Recently, 3 industry giants, Amazon, Berkshire-Hathaway, and JP Morgan, announced their intention to form a nonprofit consortium to manage costs and quality of healthcare.1 Can this market-based effort succeed where others have failed to address these issues?
One key problem that is widely discussed, but rarely defined, is the actual costs of healthcare. What are these costs and why do they continue to rise more quickly than overall inflation? Where does nursing care fit in the overall cost of healthcare? The starting point for discussion is to understand costs of healthcare from 3 perspectives:
- Personal costs: the amount of money a person or family spends on receiving or consuming healthcare, including out-of-pocket expenses.
- Administration costs: incurred to administer healthcare plans (insurance) and government-sponsored plans (eg, Medicare and Medicaid).
- Delivery costs: the direct and indirect costs to deliver healthcare, including the labor component, operating costs, taxes, depreciation, debt service, and capital.
From a nursing perspective, each of these costs are relevant if not personal. As employees, nurses receive benefits such as health insurance, but also incur costs consuming healthcare for themselves and family members, for example, routine visits and copays for primary care, prescriptions and over-the-counter medications, deductibles for elective or emergency surgeries, and so on. One of the most pertinent public discussions regarding healthcare costs is out-of-pocket expenses especially with high deductible insurance plans, which can leave families with thousands of dollars of healthcare expenses each year over and above the premium costs.
Administrative costs of healthcare plans, largely hidden, include costs associated with delivering insurance products or administrative overhead for government programs such as Medicare.2 These costs are typically not associated with the direct costs of delivering healthcare. However, they impact care delivery; for example, in a primary care setting, patients requiring preapproval from an insurance carrier for certain tests or procedures can divert clinical time away from patient care and add extra administrative or billing personnel to handle the complexities of reimbursement.
The proposed industry consortium addresses a range of issues in healthcare, namely, cost, quality, access to care, efficiency, and performance. The United States spends more than any other country on healthcare, yet overall health outcomes fall short of many other industrialized countries.3 How will this consortium use purchasing power to leverage efficiencies in healthcare labor, pharmaceuticals, supplies, and delivery of durable medical goods to patients? What is the nursing role in all of this? Ultimately, this is a question of value: How to optimize costs and resources expended in healthcare toward a particular goal?4 How can we reduce the cost of delivering nursing care while simultaneously improving overall clinical and financial outcomes of care?
One other interesting aspect in the overall discussion to make healthcare better is: What is the difference between price and cost? Consumers expend their financial capital for medical items not covered by insurance or government payment. Do nurses have a role in managing and reducing these costs? For example, should nurses review medications (prescription and over the counter) and find ways to minimize costs to the patient and family? Would a bridge visit postdischarge from a hospital by an advanced practice registered nurse (APRN) avoid the cost of a readmission or emergency department visit? Would the consortium prefer nurses to physicians or other healthcare professionals in delivering care, when appropriate, in order to reduce the costs?
In any discussion of healthcare expenditures, labor costs dominate, with nursing being one of the highest overall, especially in acute care accounting for greater than 25% of operational costs.5 The key question is whether a large industry healthcare consortium would constrain costs by reducing nursing labor or substituting nurses for less expensive clinicians or personnel. Is cheaper care actually better care? From an advance practice standpoint, would the consortium compare the costs of physicians versus APRNs and make choices that would favor APRNs, especially in primary care setting, when care and outcomes are equivalent?6 Would a large industry consortium integrate K through 12 school nurses with pediatric primary care? Would this improve immunization and mental health outcomes?
Will data-intensive technology similar to those used by Amazon find healthcare efficiencies that have been elusive to date? For example, could Amazon use its current data strategies to develop alerts to better manage patients or perhaps in the future send a drone with needed prescription medications right to the patient’s front door?7
Could nurse entrepreneurs form new businesses that contract with the consortium to better serve a population in need with high-quality, lower-cost services? Can nurses help decrease the administrative costs of healthcare (that ostensibly add little if any value to patients and families) and be more competitive in the healthcare marketplace?
Implications for Nurse Leaders
In a new era of more competitive and data-driven healthcare models, is nursing care affordable if it is not linked to improved outcomes. What is the price consumers are willing to pay for nursing care, and what are viable alternatives to high-cost healthcare that nurses practicing at the top of their license can provide to lower costs of care—from a consumer expenditure, administrative overhead, and actual cost of delivering care perspective? This raises the specter for nurse leaders to define nursing care delivery in a more businesslike manner and asks whether nurses can provide novel or innovative solutions to vexing problems about the cost, quality, and outcomes of healthcare. Will new competitive models of healthcare driven by large amounts of real-time data and technology be the new frontier?
2. Jiwani A, Himmelstein D, Woolhandler S, Kahn JG. Billing and insurance-related administrative costs in United States’ health care: synthesis of micro-costing evidence. BMC Health Serv Res
3. Squires D, Anderson C. US health care from a global perspective: spending, use of services, prices, and health in 13 countries. In: Commonwealth Fund
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4. Pappas SH. Value, a nursing outcome. NursAdm Q
5. Welton JM. Hospital nursing workforce costs, wages, occupational mix, and resource utilization. J Nurs Adm
6. Pohl JM, Hanson C, Newland JA, Cronenwett L. Analysis & commentary. Unleashing nurse practitioners’ potential to deliver primary care and lead teams. Health Aff (Millwood)