Study: More Spending Equals Better Health Care
It is widely believed that a significant amount, perhaps as much as 20 to 30 percent, of health care spending in the United States is wasted, despite market forces such as managed care organizations and large, self-insured firms with a financial incentive to eliminate waste of this magnitude. [However]…Estimates from the analysis indicated that except for [acute myocardial infarction] patients, a 10 percent increase in inpatient spending was associated with a decrease of between 3.1 and 11.3 percent in thirty-day mortality, depending on the type of patient.
Study on efficiency in patient spending available here (gated, but with abstract).
You can have a lot of inefficiency and still get a positive relationship between spending and outcomes. You basically have to be as inefficient as the public schools to find no relationship between spending and results.
Makes sense to me. More spending on a new car means the difference between a Mercedes and a Kia. The same phenomenon exists in health care. Yet there remain inefficient purchases (like the Chevy Volt) that boggle the mind.
Has anyone noticed how often health studies seem to contradict one another? One day, you get a study with one result; the next day, you get a study with the opposite result.
I’m not surprised by this. You can have a positive relationship bewteen spending and outcomes and still be very wasteful.
It could be a case of diminishing returns. A little bit of spending might go a long way whereas a lot of spending at the margin may be positively correlated with better outcomes but not as much bang for the buck.