This research paper outlines the idea of cost-effective health care, which minimizes 'unnecessary' patients tests and procedures that do not improve patient outcomes. The analysis focused on examining current trends in cost-effective health care, the rise of modern medical technologies involved in cost-effective health care, and the benefits of the U.S. implementing a cost-effective health care system. Mrs. McCallister and Dr. Pahwa were instrumental in the formation of this paper.

1. Suraj Jaladanki
Mrs. McAllister
G/T Intern Mentor 5
February 28, 2014
How much is too much in U.S. health care?
The U.S. government wasted $750 billion dollars in 2009 on unnecessary medical
procedures and pointless medications. This is no small number. The U.S. health care system is
acknowledged to have many problems, specifically dealing with its inefficiency and high costs.
These issues have been apparent for several decades, but the system’s faults have become more
apparent in recent years. While the public deemed health care reforms as necessary, the topic has
been avoided by the U.S. government until 2010 when the Affordable Care Act was passed.
While the bill seeks to resolve some of the most blatant issues found in the U.S. health care
system, such as individuals being denied coverage based on pre-existing conditions, there is still
more that can be done. How can the U.S. medical care system continue to lower the amount of
money it spends? Cost-effective health care. This type of care focuses on giving treatments and
procedures to patients who need it and tries to ensure that unnecessary procedures are not done to
individuals. The use of cost-effective health care methods in the U.S. medical system will create
a more flexible and durable entity that will deliver better health care to its patients and will
manage to reduce overall medical costs in this country. This paper will demonstrate that
implementing cost-effective health care in the U.S. using modern medical technologies, several
medical programs, and methods used in other countries will lead to the creation of a more
efficient and economical medical system.

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Before one hopes to solve the problem of a bloated and inefficient medical system, one
must understand how the system came to be and how it operates today. There are many facets
involved in the U.S. medical system, but for economic purposes, only the major programs will be
highlighted. For one, there is Medicare is a government-run program that focuses on caring for
senior citizens and citizens with certain disabilities, and in 2010, Medicare provided insurance
for 48 million individuals (Chua). Medicaid is another government program that assists citizens
who have extremely low incomes, and in 2009, 62.9 million people were enrolled in Medicaid
(Chua). The other major players in the U.S. medical system are the hospitals that provide the
actual care for individuals. These programs and institutions work together to ensure that all
citizens have basic access to health care. However, because there are so many participants
involved with the funding, policy, and execution of health care, this inadvertently drives health
care costs up (“The Evolution”). The U.S. is also unique in that there are large disparities in the
quality of care provided across the country. In certain areas, “Doctors in high-cost areas use
hospitals, costly technology and platoons of consulting physicians a lot more often than doctors
in low-cost areas, yet their patients, on average, fare no better” (“The High”). If the patients have
similar outcomes when given varying levels of treatment with different costs, it is logical to
assert that the extra money that is involved in a patient’s care may not necessarily result in better
outcomes. If the health care spending levels become closer in margin between urban and
suburban areas, and in different cities, the well-being of U.S. citizens is assumed to not change
given the fact that disparities in spending don’t always beneficially impact an individual’s health.
The U.S. payment method system is interesting in that it is a fee-for-service program.
With fee-for-service, physicians and hospitals are given money for the number of health care
services that they provide, such as a CT scan, to an individual. This inevitably leads doctors to

