An ounce of prevention is worth a pound of cure, but what about your bottom line?

An ounce of prevention is worth a pound of cure, but what about your bottom line?

There are many such aphorisms that pervade our daily dialectic. But do these delightful one-liners bear much in the way of results? Does prevention actually save money, or is it merely a quaint, logically straightforward statement made by Benjamin Franklin 200 years ago with little substance when spoken about in the context of a $3.8 Trillion healthcare economy?


Great question.


Thank you.


The answer to the question of whether prevention saves money really depends on the many ways to look at the question.


Save money for whom? For payers? For hospitals? For patients? Humanity?


I know, I know. I am just asking questions. And you came here for answers.


I will attempt to tackle the question in two ways. The first, from the hospital perspective. Prevention in a hospital is much different than prevention elsewhere. The second, from the public health (humanity) perspective. Payers don’t want to pay for anything, but where prevention helps public health, it helps payors and you will see why. Patient cost is always tricky to address and perhaps is part of the larger conversation about healthcare, namely who should pay and what should you pay. We will leave the topic for another enlightening and entertaining post.


Before we begin (I promise we will begin soon), lets define prevention. There are generally 3 types of prevention that many experts talk about. They are:


Primary prevention: The prevention of a disease from ever occurring. An example would be exercising to prevent obesity.


Secondary prevention: The prevention of the progression of an existing disease beyond early stages. An example would be lowering the cholesterol of someone with heart disease to prevent a heart attack.


Tertiary prevention: The reduction of the impact of the disease on a person’s life. An example would be monitoring blood sugar levels of a diabetic patient to prevent damage.


It is important, if not critical to note that screenings are not the same as prevention. Screenings cost money and when younger, asymptomatic, individuals with little to no history are screened, you can often find something wrong. This inevitably leads to higher cost. Because of the conflation, prevention is often looked at as an investment that only leads to more treatment and does not avoid costs.


Let’s dive into the cost savings implications of prevention from each perspective, the hospital and public health.


Hospital perspective


We can go ahead and address the elephant in the room here, the only way for hospitals that are not self-insuring systems to make money is treating patients. That means that short of a new business model whereby a hospital makes money by avoiding admissions, hospitals need to see and treat patients. I will leave the philosophical debate and implications of this alone for now.


What then does prevention look like within the hospital? Essentially for prevention to apply in a hospital setting where patients are already present for treatment, the hospital must do one thing: prevent patients from becoming sicker.


While this sounds like a relatively simple edict, it can be incredibly difficult to achieve. Consider the list of Healthcare Acquired Conditions (HACs) that CMS uses to assess hospitals on performance. It is not terribly short. Beyond that, there are no shortage of superbugs such as C.diff waiting to climb into a surgical site after surgery.


When a hospital falls below a certain threshold, or above depending on how you look at it, CMS penalizes the hospital for its HAC scores in addition to other penalties the hospital can incur. The penalties can be up to 1% of reimbursement from CMS. This all leads back to the question, is prevention worth it?


The answer from a philosophical point of view is yes. From a hospital business perspective, it depends (typical).


Unequivocally, if a hospital is going to be penalized by CMS and lose reimbursement dollars, it should focus and not skimp on the prevention measures it employs. For example, a competent wound care team can use best in class products and guidelines to prevent pressure injuries, one of the HAC measures. It can also institute fall policies and measures, DVT prevention using sequential compression, improve foreign body incidence with new technology and protocols, and more.


The issue at hand is that these measures cost money and do not generate income. But they do improve profitability.


Imagine your health system bills 33% of its charges to Medicare and Medicaid. For a $5 Billion system that is about $1.65 Billion. If CMS penalizes the hospital for being in the bottom 75% of HAC performance, then it loses 1% of its reimbursement or $16.5 Million. If you are a non-profit system with a median operating margin of 1.7%, you may be in a lot of trouble. Especially considering this reduction in reimbursement directly impacts the bottom line, as you have paid for the treatment already, you just are not going to be paid for it or the additional costs of treatment.


Why then do hospitals avoid shelling out the case for prevention? Its human nature really. We see costs that are happening now and profits in the near term. It is hard to invest to avoid loss in the future. Regardless, there are things a hospital needs to and should do to avoid the costly penalties.


  • Hire an expert in reimbursement. You probably already have someone or a group on staff who looks at this. Great! Document every single area where you need to improve relative to the CMS measures.


  • Strike a team to address the individual areas that may be leading to decreased performance. Use black belts. Make it their whole job.


