• Japan – better outcomes with older people at half the cost

    Don’t let anyone assert (without data) that the aging US population is to blame for our high health care costs. Look at Japan. Despite one of the oldest population in the OECD and health expenditures half the US amount, Japan enjoys much longer longevity. Some data from today’s Lancet is in Table 1 at the bottom of this post, but for a more comprehensive approach, see Aaron’s 10-part, must-read cost series using the same OECD dataset. (See also his comparative quality series).

    The more interesting part of this article is how Japan achieves these results. First, what they don’t do:

    During the past three decades, Japan’s health-care system has effectively managed to contain costs despite many factors that are typically associated with high costs: a private-sector dominated delivery system, payment by fee-for-service, and no gatekeeper function by family doctors.

    How does Japan achieve better outcomes with older people at half the cost?

    The Japanese health-care system has two contrasting features: tight supply-side control of payment by the fee schedule and a laissez-faire approach to how services are organised and delivered. Costs have been contained by setting of the global revision rate and subsequent item-by-item price revisions of targeted services and drugs.

    1. Less intensive inpatient care – many fewer surgeries with general anesthesia, reflecting both institutional biases and a cultural preference for less invasive treatments.
    2. All payer rate setting – a single national fee schedule that 3500 private plans use, which has been effective in reducing overall health expenditures (cf. Maryland; prior TIE all-payer coverage here):  
    3. The authors conclude with a heretical thought for doctors and hospitals — perhaps the medical care system doesn’t have much to do with population health:

    One answer might be that the structure and process aspects of quality of care are not that important for outcomes.

    I can hear every public health person applauding. Meanwhile, in completely unrelated news, the Obama Administration proposes to cut the Prevention and Public Health Fund by $3.5 billion.

     

    Table 1. Health-care use, expenditure, and resources in Japan compared with selected OECD member countries, 2008* 

    Japan Canada Finland France Germany Korea Mexico UK USA
    Proportion of population aged 65 years and older (%)
    22·1%
    13·6%
    16·6%
    16·5%
    20·2%
    10·3%
    5·6%
    15·7%
    12·7%
    Total expenditure on health (% of GDP)
    8·5%
    10·3%
    8·4%
    11·1%
    10·7%
    6·5%
    5·8%
    8·8%
    16·4%
    Physician consultations (number per head per year)
    13·2
    5·5
    4·3
    6·9
    7·7
    13·0
    2·8
    5·9
    3·9
    Inpatient acute care, average length of stay (days)
    18·8
    7·7
    5·5
    5·2
    7·6
    NA
    3·9
    6·9
    5·5
    Acute care beds per 1000 total population
    8·1
    1·8
    1·9
    3·5
    5·7
    5·4
    1·6
    2·7
    2·7
    Turnover of cases per available bed per year
    14·8
    35·8
    NA
    51·8
    36·6
    NA
    62·5
    49·0
    44·2
    MRI units, per million population
    43·1
    8·0
    16·2
    6·1
    NA
    17·6
    1·7
    5·6
    25·9
    Practising physicians, per 1000 population
    2·2
    2·3
    2·7
    3·3
    3·6
    1·9
    2·0
    2·6
    2·4
    Practising nurses, per 1000 population
    9·5
    9·2
    9·6
    7·9
    10·7
    4·4
    2·4
    9·5
    10·8
    Physicians per acute care beds
    0·3
    1·3
    1·4
    0·9
    0·6
    0·4
    1·3
    1·0
    0·9
    Nurses per acute care beds
    1·2
    5·1
    5·1
    2·3
    1·9
    0·8
    1·5
    3·5
    4·0
    Data are from reference 2. OECD=Organisation for Economic Co-operation and Development. GDP=gross domestic product. NA=not available.
    * Available data for the nearest year to 2008.
     Professionally active physicians in Canada and France.
     Professionally active nurses in France and the USA.
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    • Kevin: nice post. I love teaching Japan in my comparative health systems class, so many paradoxes when viewed through a US lens. Japan is older today than the US is ever projected to be. Also, their smoking prevalence is something on the order of ~45% of adults (but very small obesity rate).

    • I think one of the keys to solving the problems with health care financing in the US is the first point: “Less intensive inpatient care”

      The problem in the US is that patients pay through the nose for “insurance” and deductibles, so when they see a doctor they expect “treatments”. Until we accept that sometimes it really isn’t effective, either from a cost or treatment standpoint, to do extensive treatment, this will remain a problem.

    • It would be good to see some comparative figures about direct care:
      – staff ratios to care receivers
      – proportions of staff involved in direct care
      – hours of direct care per staff over time

      Also, medication rates would be interesting too.

      And how much of what Americans call “alternative” methods & such.