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prescribe more procedures to their patients, seeing how they get paid for the quantity of care that
they give instead of the quality of care (Adler). In the long run, the U.S. government will have to
give out more money to hospitals for the services they provide to individuals, and this is seen as
one of major factors contributing to the escalating costs of health care spending in the U.S. The
Patient Protection and Affordable Care Act signed in 2010 as one of its goals sought to reduce
the costs of health care for citizens and the government by enforcing certain mandates and
providing subsidies to health insurance providers. Unfortunately, the law needed more funding to
take full effect which cost the U.S. medical system even more money because the government
needed to create the web-site and hire workers to teach employers about the new laws. While
Obamacare has increased medical coverage for individuals, from an economics perspective,
there has not been any significant economic benefit from the law, but this might change in the
future (Woodward). There are other factors that contribute to the high medical bills of the U.S.
One of these factors includes the rising costs of drug research. One source notes how, “While a
particular new technology may either increase or decrease health care spending, researchers
generally agree that, taken together, advances in medical technology have contributed to rising
overall U.S. health care spending” (“Snapshots”). It is excellent that more effective medical
technology is being created; however; it is at the cost of high funding that is required to sustain
this sort of research and development. Now that the various influences that affect the costs of
medical care in the U.S. have been examined, it is time to analyze how the U.S. medical system
can improve in terms of its service and its spending.
Computer technologies and new medical technologies have brought great changes to U.S.
health care, and these changes need to be investigated to see how it will fit in with cost-effective
health care. First, due to more advanced computer programs, there has been a rise in electronic

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medical records (EMR’s) which have made a great impact in the medical field. The EMR’s are
useful to the medical system because they enable the users, the physicians and nurses, to access
their patient’s records easier and keep many different patient files organized and readily
accessible. There has also been improved medication management because doctors can run
software applications that state whether the prescriptions they give a patient can interact in a
strange manner and potentially harm the patient. A study was done by AHRQ, the Agency for
Healthcare Research and Quality, which showed that an “automated antibiotic consultant
program recommended the appropriate medication regimen for hospitalized patients 94 percent
of the time, compared with the 77-percent success rate for physicians” (“Medical Informatics”).
The point that these programs are able to be more accurate than doctors shows that computer
applications have a great potential to make healthcare safer and at the same cost-effective for
individuals.
Mainstream use of the Internet and social media has also inadvertently provided some
advances in medicine and cost-effective health care as well. Since the vast majority of
Americans can connect to the Internet, these citizens have greater accessibility to medical
information and medical databases. As Business Insider put it, “While it is never a good idea to
skip out on the doctor completely, the Internet has made patients more empowered to make
decisions about what to do next” (Kreuger). This empowerment has made users more aware of
their health and some detrimental medical effects from living a poor lifestyle and hopefully has
encouraged them to try to stay out of the hospital. Another benefit the Internet gave to medicine
is social media. Now, hospitals are starting to use social media to get in touch with their patients,
answer questions, and launch public awareness campaigns (Kreuger). These public awareness
campaigns are especially significant because the “average” individual has a greater chance of

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learning more about a certain medical condition such as diabetes after he or she is exposed to it
on social media. The Internet has made both doctors and medical information more readily
available which will no doubt alleviate concerns about educating the public about certain
medical conditions and illnesses. Modern medical and computer technologies have been shown
to benefit the public, but there are others in the medical system who have been helped with the
new technology.
Medical education has vastly improved after computer simulations started to play a role
in teaching medical students. Several programs have been made to create patients with a certain
set of problems that the student has to diagnose, such as an irregular heartbeat. These new
advances have been brought about through computer and medical technologies. There are many
benefits for medical students and residents who seek to practice in their futures. One main
advantage to using these technologies is having a safe practice environment to learn. Medical
students must learn how to effectively use the knowledge and skills they have learned in school
to help individuals, but they must first to do so in a controlled environment so that any mistakes
do not directly harm individuals. Studies involving the use of computer and modern medical
technologies showed that there was improved patient safety and learning efficiency
(Grantcharov). Furthermore, Obamacare is a law that is partially dependent on computer
technologies in order to provide health insurance to citizens, and this will lead to cost-effective
health care as well.
While Obamacare had issues when it began, the government’s use of web-sites to
administer health care shows additional benefits that computers have brought to health care
leading to more a more efficient medical system. The poor implementation of the Affordable
Care Act showed the technical limitations for computers which was shown in the prolonged