  • Partner with industry. Sometimes it may seem expensive as a line item, but there are great programs and products that can help with HAC reduction and other program reductions. Paying a little more up front can save in the short and long term.


  • Follow the evidence. You can throw a rock and hit an advisory panel or medical group that publishes best practices on any given area. Follow them. Empower your teams to implement the changes.


It can be complicated. But from a high-level perspective, like most things, it is simple but not easy. Look at the measures, launch quality improvement teams to fix the problem areas, invest, and control the outcomes. Though it may seem like an investment with little to no return, it does provide a return through loss avoidance.


While it “depends” if prevention is a worthwhile strategy for hospitals to employ from a business perspective, where it does impact the bottom line, it really impacts the bottom line. Wouldn’t you pay $800K to keep $16M? I would.


Public Health


Here is where things get interesting and fun to debate. Does prevention makes sense for the bottom line of public health? If you ask economists, the answer is no, but do it anyways because it is cost effective. I will respectfully disagree. It is always worthwhile because it is cost saving (and morally right), not only cost effective.


To determine whether or not “prevention” makes sense from a public health perspective, one study looked at several dimensions and compared the cost of each to subsequent QALYs or Quality Adjusted Life-Year. Sounds soulful doesn’t it? Basically, it put a price on each QALY.


The big issue with the study that determined only childhood immunizations and the counseling of adults on the use of low-dose aspirin to be definitively cost-saving. These were the only cost saving prevention measures because most of the others were screenings. And the lifestyle modifications were mostly cost-saving but not concluded as definitively cost-saving because they were not studied universally by the authors’ sources.


As noted above, screenings are not the same as prevention. It is not possible, unless you talk to someone who really believes in the healing power of crystals to prevent breast cancer. So, when you screen for it, you are simply identifying something that you could never prevent in the first place. Obviously, screenings are important, but no doubt, lead to higher cost of care.


Other arguments have been made relative to prevention. One delightful one is that if you prevent more disease, then people will live longer and will continue to burden the system with additional disease as their life progresses. Not sure I know how to answer that one other than bringing to light general ethical concerns and talk of morality, but nevertheless, we are looking at bottom lines here.


Looking at the bottom line of public health can only really mean one thing, how much it costs the country to foot the bill for poor health. For a brief dive into that joyful topic, the United States is on track to spend just under 20% of its GDP on healthcare in 2020. Of that, according to CMS, 90%, of costs go to managing chronic disease. For those in the back, 90% of healthcare costs are devoted to managing chronic disease. Ninety, for the prose inclined.


While not all chronic disease is preventable, some of the top chronic diseases are heart disease, stroke, diabetes, and obesity. To be fair cancer is a huger driver of the costs, but we do know that lifestyle choices impact cancer, such as smoking.


Being able to address true prevention, not screenings, can attack 90% of healthcare costs.


Thinking beyond the comparison of treatment versus prevention costs, if we look at keeping people alive longer we will inevitably gain more economic productivity from the individuals, which may easily offset ongoing medical costs due to their longer lives (the economist view). To be crass as an economist might be, measuring people in terms of their productivity contributing to GDP based on millions of life years saved, seems like a pretty good return on investment.


For just one more layer of complexity to all of this, the United States has one of the highest infant mortality rate of any industrialized country, the lowest life expectancy compared to similar countries, and pays more for it. Going back to return on investment and cost, while it would still save cost to prevent chronic disease or 90% of healthcare spending, imagine the economic boost if we increase life expectancy and decrease infant mortality rates. And just because, about half a million people file for bankruptcy in the United States every year because of medical bills. If those were for preventable conditions, that would mean more money going into and circulating within the economy.


Two things may be conflated in the above argument, but they are equally important. On the one hand, if we can reduce chronic disease, we can make a significant dent in 90% of healthcare spending – cost saving. On the other hand, if preventative measures are worth it in terms of economic output and human decency, then they are a good investment. A win-win on both fronts.




Prevention is not always the sexiest strategy. It is much cooler to develop Bluetooth enabled heart monitors and implants that communicate with monitoring systems miles away. But, tried and true methods can and will not only save money but save lives. Its why countries like Singapore can spend 5% of GDP with better outcomes. And Australia spends 9.2% of GDP, France 11.2%, Canada 11.7%, and Germany 11.2% all will higher life expectancy than in the US.


I tried not to wade into the murky waters of healthcare overhaul here, but this debate points out one important thing: We can address our health and not our illness, which not only saves money, it can improve our lives.

No Comments

Post A Comment