Coordination Failures and Inefficient Production

In his recent NBER paper on inefficiencies and costs in the health care system, about which I commented previously, David Cutler provides a very good summary of the diabetes care coordination problem.

Diabetes is a chronic disease, requiring regular dietary and (often) pharmacological intervention, and testing for possible complications. There are consensus guidelines for how frequently these should occur. …

Adherence to guideline recommendations is low. Only 43 percent of diabetics in the United States receive recommended therapy. The issue is not just lack of insurance. … [O]ther countries [with] universal coverage [have] an average success rate (46 percent) [that] is no better.

Diabetes is not unique. Only one-third of people with high blood pressure have their cholesterol under control (Cutler et al., 2008), and only one-quarter of those with high cholesterol are under control (Hyre et al., 2007). Outcomes for patients with conditions such as depression are even worse. Again, this appears similar in all countries. Unlike excessive use of care with low value, poor chronic disease care management is a feature of all developed country medical systems.

He also provides examples of waste in the health care system.

[O]ne study found that physicians spent on average of 142 hours annually interacting with health plans, at an estimated cost to practices of $68,274 per physician (Casalino et al., 2009). Another study found that 35 percent of nurses’ time in medical/surgical units of hospitals was spent on documentation (Hendrich et al., 2008); patient care was far smaller.

(All quotes © 2010 by David M. Cutler.)


Casalino, Lawrence P., Sean Nicholson, D. N. Gans et al., “What Does It Cost Physician Practices to Interact with Health Insurance Plans?” Health Affairs Web Exclusive, May 14, 2009, w533–w543.

Cutler, Jeffrey A., Paul D. Sorlie, Michael Wolz, et al., “Trends in Hypertension Prevalence, Awareness, Treatment, and Control Rates in United States Adults Between 1988-1994 and 1999-2004,” Hypertension 2008;52:818-827.

Hendrich, Ann, Marilyn Chow, Boguslaw A Skierczynski, and Zhenqiang Lu, “A 36-Hospital Time and Motion Study: How Do Medical-Surgical Nurses Spend Their Time?” The Permanente Journal, 12(3), Summer 2008, 25-34.

Hyre, Amanda, Paul Muntner, Andy Menke, et al., “Trends in ATP-III-Defined High Blood Cholesterol Prevalence, Awareness, Treatment and Control Among U.S. Adults,” Annals of Epidemiology, 17(7), 2007, 548-555.

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