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A few patients account for most of healthcare costs
The federal Agency for Healthcare Research and Quality, among others, has pointed out 5% of the population account for nearly 50% of total healthcare costs. Similarly, the 15 most expensive health conditions account for 44% of total healthcare expenses and patients with multiple chronic conditions cost up to seven times as much as patients with only one chronic condition.

In a recent interview with Hospitals & Health Networks, excerpted below, surgeon and writer Atul Gawande discusses the implications of this curious finding. Dr. Gawande is a staff writer at the New Yorker and an associate professor of surgery at Harvard Medical School and of health policy and management at the Harvard School of Public Health. In 2007 he became the director of the World Health Organization's global campaign to reduce surgical deaths.

H&HN: In a recent New Yorker articles, you looked at patients with the highest medical costs. What about applying the values of cost and quality to that population? How do you generalize that?

Gawande: The puzzle we've had is how to control costs while managing and improving quality, not in isolated examples but at a scale large enough to actually lower costs for an entire community. It's a formidable goal, but our economic future as a country depends on our finding answers.

In my recent writing, I hoped to identify the priority situations where we should take those actions. As soon as anyone starts listing all the ways in which care goes imperfectly or even outright wrong in medicine, the list grows so long and daunting. It feels impossible to tackle. And compounding matters, for as much money as there objectively is in medicine, in the middle of our work we feel our resources are constrained. Trying to figure out where to place both energy and resources is hard to do.

The epiphany came for me when I met a young family physician from Camden, N.J., named Jeffrey Brenner. Like a number of pioneering doctors around the country, he started by looking carefully at the cost numbers in his community. He found that in his community, as in every community, a small percentage of patients accounted for the largest volume of costs. In Camden, 1 percent of patients account for 30 percent of costs; 5 percent account for 60 percent of costs. One percent represents a manageable number of people. It's about 1,000 patients in Camden, or half the size of a family physician's practice. Suddenly, doing something significant about costs became a potentially manageable problem. Brenner started looking at what he could do to change the care for those patients.

He observed that patients with the highest costs often are getting the worst care. It simply can't be adequate care to have patients floating in and out of multiple emergency rooms and going through months'-long hospital stays. In Camden, many of the underlying health issues are caused by poverty and social problems, but Brenner nonetheless found effective ways to tackle them.

In other communities, the highest-cost patients may have inadequate care for terminal illness, severe mental illness or complex chronic disease. As hospitals shift to global payment, we are taking accountability for higher quality and lower costs for large populations. And, it seemed to me, we had to have a concrete place to start. Zeroing in on that top 1 percent or 5 percent of patients who have the highest costs and identifying the best practices to take care of them seemed the obvious, most logical thing to do.

Beginning to scale that work – going from taking care of 100 patients to thousands – physicians have no choice but to put systems of care in place. They have to devise their toolkits for the most common failures in care, the practices that are most successful in making patients healthier, keeping them out of hospitals and emergency rooms and thereby dramatically lowering their costs. These experiments compared with controls are cutting costs in these populations by more than 20 percent. When these populations represent the bulk of costs, it is a substantial gain for the system.