Friday, March 28, 2008

Why are health costs out of control? Is it the lack of information?

Dear Colleagues

There are many reasons that health costs are out of control. I am reminded of an old saying that I grew up with in the UK: "Ignorance is bliss, 'tis folly to be wise".

In the case of the global health sector there is an apparent total ignorance about cost ... I say "apparent" because in many situations it appears that health sector leadership is still able to make very profitable decisions when personal interest is in play!

Certainly the public is kept in almost total ignorance about cost ... and this needs to change.

Most of the corporate organizations that are well regarded for their operating performance have a deep understanding of their costs ... and how costs behave under various conditions. Because they have this information, their decisions to get cost effective performance are well informed.

In most of the global health sector decisions are rarely based on any deep understanding of costs, even in the most simplistic terms. Certainly there is little or no articulation of the way costs behave under different conditions.

While the science of medicine has progressed rapidly over the past fifty years ... with exponential acceleration, maybe ... information and awareness of costs and cost behavior is languishing in a bygone era.

There is absolutely no good reason why this should be. There are ways that cost information can be developed that has wide value ... but it needs to be done in a manner that is both professional and cost effective. It can be done. It should be done.


Peter Burgess

No comments: