Washington To cut down on what it says is a massive amount of waste and inefficiency in health care, an Institute of Medicine report is recommending that physicians and other health professionals become part of a learning system that uses new clinical support tools and payment models linking performance to patient outcomes, as well as a team approach to care management.

A panel convened by the institute to look at the challenges facing the U.S. health system found that unnecessary services, fraud and excessive administrative costs accounted for about 30%, or $750 billion, of total health spending in 2009. Wasted resources have human consequences, according to the report, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America. According to one outside estimate, 75,000 deaths may have been prevented in 2005 if the quality of care in all of the states had risen to the level of care of the highest-performing state in the nation.

Our health care system lags in its ability to adapt, affordably meet patients needs and consistently achieve better outcomes, said Mark Smith, MD, chair of the IOM committee that wrote the report. Dr. Smith cited examples of these inefficiencies during a press event to discuss the reports 10 main recommendations on transforming the health care system.

Cost and complexity of health care are the two issues at stake, Dr. Smith said. Physicians in private practices can interact with as many as 229 other physicians in 117 different practices for their Medicare patients alone. Some of this interaction relies solely on outdated technology from the last century, such as telephones and faxes. Who uses faxes anymore? he asked.

The cost problems are known as well, Dr. Smith continued. For 31 of the past 40 years, health care has been increasing at a greater rate than the economy as a whole and now comprises roughly 18% of the nations gross domestic product.

Getting rid of health care inefficiencies and waste requires a broad transformation to a system that adopts new clinical and information technology tools to manage patient care better. Unlike the situation in 1999, when the IOMs landmark patient safety report To Err Is Human: Building a Safer Health System was released, the industry today has newfound access to computing and connectivity tools to make substantial gains on cost and quality, Dr. Smith said. Our sense is the system must learn continuously, that patients, clinicians and the communities they reside in have to be part of constant circle of the generation of evidence and capturing of information from patient care that can then be returned to scientific knowledge.

Current payment methods also foster inefficient care, the report stated, advising that pay instead should be based on care outcomes and the principle of providing optimal care at lower cost, instead of on individual products and services. Payers should adopt outcome- and value-oriented payment models, contracting policies, and benefit design to reward and support high-quality, team-based care that focuses on patients needs, the IOM report stated.

Physicians, particularly older ones, have been resistant to such changes, said Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions in Washington. They invest a lot of time to get prepared to practice, and then the rules change and theyre frustrated, he said.

Health care comprises roughly 18% of the U.S. gross domestic product.

Investment costs are tied to information technology, to transferring from a physician-centric to a team-based delivery model, and to shifting incentives from volume to outcomes. And its coming at a pretty difficult time, when the health systems costs are a major issue.

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IOM: Physicians play key role in stopping health system waste