The following article, published August 1, 2012 in the New England Journal of Medicine by Ezekiel Emanuel, M.D., Ph.D., et al., examines the burgeoning cost of healthcare in the United States and potential solutions that could help quell our expensive habits. The authors cite excessive pricing for medical equipment as one area that needs improving; utilizing reprocessed single-use medical devices (SUDs) through FDA-regulated third-parties is just one of many opportunities currently available to healthcare providers that offers an immediate, safe and effective solution.
National health spending is projected to continue to grow faster than the economy, increasing from 18% to about 25% of the gross domestic product (GDP) by 2037.1 Federal health spending is projected to increase from 25% to approximately 40% of total federal spending by 2037.1 These trends could squeeze out critical investments in education and infrastructure, contribute to unsustainable debt levels, and constrain wage increases for the middle class.2,3
Although the influx of baby boomers will increase the number of Medicare beneficiaries, growth in per capita health costs will increasingly drive growth in federal health spending over the long term.1This means that health costs throughout the system drive federal health spending. Reforms that shift federal spending to individuals, employers, and states fail to address the problem. The only sustainable solution is to control overall growth in health costs. Medicare is an important part of society that so many people use due to costs that they cannot afford on regular healthcare. With advancements using a medicare beneficiary identifier, medical centers and patients can be assured of where they stand with how they are paying for their treatment.
Although the Affordable Care Act (ACA) will significantly reduce Medicare spending over the next decade,4 health costs remain a major challenge. To effectively contain costs, solutions must target the drivers of both the level of costs and the growth in costs – and both medical prices and the quantity of services play important roles. Solutions will need to reduce costs not only for public payers but also for private payers. Finally, solutions will need to root out administrative costs that do not improve health status and outcomes.
…USE COMPETITIVE BIDDING FOR ALL COMMODITIES
Evidence suggests that prices for many products, such as medical equipment and devices, are excessive.9 Instead of the government setting prices, market forces should be used to allow manufacturers and suppliers to compete to offer the lowest price. In 2011, such competitive bidding reduced Medicare spending on medical equipment such as wheelchairs by more than 42%.10 The ACA requires Medicare to expand competitive bidding for equipment, prosthetics, orthotics, and supplies to all regions by 2016.11
We suggest that Medicare immediately expand the current program nationwide. As soon as possible, Medicare should extend competitive bidding to medical devices, laboratory tests, radiologic diagnostic services, and all other commodities.12 Medicare’s competitively bid prices would then be extended to all federal health programs.13 To oversee the process, we recommend that Medicare establish a panel of business and academic experts. Finally, we recommend that exchanges – marketplaces for insurance starting in 2014 – conduct competitive bidding for these items on behalf of private payers and state employee plans.