Financial

The $49 billion/year of waste in healthcare spending we can solve

December 8, 2018 / Peter Nichol

It is estimated that 30% of healthcare costs are lost to waste in the system. These costs get passed on to the insurer and ultimately the patients. With healthcare bills being the leading cause of personal bankruptcies in the country (60%) that 30% is the difference between solvency and destitution for a lot of people.  This is a compelling moral argument to wring all waste out of the system as quickly as possible. That moral argument is even stronger when one considers that poverty is the greatest threat/risk to one’s health.

So, what if I told you that there is a segment of healthcare spending that accounts for $165 billion/year and we could eliminate the waste in that space ($49 Billion) in the next ten years. That we have a very sound grasp of the root causes of that waste, that we have all the technology to solve it.

That segment is sterile processing or the cleaning and sterilization of surgical instruments and medical equipment. And most of us are completely unaware of this critical pillar in surgical services unless something goes terribly wrong and a lawsuit ensues.

Sterile processing employees work in windowless rooms typically in the basement of hospitals, the rooms are hot, they have to wear personal protective equipment which makes it hotter. They are frequently injured by the errant sharp instrument or scalpel blade left on the knife handle. Their wages are miserable ($15-$22/hour) meaning that many live in poverty in major metropolitan areas. They are relentlessly pushed by clinicians to rapidly turnover instruments knowing that they are sacrificing safety and quality. They are verbally abused when they can’t meet these demands and to most people in the hospital, they are invisible. Yet, the entire economic engine of the hospital hinges on their performance.  And under these brutal conditions they somehow perform this critical task at a very high level in an environment that can best be characterized as a pre-Henry Ford assembly line.  Everyone one of them that I have met is purpose driven in knowing that their work will touch multiple patients in a day. This is the one reason they do what they do and hospitals should be kissing the ground they walk on.

But I digress.

This really is an argument about economics and waste because in this agency driven world of western capitalism, large, impersonal organizations really do not care about these people unless it affects their bottom line. So, let me begin by telling you that every hospital is losing hundreds of thousands to tens of millions of dollars a year because they ignore these people.

 

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Chris Stewart

Chris currently serves as SVP and GM of Hospital Strategy at Ortho Sales Partners. Prior to that, he was the assistant vice president and business unit leader of Medical Device Management for HealthTrust.

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