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failure of the healthcare.gov web-site (Radelat). However, when the web-site was running,
millions of Americans were able to sign on and find a health insurance provider. The state of
New York’s health web-site had more than two million hits in the first hours of operations.
Jennifer Tolbert, director of State Health Reform at the Kaiser Family Foundation, stated that,
“the way to interpret this is that people are interested to learn about what’s available in the
Affordable Care Act” (Radelat). The health web-sites demonstrate that citizens can use the
Internet to successfully find medical care as well which in turn makes the medical system more
accessible. This is beneficial for cost-effective health care because if more people are a part of
the U.S. medical system, more individuals can be treated before their medical problems get too
problematic which reduces the overall spending per individual. While the subject of modern
computer and medical technologies has been extensively discussed, there needs to be a mention
of new medical equipment that is helping to keep health care costs down. As mentioned
previously, increased research into medical drugs and equipment is expensive, but there are still
valuable results that occur. Several medical problems that have been helped by the different
medical tools available today are heart attacks, the incidence of low-birthweight infants,
depression, cataracts, and a reduction in fatalities in complex surgeries (Cutler). In studies
involving these conditions, more individuals were helped with the new equipment than with the
old machinery. The results of this study illustrate that medical research is fruitful, and it justifies
that “health has improved as medical spending has increased” (Cutler). Specific modern
equipment and procedures that are making a positive difference in the medical field are
ventricular assist devices and coronary artery bypass grafting (Iribarne). The devices help blood
flow through the heart for both children and adults which can help reduce an individual’s risk
from developing additional cardiac problems. The procedure of coronary artery bypass grafting

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reduces the effects of coronary heart disease on a patient’s blood vessels. As a whole, computer
and medical technologies have positively impacted the U.S. medical system and have made it
more cost-efficient while also bringing about other results such as increased accessibility. Also,
modern medical equipment has reduced the incidence of numerous medical conditions leading
the health care system to save money in the long run.
Several medical institutions have already realized the problem of wasteful medical
spending in the U.S., and they have taken steps to solve the issue. However, their methods must
be scrutinized to see what worked and what did not. To begin with, there is the Cleveland Clinic
located in Cleveland, Ohio. This revolutionary clinic is a fascinating example to analyze because
it is the largest health care system in Northeast Ohio, but it still consistently ranks high in both
patient satisfaction and the amount of money that it saves by practicing cost-effective health
care. The Cleveland Clinic utilizes a complete electronic medical care record system which is
under one service and accessible to all doctors and nurses at the different Cleveland Clinic
establishments (“Bending”). Their web-site has allowed for a drastic 32% reduction in patient
wait times which is a significant improvement for patient experience. The Cleveland Clinic has
also recently started an energy conservation initiative in which there is a focus on water
conservation and the amount of electricity that is used. Cumulatively, the energy initiative has
saved the Cleveland Clinic approximately nine million dollars (“Bending”). Delos Cosgrove is
the CEO of the Cleveland Clinic and its branches, and he noted that he makes his doctors focus
more on cost-effective health care by giving them more of a voice in how they treat patients. For
instance, when Mr. Cosgrove wanted to cut down their cost for replacement hip joints, “he got
all the surgeons in a room, told them that having too many different joints in circulation was
costing the clinic big money, and got them to come to a consensus on which models they should

8. Jaladanki 8
use” (McArdle). The concept of making the doctors more involved in the money spent on
treating their patients show that doctors are willing to look at cost-effective methods that they
believe are reasonable and have no negative impact on the patient’s health. Mr. Cosgrove and the
Cleveland Clinic demonstrate that even large institutions can keep costs down by finding
inventive ways to save money, whether it is through an electronic medical record system or
giving the doctors more input on cost-saving methods while keeping patient satisfaction at an
admirable level. While the Cleveland Clinic is effectively practicing cost-effective health care,
there are other programs that play a major role in the implementation of cost-effective health
care.
The “Top 5” Lists were a series of methods developed by the National Physicians
Alliance (NPA) to “practice high-quality, evidence-based care” and to advocate for “just and
cost-effective distribution of finite clinical resources” (Good Stewardship). These lists were
made for three specialties in health care: internal medicine, family medicine, and pediatrics. A
recurring theme that was found in these lists was to hold off on giving a certain procedure
whether it is pap tests in family medicine or ECGs in internal medicine. The commonality in
these lists from the different specialties shows that in general, doctors are giving, during the
majority of the time, unnecessary measures which are costing both the patient and the hospital
money (Good Stewardship). In addition to the Cleveland Clinic and the “Top 5” Lists discussing
the idea of cost-effective health care, there are other groups that are working to show the same
message.
The “Choosing Wisely” campaign was launched by the American Board of Internal
Medicine (ABIM) to reduce wasteful spending in the specialty of internal medicine. As part of
the campaign, doctors released a list of the 45 most common tests that are actually unnecessary

