While many are familiar with the "80/20 Rule" and its various application in organizations, a new report from the National Institute for Health Care Management Foundation highlights a new axiom in health care, the "50/5 Rule". According to the report, a mere five percent of healthcare patients generated half of all U.S. medical expenses in 2009, hence, the "50/5 Rule".
Furthermore, when the top 10 percent of healthcare utilizers are considered, the percentage of cost utilization rises to an astounding 63.6%. Interestingly, the top one percent of patients accounted for 20% of healthcare spending.
The study found that, to no surprise, people over 55 years old made up a large proportion of the high spending groups, while those who were much younger had lower medical spending.
In addition, people with at least one chronic condition were two to four times more likely to end up in the top 5 percent of spending, with the risk increasing as the number of chronic conditions rose.
This is consistent with Institute of Medicine data released Wednesday, which showed that chronic pain affects 116 million Americans and results in healthcare and economic costs of $560 billion to $635 billion a year.
According to the study, there is a correlation between obesity-related conditions and the small percentage of very sick patients racking up big medical bills. Nearly half of all patients in the top 5 percent of spending had hypertension, one-third had lipid disorders (high cholesterol), and more than one-quarter had diabetes.
These results are significant on a national scale as we attempt to address seemingly unrelated financial issues of the debt ceiling, huge ongoing budget deficits and the affect of entitlements on spending.
Healthcare accounts for over 2 trillion dollars or 1/6 of the U.S. economy. The statistics highlighted in the report allow us to conclude that healthcare costs, and the associated huge government spending, can be controlled best, not by regulation and the nationalization of healthcare (think Obamacare), but, rather, by a more holistic approach to funding and support for disease prevention, patient education and medical management as is found in managed care provided by the private U.S. healthcare system for many years.
How do we reduce the Federal budget deficit and improve quality of life at the same time?
So, the 50/5 Rule can help us to navigate a new, more appropriate path to achieve cost savings and improved health outcomes.
For more:
- check out the report (.pdf)
- read the H&HN Daily article
Furthermore, when the top 10 percent of healthcare utilizers are considered, the percentage of cost utilization rises to an astounding 63.6%. Interestingly, the top one percent of patients accounted for 20% of healthcare spending.
The study found that, to no surprise, people over 55 years old made up a large proportion of the high spending groups, while those who were much younger had lower medical spending.
In addition, people with at least one chronic condition were two to four times more likely to end up in the top 5 percent of spending, with the risk increasing as the number of chronic conditions rose.
This is consistent with Institute of Medicine data released Wednesday, which showed that chronic pain affects 116 million Americans and results in healthcare and economic costs of $560 billion to $635 billion a year.
According to the study, there is a correlation between obesity-related conditions and the small percentage of very sick patients racking up big medical bills. Nearly half of all patients in the top 5 percent of spending had hypertension, one-third had lipid disorders (high cholesterol), and more than one-quarter had diabetes.
These results are significant on a national scale as we attempt to address seemingly unrelated financial issues of the debt ceiling, huge ongoing budget deficits and the affect of entitlements on spending.
Healthcare accounts for over 2 trillion dollars or 1/6 of the U.S. economy. The statistics highlighted in the report allow us to conclude that healthcare costs, and the associated huge government spending, can be controlled best, not by regulation and the nationalization of healthcare (think Obamacare), but, rather, by a more holistic approach to funding and support for disease prevention, patient education and medical management as is found in managed care provided by the private U.S. healthcare system for many years.
How do we reduce the Federal budget deficit and improve quality of life at the same time?
- Stop the nationalization of healthcare via Medicare and Medicaid (i.e., move toward the concepts promoted by the Paul Ryan plan and away from the regulation and government control being implemented by the Obama administration).
- Fund private managed care systems and solutions
- Measure results and reward positive outcomes
So, the 50/5 Rule can help us to navigate a new, more appropriate path to achieve cost savings and improved health outcomes.
For more:
- check out the report (.pdf)
- read the H&HN Daily article
