Produced by the Deloitte Center for Health Solutions
Introduction
The U.S. health care system is prohibitively expensive – its cost has outstripped the growth of the economy since 19801 and threatens to continue doing so for the foreseeable future. Contributing to this cost spiral are discouraging, widely acknowledged demographic and lifestyle issues: an aging population and the tendency of individuals to live unhealthy lifestyles. As a result:
- Over 100 million people in the U.S. are living with chronic diseases, and spending on hospitalizations and chronic care management now exceeds up to $500 billion per year. This represents over 75 percent of all health care costs. More than 50 percent of Medicaid and Medicare beneficiaries are now living with a chronic disease or disabling condition.2
- 133 million American adults, or 66 percent of the adult population, are either overweight or obese. The prevalence of obesity has doubled since the 1960s, to an all-time high of 30 percent, and the rate of increase continues to trend up.3
- With average life expectancy at an all-time high of 78 years, the nation’s elderly population is drastically increasing. Globally, the number of persons 60 and older was 600 million in 2000. It is expected to double to 1.2 billion by 2025. Medicare spending is 12 percent of the entire U.S. Federal Government budget and is expected to increase by nearly eight percent every year between 2007 and 2016.4
The U.S. health care system is facing a perfect storm: Increased demand for health care services to support an aging, unhealthy population will require additional investments in acute hospitals and specialty care, spur the need for post-acute patient monitoring to avoid complications and readmissions, and exacerbate primary care (nurse and physician) labor shortages. Left unchecked, the health care system’s current consumption rate of 16 percent of the Gross Domestic Product (GDP) is expected to increase to 20 percent by 2013 – threatening the viability of the nation’s entire economy.
Hospitals already feel the pressure. The nation’s supply of hospital beds is shrinking as demand grows. Left unattended, the nation’s hospital beds will be full with patients too old and fragile to care for themselves and conditions that otherwise could have been managed.