9. Jaladanki 9
and sometimes redundant. An important statistic is that almost one-third of the $2 trillion spent
annually on health care is spent on unnecessary hospitalizations and tests, ineffective new drugs,
and unproven treatments (Jaslow). Dr. Christine K. Passel, president and CEO of the ABIM, said
in a statement that “Physicians, working together with patients, can help ensure the right care is
delivered at the right time for the right patient. We hope the lists released today kick off
important conversations between patients and their physicians to help them choose wisely about
their health care” (Jaslow). Along with ABIM, other medical specialties such as the American
College of Cardiology have released a list of five things patients and doctors in their respective
fields should question. The group suggests that the major problem in health care today is that
there are too many unnecessary procedures that are done and needless prescriptions that are
given which echo the thoughts of the “Top 5” lists. While many organizations and hospital
systems that seek to practice cost-effective health care have been mentioned, there is another
notable hospital clinic that needs some attention.
The Mayo Clinic runs the world’s largest private medical practice and is world-renowned
for its cost-effective health care. It also consistently gets high patient satisfaction rating. CEO
John Noseworthy, a neurologist, in an interview noted how the Affordable Care Act (ACA) is
meant to stop government’s excessive spending on health care and will reduce the
reimbursement hospitals receive for treating patients on Medicare (Colvin). Mr. Noseworthy sees
that a pressing problem in this country’s health care system is the fact that it is fragmented and
varied in different parts of the country, with certain hospitals having exceptional ratings while
others have abysmal ones. He believes that these internal divisions are making health care
sluggish and bloated which results in unnecessary spending (Colvin). Mr. Noseworthy discusses
Optum Labs, which does sophisticated analyses of patient data and compares procedures to costs

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and sees the results on patients. Optum Labs has a database on what 149 million people spent on
health care over the past 20 years. Mr. Noseworthy states that “Mayo Clinic will put in their
outcomes data, what actually happened to patients, which will allow them to break apart the
value equation of outcomes over cost” (Colvin). The concept to create a large database from all
patient’s treatments and bills is a novel idea which will make an effective database that will show
how a patient can be treated effectively with minimal cost. It is clear that there are many
organizations and medical establishments that have acknowledged the issue of unnecessary
spending in the medical system and see cost-effective health care as a method to practice more
efficient health care. The Cleveland Clinic and the Mayo Clinic exemplify that fragmentation can
lead to communication and financial problems while defragmentation has the opposite effect on
delivering efficient health care. The “Top 5” lists and the Choosing Wisely campaign
demonstrate that doctors indeed conduct many unnecessary tests and perform needless
procedures on their patients. Overcoming these challenges will create a medical system that is
both efficient and effective.
In order to get a broader understanding of the practical uses of cost-effective health care,
the U.S. medical system needs to be compared with heath care systems from different countries
to see what beneficial changes the U.S. can make to its own. First, the similarities and
differences between U.S. and European health care systems will be discussed. Over time, Europe
has generally seen more stability in health care costs as compared to the U.S. In many European
countries, approximately 7-10% of the nation’s GDP is spent on health care for the past twenty
years. In contrast, the U.S. spent 17.9% of its GDP on health care, in 2009 which was up from
15% from a few years prior (Saltman). There is also a different culture in Europe than in the U.S.
dealing with doctors. In Europe, there are less court cases that take place over health care than in

