Healthcare Analytics

US Health Care in the Spotlight

“An era of open information in healthcare is now underway. We have already experienced a decade of progress in digitizing medical records, as pharmaceutical companies and other organizations aggregate years of research and development data in electronic databases. The federal government and other public stakeholders have also accelerated the move toward transparency by making decades of stored data usable, searchable, and actionable by the healthcare sector as a whole. Together, these increases in data liquidity have brought the industry to the tipping point”.  McKinsey Global Institute – The Big Data Revolution in Healthcare, 1/2013

This “Tipping Point” promises to reveal solutions to two critical challenges in US healthcare today:

  • How can we begin to measure effectiveness and quality of medical treatment?
  • How can we reign in the spiraling costs of healthcare?

These questions have been at the center of running debates for years now and the answers involve many parties with diverging interests and different levels of political influence, making them among the most contentious societal issues. For this reason, we try to take an impartial and apolitical view in our analysis, understanding that reasonable people can differ on big issues. In our analysis, we would rather be generally correct rather than very precisely wrong and  feel that where you stand also depends a lot on where you sit, so finding a truly impartial point of view is not easy. Finding data however is becoming easier so we will rely on the best publicly available data we can find, analyze it and let readers decide where they fall for themselves.

The US Spending Gap

The US has spent more on healthcare per capita than all other countries over a long period of time, to the point where it reached ~18% of GDP in 2010, or over $8,300 per capita.

Spending and LifespanThe correlation between public Health Spending and Life Expectancy does not seem to hold on a linear trajectory, at least after a certain point, a fact which is also evident from this graph. It shows many countries with Life Expectancy over 80 years, starting at about the point where spending is $1,500-$2,000 and continuing across the board. The cluster that falls on the line and within the confidence bands includes mostly Western European and Nordic countries, along with Canada and Australia. The right side cluster includes Switzerland (top Life Expectancy), followed by Norway, Luxembourg and the US. The cluster to the left of the line (and above 80 years) include the UK, Ireland, Italy, Spain and New Zealand, all of whom spend between $3,000 and $4,000 per Capita. Japan and San Marino had the highest Life Expectancy (83 years), and spent $4,065 and $3,655 respectively.

Without assuming too much from this high level data, it seems that we are overspending compared to others, a finding which is borne out in the above quoted McKinsey research.

Back to the original questions of how to measure effectiveness  and control costs, we will be cover these two issues in detail as the Affordable Care Act is implemented. Required reporting for participating Affordable Care Organizations (ACO) includes measurement of Patient Satisfaction, Care Quality and Effectiveness metrics for longitudinal analysis of clinical treatments of Diabetes, COPD, Cardiovascular Disease as well as monitoring for several important risks such as Breast Cancer, Obesity, Pneumonia, Tobacco Use, among others. These performance measures will be released to the public along with data covering Medicare and Medicaid payments and pricing, making the whole process much more transparent. CHCER will be following this closely and helping clients understand the the implications and manage compliance for ACO reporting.

What is the big deal? We have the best care in the world.
Not any More.

One of the arguments we hear is that the US system offers the best care in the world, and from advanced R&D, Academic and Pharmaceutical perspectives, that may be true. However, in the ultimate measure of population health management; Life Expectancy, we do not do as well as other advanced economies, while spending multiples more on care, as seen in the 2010 World Bank Study Data here.

Health Spending

Data shows the US has a Life Expectancy of 78 and spends 18% of GDP on healthcare, while Australia has an 82 year lifespan and spends 9% of GDP on healthcare. And Korea, which has only recently become an international economic power, manages to have a Life Expectancy of 81 while spending only 38% as much as the US, at 7% of GDP.

Regardless of this discrepancy at the top of the scale, almost all countries that spend more than $1,500 per capita on health have improved overall public statistics such as Infant Mortality and Life Expectancy. Using the date sliders in the graphs below, you can see the progress made over the past ten years. The views can be navigated using the tabs at the top or the down arrow at upper left.


Interactive Tool



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