    • There was a recent article on the Japanese healthcare system in The Economist. It reported that the Japanese system is actually not that great.

      Some problems
      – Avg physician visit is 10 mins
      – Huge problem with following up with the patient after the visit (aka care coordination sucks)
      – People are more likely to die of serious accidents than in the US due to the lack of availability of doctors
      – Highly overworked and underpaid doctors
      – Emergency care is awful

      http://www.economist.com/node/21528660

      • Good points Aaron thank you. We all know that you can lower spending and prices with price controls but things that you list are what you get. It may still be a good pay off but you should not ignore the downside.

    • It is not clear that Japan has better out comes see here:

      1. Asians live longer here too.
      2. Japan has a much lower accident rate than the USA.
      3.Japan has a much lower homicide rate than the USA.
      4. Japan has a much lower multiple birth rate that the USA.

      If you assume that all ethnic groups are equally health then we don’t have to go to Japan for an example we can adopt the the care level to that of Hispanics here in the USA and that will improve our longevity. I think it would not help, though it could be true that too much health care is killing whites.

    • Exactly.

      Does anyone actually believe that you could move everyone in the deep south to Japan, and move an equal number of Japanese over to take their places, while leaving the health care system intact in both places and this would have *zero* effect on health outcome aggregates and spending in either place?

      Once you’ve got basic sanitation and vaccination in place in a developed country life expectancy metrics cease to tell you very much about clinical efficacy versus spending. Denmark spends something like ten or twenty times more per capita on healthcare than Albania, and has a life expectancy that’s all of 1.9 years longer. Is health care delivery really 20X more cost-effective in Albania, or does this just tell us that comparing life expectancy amongst more or less developed countries doesn’t tell you much about how effective doctors and hospitals are at treating specific diseases?

      I can understand the attachment to life expectancy metrics since they’re easy to measure, but studies that compare specific measures of clinical efficacy that make the proper adjustments for age, disease severity, etc would be much more useful and informative.

      • JayB:

        So what metrics would you suggest? This is a serious question. If you can’t provide the precise metrics that would provide the “proper” measurements and support those, then why not use life expectancy? People won’t accept scientific based medicine; how do you propose to get them to accept your metrics?

        What you are actually suggesting with your data is that we abandon most of our advanced medical care and invest in public health and basic preventive care. It would save a lot of money. Because that extra life really does cost a lot of extra money.

        • You could compare Japanese Americans against Japanese in Japan and adjust for accidents and homicides and fertility treatments. Diseases are difficult because of differences in screening. Our rates of cancer cure look high because we find more cancers.

    • FWIW, in 25 years in Japan, I’ve been much happier with the Japanese system than with what my parents experienced* at “the best teaching hospital in Boston”. Said hospital dropped my mother out of a bed (hurting her badly), and although they gleefully carved up his gut looking for cancer, said hospital neither diagnosed nor treated my father for the fainting spell that brought him to the ER in the first place (and things went downhill from there). Of course, at 59 with only one hospitalization (a detached retina), I’ve not pushed the system here very hard. It’s very conservative; more interested in delivering proven medicine reliably then heroic leading-edge experimental treatments.

      Since charges are strictly limited, even with the patient paying 30%, going to the doctor or dentist is quite cheap (for simple things it’s usually US$10 or $15 or so) so one can get seen as much as one wants. So the complaint about “short visits” is really quite irrelevant (and is also a complaint one hears about the US). The waits at the big hospitals can be quite long, so going to private practices for simple things is recommended.

      *: Apparently the PPACA has rules that directly relate to the problems my parents ran into, refusing to pay for problems caused by the hospital and thus making hospitals much more interested in not causing those problems.

    • America has more hospitals per capita than Japan, each hospital has far more employees per patient than Japan, average hospital wages and doctor’s incomes are far higher than in Japan, and Americans perform more surgeries per capita than Japan.

      We probably do far more joint replacements and far more end-stage cancer care than in Japan, though I am not completely sure.

      The Dartmouth studies have discovered the same dynamic just inside America. The existence of more hospitals and more specialists leads to more spending.

      There is one more factor, something that Uwe Reinhardt also mentions.

      Japan is a fiercely homogenous society, racially and religiously.
      That is not all good, in terms of intolerance and (now-suppressed) militarism, but in health care it probably is good. This ethnic solidarity leads to a fierce protectiveness of the patient’s wallet. It would be considered shameful if a fellow citizen was bankrupted by health care charges.

      Ironically, the Japanese system of national health insurance was originally set up by a bunch of American liberals, men and quite a few women, who worked for Douglas MacArthur duing the postwar Occupation.

      At that time the Japanese conservatives were completely disgraced and powerless, so the reforms went through quickly.

      America should be so lucky!