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Winston Churchill and the 80/20 Rule

06/07/16

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Tom Robertson, Executive Director, Vizient Research Institute

Winston Churchill once said, “If you have an important point to make, don’t try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time – a tremendous whack.”

In 2014, our research introduced four distinct biological cohorts of any large population, and called attention to the concentration of an overwhelming majority of health care spending among a small minority of the individuals. The key findings of that research were published in Academic Medicine in an article entitled “Where Population Health Misses the Mark: Breaking the 80/20 Rule." An animated YouTube video, "Through the Looking Glass: A Look at Population Health," created shortly after the study concluded conveys the findings in a very accessible format. Taking Churchill's advice to heart, this essay makes the point for a third time.

Broad population health initiatives, including wellness programs, preventive measures, and early detection have unquestionable social value and improve the quality of life, but the key to containing rising health care costs rests squarely on the delivery of more efficient episodes of care to the small subset of the population suffering from advanced chronic and complex illnesses.

In 2010, the sickest 10 percent of Americans spent an average of $26,851 in health care costs per person, while the healthiest 50 percent spent less than $250 per person, according to the federal Agency for Healthcare Research and Quality. Our research found that 42 percent of all health care spending among the commercially insured population arose from unpredictable and largely unavoidable single events such as appendectomies or injuries. Another 31 percent of total spending was incurred by the small subset of the population who suffer from advanced chronic and complex illnesses such as congestive heart failure or cancer.

Using commercial insurance claims data and standardizing unit prices, we found a 50 percent variation in the costs for newly diagnosed lung cancer episodes, completely attributable to differences in the utilization of chemotherapy, radiation therapy, and major imaging, a five-fold difference in the percentage of stage IV patients undergoing surgery, and inconsistent use of palliative care and hospice services. The study concluded that lung cancer costs would be reduced by as much as 40 percent, or more than $50,000 per patient, if high cost markets adopted the utilization patterns observed in low cost markets. In chronic episodes of care, for such diagnoses as congestive heart failure, chronic obstructive pulmonary disease, or a combination of multiple chronic conditions, reducing avoidable variation in utilization would reduce total spending by 30 percent or more.

Although wellness programs have great value, they will not reduce health care spending by enough to make the system affordable. Any programs or policies designed to curb health care spending must focus on improving the efficiency of complex episodes of care delivered to the sickest subset of the population.

About the author and the Vizient Research Institute. As executive director of the Vizient Research Institute, Tom Robertson and his team have conducted strategic research on clinical enterprise challenges for 20 years. The groundbreaking work at the Vizient Research Institute drives exceptional member value using a systematic, integrated approach. The investigations quickly uncover practical, tested results that lead to measurable improvement in clinical and economic performance.

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