January 15, 2009 / 7:10 PM / in 11 years

Deloitte sees $530 bln in US health care savings

WASHINGTON (Reuters) - U.S. health care spending could drop by half a trillion dollars over 10 years if policymakers make broad changes like adopting electronic prescriptions and relying on drugs and procedures proven to work best, consulting firm Deloitte LLP said on Thursday.

Deloitte issued its proposals and analysis of potential cost reductions less than a week before President-elect Barack Obama takes office promising a major overhaul of the U.S. health care system.

The details of Obama’s health care plans have not yet been released. Deloitte offered its own approach that embraced several ideas that experts have considered.

Deloitte proposed $220 billion in new spending upfront over three years on efforts such as getting doctors to use e-prescribing and electronic medical records, as well as better coordination of patient care through primary-care doctors.

Deloitte sees net savings beginning in the sixth year and 10-year savings of $530 billion.

“We’re including improving health status and improving quality and not just taking an ax to costs,” Paul Keckley, executive director of the Deloitte Center for Health Solutions, said in a telephone interview.

Obama and Congress, in which his Democratic Party has the majority, are planning sweeping changes in a U.S. health care system that is the world’s most expensive but lags other nations in many quality measures.

A government report this month showed that in 2007 Americans spent $2.2 trillion on health care, and health spending was 16.2 percent of U.S. gross domestic product.

Many experts and advocacy groups have laid out proposals on improving the U.S. health care system.

A key element of the Deloitte approach is evaluating the comparative effectiveness of various drugs and medical procedures. The idea is to eliminate the use of unnecessary or inferior tests, medications and procedures, Keckley said.

Deloitte sees savings from adopting of health information technology in terms of reducing medical errors, improving care coordination and lowering administrative expenses.

Roughly 12 percent of U.S. doctors now use e-prescribing — sending a prescription electronically to a pharmacist rather than scribbling it on a piece of paper and giving it to the patient.

Proponents say this removes the risk of a patient getting the wrong drug due to a doctor’s sloppy handwriting or a wrong medication with a similar name, and may encourage doctors to pick cheaper generics over costlier name-brand drugs.

The report does not anticipate savings from its “medical home” proposal to pay primary-care physicians to closely manage and coordinate care for individual patients, but does envision improvements in patient care.

It also sees eventual savings as these doctors help patients better manage chronic diseases such as diabetes by, for example, preventing that condition from worsening to the point that the patient needs a limb amputation.

The report can be read at www.deloitte.com/us/healthreformpyramid.

Editing by Maggie Fox and David Storey

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