Article

Why We Need to Bend the Healthcare Cost Curve

Bernhard Kappe

Published on: September 29th, 2015

This post was previously on the Pathfinder Software site. Pathfinder Software changed its name to Orthogonal in 2016. Read more.

There’s a lot of discussion about ways to “bend the healthcare cost curve.” What do people mean by that, and why do we need to bend it?

I like to answer that question by showing three simple charts.

1. The growth of Healthcare Expenses

2. Where we spend our healthcare dollars

3. What’s coming down the pike: the demographic timebomb

Source: U.S. Administration of Aging 2010a.

Summary:

We’ve had a tripling of the share of healthcare costs as a percentage of GDP over the last 50 years, from 6% to 18%. We spend much more on healthcare for those over 65 than those under 65. Thanks to the aging of the baby boomers, we’re going to more than double the percentage of the population over 65.

You put these three factors together, and without significant changes, we are in trouble.

The good news is that there are promising approaches to reducing costs while improving outcomes, and a lot of smart, passionate people working on these approaches. We’re working with some of them on software to help address these challenges.

We’d love to hear from you on how you think of these challenges and what you’re doing to address them.