Related story:
Active U comes back strong >
About this series
Today the University Record begins a three-part series exploring the rising cost of health care.
Part 1: Setting the scene
Part 2: The University perspective >
Part 3: Doing our part one person at a time >
Setting the scene
It is something we’ve heard about for many years: the cost of health care is going up at an alarming rate. But what do cost increases that more than double and threaten to triple inflation mean to our nation, to the University, to us? How did we get here and where do we go now?
These are among the questions leaders of Michigan Healthy Community hope to address through a new awareness program called HealthSense: Managing the Rising Cost of Health Care. It’s a complex challenge, and we have been working to slow the overall rate of increase at U-M. Some large employers report increases of more than 12 percent a year; U-M costs have gone up 8-10. Continuing to be effective is dependent in part on increasing our understanding of wellness and prevention, gaining broad participation in health and well-being programs and making sound health care decisions at the individual level. This kind of investment in wellness is what Michigan Healthy Community represents.
HealthSense begins today with this first of a three-part series in the University Record. During the coming months we will develop a HealthSense Web site to offer ongoing information on the national health care context, the impact at U-M and resources to help individuals to make healthy choices that better manage their own costs.
The University Record staff sat down with Dr. Robert Winfield, chief health officer, and Laurita Thomas, associate vice president for Human Resources, to talk about the national situation, what the University is facing and how it is responding to increasing costs, and what employees can do to impact this trend.
Our hope is that this series will help put the problem into perspective and also will encourage members of the community to take advantage of a number of resources the University has to offer to affect personal health and well-being; and will inspire everyone to take part in responding to this challenge.
Record: So, when we talk about rising health care costs, what do we mean?
Winfield: Health care costs across the country are going up at a rate that is challenging employers and the federal government. The money being devoted to health care by employers also is needed for reinvestment in their businesses. These dollars are also needed to produce competitive and cutting-edge products. The rates of increase of health care costs are double that of the rest of the country’s inflation — sometimes triple that of inflation — and this is not sustainable.
.jpg)
Human Resources
Thomas: The same thing is happening in universities, where our output includes educated students, research and services to our community, including patient care. The University has close to 40,000 employees and a health care expense budget approaching $300 million, going up 8-10 percent a year. We simply can’t sustain that indefinitely because it makes resources less available for teaching, research and service to the community.
Record: What’s the primary cause for the high rate of increase in costs?
Winfield: There are a number of reasons health care costs have been going up. Let me highlight three of these. One is the development of new technologies, which are very expensive and are increasingly used.
Second is that the cost of pharmaceuticals has been going up. Some of the drugs that are being developed are extremely difficult to develop and produce, and their costs are high.
Third is increasing need for more health care providers of all types, and the increasing pressure on salaries, as many of these health care providers are in limited numbers.
So those are three of the key forces that are driving up health care cost and, as a nation, we haven’t yet figured out how to grapple with this.
Thomas: We should also add to that there are demographic influences. For instance, aging baby boomers tend to have high expectations for quality of life and full utilization of health care resources. As Dr. Winfield pointed out, there are evolving new technologies to sustain their quality of life. We’re living longer, and I think we agree that’s wonderful. We also acknowledge that the increase in chronic diseases like heart disease, diabetes and cancer that can develop from long-term poor health habits adds increasing demands on our health care system that we have to manage.
With respect to new drugs and technology, if you watch television, it is easy to see several different advertisements for drugs that essentially do the same thing. Is there value in having so many variations of drugs and technologies that treat the same condition?
|
Winfield: I think there are two questions there. One is about the medications; the development of new drugs is a very expensive proposition. When an innovative drug becomes available, it typically comes with a high price. Some of the advertisements we see are due to drug companies competing for a larger slice of a particular lucrative market. And I think that in general when a generic drug comes into the marketplace the advertising may decrease. That’s not always the case. Sometimes the advertising is an attempt to hold onto the market share of that brand drug. At other times it’s an effort to increase public demand for a drug. Generic drugs are with few exceptions equivalent to brand name drugs and the cost savings can be substantial.
To the question of technology: Because we’re a research institution, one of the expectations is that we are at the cutting edge, and we’re developing some of the newest technologies — not only for our own patients but for the country as a whole. So the immediate benefit that anyone might gain from some of these new technologies might be marginal today, but might be dramatic in five years. But the majority of the technology, when applied thoughtfully, may benefit the patient. Where 10 years ago a particular kind of scan called the PET scan was experimental, now it’s being used to identify the presence of cancer in locations that were unsuspected. And it has now become widely approved by insurers, and though expensive, when used prudently, this new technology can make a big difference.
Record: With all of the expertise at the University, what are we doing to impact the national scene, and the delivery and cost of health care in particular?
Winfield: There are two basic thrusts: One is a joint venture between the University of Michigan and Blue Cross Blue Shield of Michigan that was established as part of the sale of M-Care to help improve the quality of the state’s health care system, and transform the way patient care is delivered. The Center for Healthcare Research & Transformation was formed in 2007 and is headed by Marianne Udow-Phillips, former director of the Michigan Department of Human Services.
Second we’re engaging in a variety of research relative to the national situation. Some of these include the Center for Value-Based Insurance Design, which is nationally known for its work on reducing barriers to access for health care; the Institute for Social Research
that has been doing studies for decades on social disparities in health; the School of Public Health and the Institute for Social Research do research on the economic and public policy aspects of disease prevention and health promotion; and a joint effort among the School of Public Health, the Ford School of Public Policy, the Institute for Social Research, the Economics Department and the Robert Wood Johnson Foundation is focusing on the problem of the uninsured.
The work we have done in our employee pharmacy benefits to contain the cost of pharmaceuticals, and the use of pharmaceuticals in the Focus on Diabetes and Focus on
Medicines pilot programs have gained national recognition, and we’re continuing to develop new ideas. We are continuing to try to find new ways of working with health care delivery and, in fact, the U-M Health System has been working with the Michigan State Medical Society on a variety of innovative ideas.
Finally, we have one of the highest performing hospital and health care delivery systems in the country, and many other health systems have used some of the things we have done as models.
