The U.S. healthcare system is failing due to a decades-long absence of efficiency incentives, a problem that poses an existential threat to public health, according to Eugene Litvak, PhD, President and CEO of the Institute for Healthcare Optimization (IHO) and an Adjunct Professor at the Harvard School of Public Health (HSPH).
Litvak argues that Americans face two \”disturbing trends\”: rising treatment costs and increasing avoidable deaths. With more than 500 patients dying from hospital error every day, current debates focus only on quality and cost, while the word \”efficiency\” remains \”mysteriously absent\”.
The fundamental issue, Litvak writes, stems from \”decades of cost-plus reimbursement\” that provided \”no incentives for efficiency\”. Hospitals typically react only to visible symptoms, like emergency-room overcrowding and nursing shortages, instead of addressing the root cause.
Twenty-five years ago, Litvak warned of this critical flaw: “To achieve maximal cost effectiveness in healthcare, we must understand the complete dynamics of patient interaction with all components of the delivery system and their mutual interdependencies”.
The solution, which has been applied successfully by every other major industry, lies in applying the \”science of operations management\”. A \”proven methodology\” for managing patient flow is available. This approach, which focuses on managing variability, is key to significantly alleviating patient mortality, emergency-room overcrowding and nursing shortages.
The financial benefits are staggering: implementing efficient patient-flow management could reduce hospital costs alone by $200 billion annually.
Yet, despite the fact that the health and cost benefits have been known for 25 years and its validity has never been criticized, only a few organizations have adopted it.
Litvak is calling on the federal government—including the Department of Health and Human Services (HHS) or the Centers for Medicare & Medicaid Services (CMS)—to inform providers and \”incentivize or demand its implementation\”.
He issues a sharp warning about the failure to act: “If nothing changes, our ailing healthcare-delivery system will not survive the next pandemic”.
To move forward and benefit Americans, Litvak argues, “the endless and useless debates over what is more important, the quality of care or its cost, must end”.