The current rate of spending on medical bills across Western nations is unsustainable. But what are the options?

Consider reverse innovation

Abolish bureaucracy. Coordinate services. Treat hospitals like other modern industries.

In America health costs will soon reach 20% of GDP.

But higher spending does not equate to safer, cheaper care. In fact, it appears to be the opposite.

American health bureaucracy has risen by a staggering 3,200 percent in the past 35 years.

Despite this, Americans have the highest rate of maternal deaths in the developed world.

“Australia’s health bureaucracy is growing faster than national employment… with one administrator for every 3.4 hospital beds nationally.”
Adam Creighton The Australian.

Australia, the not so lucky country

Australia currently spends 10.3% of Gross Domestic Product on healthcare. On top of that Australia has the third highest out of pocket medical costs among wealthy countries.

However one in nine patients who go into Australian hospital will experience a hospital error.

Despite spending $30 billion a year on it’s indigenous population, these Australians live, on average, almost 20 years less than non indigenous Australians.

“Spending on NHS bureaucracy has risen by 50 per cent in just four years.”
The Telegraph 2009

National Health Service woes

Jeremy Hunt, Britain’s longest service health secretary has stated that UK hospitals are wasting up to £2.5bn a year of the National Health Service’s, budget on poor quality care and medical errors.

One report revealed that NHS doctors and nurses are spending up to 10 hours a week on bureaucracy – a third of which is unnecessary.

“This Labour Government has said an awful lot about putting the patient at the centre of services, but what we find is that the current system puts more and more layers between the patient and their doctor and nurse, and leaves vulnerable people fighting against a system of targets.”
Katherine Murphy, from the Patients Association UK.

Increased health spending just means more bureaucrates

Patients get lost in an error prone and user unfriendly system.

Doctors are crushed by petty rules that inhibit them from caring for their patients.

And the tax payers get lumbered with the bills.

Two models of health innovation are emerging

One is a centralised, socialist style solution that fits the needs of small, homogenous population.

The other is a private, two tiered solution that fits the needs of large populations, with wide variations in income and personal beliefs.

“In 1999, Denmark had 98 hospitals. Today it has 32.”
John Menadue – Pearls and Irritations

Denmark’s solution

Over half the Danish hospitals have been closed and those remaining have been turning into specialised centers.

Partnerships have been opened up between government and private health companies.

The result is that Danish hospitals are using robotics and integrated data, to automate routine tasks and cut out waste.

“We call this transfer of new ideas and innovations from poor regions to rich reverse innovation.”
Vijay Govindarajan and Ravi Ramamurti


India’s solution

In India, only 10% of the population has health insurance. Government funded healthcare is very limited.

India is also the centre of a new movement in health reform called reverse innovation. This refers to successful solutions being developed in poorer countries and taken up by wealthy countries like the USA.

Dozens of Indian hospitals are operating like airlines, with first class, business class and economy level treatments. Wealthy patients are admitted to hospitals designed like five star hotels and have Doctors on call when they are sick. Every need is catered for. For this privilege they are happy to pay.

The money their treatments bring in, allows the same Doctors to deliver a very low cost, or even free medical care for the poor.

Indian Doctors work for high wages on their wealthy patients and accept low or no wages for their poor patients.

And it works, because it’s driven by entrepreneurial Doctors who just want to ‘get things done’.

“In India, poverty has driven a handful of private Indian hospitals to pursue breakthrough innovations in health care delivery that let them provide medical services on par with the best U.S. hospitals for a fraction of U.S. prices. What’s more, they often give away care to those who can’t afford even their minimal prices.”
What India can teach the U.S. about driving down the cost of healthcare – Stat July 2018

Apple’s solution

This technology company leverages a well established brand to promote health technology. Users are encouraged to share their data for the common good.

The company has rolled out a range of smart devices and integrated software which include a smart watch, approved to monitor cardiac irregularities.

Like the Indian model, this model meets the needs of two seperate groups.

Middle class consumers get beautiful wearables and medical researchers get access to a very large pool of health data.

“We are witnessing a paradigm shift in the way primary health care is delivered in the United States today.”
Russ Alan Prince MD.

Concierge medicines solution

The health insurance industry in America has become a nightmare for both patients and Doctors.

Skyrocketing insurance costs (average costs of $10,345 USA per year) and hidden ‘copays’ of thousands of dollars for hospital stays, have made it cheaper for many people to cancel their insurance, and just pay cash when they are sick.

Doctors have become so frustrated by red tape that some are now refusing to see patients unless they simply pay cash.

A growing number of concierge clinics have sprung up to meet both of these needs.

Patients pay a flat subscription fee, around $130 USA a month. Doctors caseloads are capped. They see their patients when ever required and follow through every step of their care.

People get good quality primary care and are less likely to end up in hospital.

Doctors avoid paperwork and simply focus on looking after their patients.

What model of care would you like to see?

@ Wikihospitals February 2019


The rise (and rise) of the healthcare administrator – Athenahealth November 2017

Bureaucrats weigh on health as number of administrators blows out – The Australian 2016

Health bureaucracy: time to rein it in – Insight MJA May 2018

Safer care saves money – Grattan Institute August 2018

Why Denmark is reducing hospitals while we are building more – John Menadue February 2019 with reference to Jill Margo (AFR 19.2.2019)

Why are Aboriginal children still dying from rheumatic heart disease? – The Conversation September 2016

Spending on NHS bureaucracy up 50 per cent – The Telegraph December 2019

Reverse Innovation in Health Care: How to Make Value-Based Delivery Work – Vijay Govindarajan and Ravi Ramamurti

What India can teach the U.S. about driving down the cost of healthcare – Stat July 2018

The World of Concierge Medicine: How a Renaissance in Health Care Can Help You and Your Loved Ones Live Long and Healthy Lives – Russ Alan Prince MD.

Lost Mothers – Propublica 2017