2012 Global Medical Costs Trends on the Rise
A recent study released by Tower Watson, 2012 Global Medical Trends, shows an increase in medical costs across every market. Unsurprisingly to us, Musculoskeletal/Back Condition is the global top 5 medical cause towards the high prevalence of medical claims. In Europe and the US, it’s the No 2 and No 3 top cause respectively. Also unsurprising to us were the leading factors of higher medical costs. These are: “Underuse of preventive services” and “Overuse of care — employees seek inappropriate care“.
As costs rise, there is an inevitable push to drive medical costs down. However, the main approach generally taken by businesses (and often individuals) is the drive down unit-costs. The assumptions made here are that 1) you can’t do much about the causes of the conditions in the first place and 2) all medical treatments are equal regardless of provider. Both assumptions are often wrong.
The idiom, “An Ounce of Prevent is worth a Pound of Cure” is never more true today than when Benjamin Franklin first quoted it. There are diseases today that no longer commonly exists simply because we have successfully introduce new preventive measures. These ‘preventive measures’ become so ingrained in our daily habit sometimes, to the point where they are invisible to us. Scurvy, the disease that ravage sailors centuries ago today would be unimaginable given our improved diet.
By ordering better ergonomical furnitures, musculoskeletal issues in the office place is often ‘solved’. Results revealing little or no improvement has also left management baffled.
Example of Captain James Cook
This is akin to the ship owners buying oranges for the sailor, only to find out that Scurvy still continues to ravage their ships. Why did this happen? Because the sailors were not eating the oranges even though they were available. It was only after a crafty application of by Captain James Cook and in his case, sauerkraut.
“On his second voyage, from 1772 to 1775, Cook took great pains to avoid for his seamen various things he had observed to be associated with outbreaks of scurvy. He insisted on cleaner, better ventilated quarters and ample freshwater for personal hygiene for all his men, as well as for the officers. Whenever possible he would take on supplies of whatever fresh fruits, vegetables, and malt were available at ports of call. Cook also noted that scurvy seemed to afflict Dutch sailors less severely than it did the English and concluded that sauerkraut might be a factor. The Dutch were fond of sauerkraut, whereas the English disliked it and ridiculed those who ate it reg- ularly by referring to these wartime enemies as “Krauts.” Cook therefore took plenty of sauerkraut aboard, but did not compel his sailors to eat it. He did order his officers to join him in eating sauerkraut daily, encouraging the rest of the crew to follow the officers’ example, if they wished to do so. Within a week, every man on the ship was asking for sauerkraut. On that long second voyage, Cook lost only 1 of 118 men to scurvy.“– excerpt from James Lind’s legacy to clinical medicine, Western Journal of Medicine 05/1995; 162(4):367-9.
Employees need to learn how to use new ergonomical furniture correctly and actually use them when ordered. Preventive ergonomic assessments and education is a simple and cost-effective way to lower total medical costs.
Not All Treatments Are Equal
Employees are overusing medical care. Or it is that they are overusing ineffective medical care? Not all medical providers are equal. Some do better at certain things than others. Unfortunately, there is often no simple way to determine this without being an expert in the area. From a business’s perspective, how should one evaluate medical providers? One benchmark that makes more sense than lowest unit cost, is applying the concept of “Total Medical Cost” or TMC. Businesses should be familiar with the concept of “Total Operating Cost/TOC” or “Total Cost of Ownership/TCO”. It has its roots in Information Technology (IT). The concepts between TMC and TCO are similar.
The TCO concept became popular when it became difficult for IT officers in a company to make purchasing or adoption decisions on the growing array of IT equipment and software choices. Like medicine today, as new solutions come onto the market at an increasing pace, so was IT back in the late 80’s and early 90’s. As it grew impossible to make decisions on the micro or individual equipment level, the IT officers moved to a higher aggregate level view of Total Cost.
Companies need to consider a more ‘expensive’ option if it leads to overall lower medical costs. It does not necessarily mean that the most expensive solution is the best. But it also means that the ‘cheapest’ solution is not likely to save you monies in the longer run.
Adopting a TMC approach, requires you to have a grasp of your total medical costs. Something far easier for a company to do, then to understand the various implications of medical technology and advice.
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