11. Jaladanki 11
the Europe, and this trend is consistent over time. This difference exists because European
countries have strict physician disciplinary systems. For example, the British determine
punishment for negligent physicians through a committee of the General Medical Council,
while the Swedish have an impartial committee of physicians and patient representatives
administered within the National Board of Health and Welfare. In each case, the decision to
put this arrangement in place was taken in order to implement what was seen to be a fair
procedure for dealing with patient complaints as well as to ensure the integrity of medical
staff (Saltman). While in the U.S., a doctor must be certified by the board in their specialty
before they can practice, the rules about discipline for physicians are more lax in the U.S.
This leads to more people to sue in court against American doctors than European doctors.
European and U.S. health care systems are also different in how they receive funding. In
Europe, health care money generally comes from one body while in the U.S., many different
entities contribute to health care dollars in programs such as Medicare and Medicaid.
However, in the U.K., most health care funds come from the national government’s general
revenues, and in Sweden “70 percent of health sector funds are raised by taxes set by the
same elected body – the county council – that owns and manages health service providers”
(Saltman). Less fragmentation in European countries through the use of one body to keep
track of health care expenditures seems to have reduced the overall health care expenditures
of a country. Europe is not the only region to have modern and economical health-care
systems; these also exist in Asia and must be examined as well.
The U.S. and Asian health care systems are different in how health care is managed
and how medical insurance is dealt with. In Asian countries and regions, such as Hong
Kong, they use total government-run health care systems. Public hospitals account for 90%
of in-patient procedures, while the private options are used almost solely by the wealthy.

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While it may seem that Hong Kong has a significant percentage of its GDP allocated to
health care, it turns out that Hong Kong spends only 3.8% of GDP on health care which was
one of the lowest among nations but still has a healthy citizenry (Lodish). Similar to several
European countries, having a government-run health program appears to have brought
down the overall costs of health care, most likely due to the reduced disintegration between
different aspects of health care. Asian countries are also interesting in how they deal with
long-term insurance. In Japan, any individual over the age of 40 is required to have long-
term insurance (Lodish). This shows that if an individual is treated at an early age for
medical conditions, this will cost less for the government as opposed to treating patients
when they are very sick. In the U.S., the passage of the Affordable Care Act (ACA) has tried
to bring about the same effect by mandating all citizens to have health insurance. The fact
that this is one of the laws involved in the ACA shows that the U.S. government is taking
some steps to bring down its health care expenditures. Examining the differences between
U.S. and European health care systems exemplified that government run health care
systems may in face reduce overall medial spending, and having stricter disciplinary actions
against negligent doctors can lead to less people to sue in court over their health care which
would also reduce costs. Comparing the U.S. to several Asian countries demonstrated the
same notion that government run health care systems do in fact work to reduce the
percentage of GDP spent on health care by a country, and having long-term insurance will
bring down medical costs for individuals over the course of their lives.
Cost-effective health care will aid the U.S. in lowering its medical bills and the
amount of money that is spent in healthcare per year. From analyzing the nation’s medical
history, it was noticed that the fee-for-service plan used by the government inadvertently
encouraged doctors to give more redundant tests to their patients. The different entities that

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make up U.S. health care, namely Medicare, Medicaid and hospitals, are disjoint in how
they function and can lead to escalating costs for patients. Computer technologies and new
medical inventions have been shown to improve the state of health care in the country, with
electronic medical records systems making medical errors less likely, and new devices
allowing more patients who have undergone complicated surgery to continue living. People
also have become aware of their medical problems through the use of the Internet, and
medical students who practice with these new technologies can be more helpful to their
patients. It is evident that prominent medical establishments and groups have noticed the
trend of money that is being wasted in increasing amounts. Programs such as “Choosing
Wisely” form the American Board of Internal Medicine (ABIM) and the “Top 5” lists from
important doctors are attempting to make cost-effective health care a daily part of the U.S.
medical system. Comparisons between the U.S. medical system and their equivalent in other
countries show there are common factors which can reduce the amount of money a country
and its citizens pay for health care, such as government-run health care systems in many
European and Asian nations. While there is no easy solution to address the rising medical
costs of the U.S. health care system, implementing and preaching cost-effective care will no
doubt mitigate the escalating concerns about U.S. medical spending.

14. Jaladanki 14
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