5 for 65 and 1 for 33: A small number of patients account for the majority of health care costs in Ontario

January 11, 2016

5% of Ontario’s patients account for 65% of healthcare spending

ICES study also reveals that 1% account for 33% of healthcare spending

ON JANUARY 11, 2016 

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TORONTO | About 65% of healthcare funding in Ontario is spent to care for 5% of the population, according to a new study from the Institute of Clinical Evaluative Sciences.

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The study, published today in the Canadian Medical Association Journalalso found that 1% of the population accounts for 33% of healthcare spending in the province.

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The study authors used data from approximately 15 million anonymized Ontarian health records between 2009 and 2011. They looked at patterns in cost for a wide range of services including lab tests, physician visits, continuing care and hospitalization. Together, these accounted for 75% of total government healthcare spending.

While the results presented here are striking, they do not in themselves support system improvements.

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“Ontario spent more than $30 billion annually on individual healthcare costs during the study period, which represents about 80% of total government healthcare spending,” said Dr. Walter Wodchis (PhD), lead author of the paper who is a senior scientist at ICES and a researcher at University of Toronto’s Institute of Health Policy, Management and Evaluation at the Dalla Lana School of Public Health.

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“We need to better understand what is driving these costs in order to find ways to lower them while improving the health of Ontario’s patients.”

While about half of Ontario’s population had median annual cost of $333 or less per year (about 2% of total health spending), costs for the 5% of patients who accounted for 65% of spending topped out at $7,961 per patient per year.

Costs for those among the 1% who accounted for 33% of spending ran as high as $44,906 per patient per year—and occasionally higher.

As for the majority of the population, “the most striking feature … is that costs were almost entirely for physician services, with gradually increasing pharmacy and laboratory expenditures,” the authors wrote. Of the total health expenditure for all Ontarians, 27% went to paying physicians and another 28% funded acute hospital services. Among the 1% of most expensive patients, 26% went to continuing care, 32% went to acute hospital care and another 26% went to “other” hospital expenditures.

The study also found that patients who recently required more costly care were more likely to require costly care in future years. According to the authors, 45% of those in the top 5% cost group would require expensive care for at least one more year.

Results not new

While the study authors claim this is the “most comprehensive summary of health system spending in a primarily government-funded health care system to date,” they also acknowledged past studies had reached similar conclusions.

“Both Canadian and American studies have shown that about 40% of older adults at the highest cost levels stayed there in the subsequent year,” the authors wrote. This study is unique, however, in that it is the first in Canada to evaluate the whole province’s costs on a per-patient level.

Earlier this month, another study from researchers at ICES, in conjunction with others at the Centre for Addiction and Mental Health, found that among mental health patients, smaller numbers also account for more of the spending, in fact, to an even greater degree than in other parts of the health system. The average cost for heavy users of mental healthcare were 30% higher than for heavy users of other forms of healthcare.

The way forward

According to a spokesperson from ICES, Ontario’s Ministry of Health and Long Term Care will be using the paper to help plan the health system changes proposed in December.

“The sustained nature of high-cost patients suggests that effective interventions to manage care among existing high-cost users may be easier to target than interventions aimed to prevent increased costs among potential high-costs users,” the authors wrote.

However, that conclusion doesn’t exactly lend itself to clean solutions.

“While the results presented here are striking, they do not in themselves support system improvements,” the authors wrote in the paper. “A more thorough understanding of the patterns and trajectories of high-cost users in the healthcare system, the types, timing and appropriateness of encounters and use of potentially avoidable institutional care would provide more clinical and managerial information regarding what to do to improve value and generate savings among high-cost users.”

 

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