Health Inequity Carries High Costs

Is healthcare efficiency at odds with health equity? It's a prominent argument that researchers like Andrew Anderson, PhD, Assistant Professor in the Department of Health Policy & Management at the Tulane School of Public Health and Tropical Medicine, say is misguided. His take is that pursuing health equity as a fundamental goal of healthcare is a direct route to efficiency.

In his Health Affairs opinion article, Dr. Anderson poses 3 arguments:

1. Equity and efficiency are not at odds.
2. Ignoring health inequities entails a significant opportunity cost.
3. Increasing equity is necessary for long-term prosperity, both socially and economically.

Efficiency value of pursuing health equity

Beyond these hypotheses, there's another way to examine the efficiency value of pursuing health equity. That entails shifting perspective from episodic efficiency to holistic efficiency. In this article, we define efficiency and provide logic and evidence to support health equity as a fundamental route to more excellent quality, efficiency, and improved outcomes.

Episodic efficiency looks to deliver care quickly, without error or waste. Holistic efficiency supports health, wholeness, and wellness across a population or an individual's current health or lifetime.

When we look at individuals and populations holistically and consider the types of barriers to equity that typically exist for a particular population, we can creatively and proactively develop programs, initiatives, and interventions that bring healthcare to individuals in a way that meets them where they are.

Defining efficiency in healthcare

Efficiency is defined as achieving maximum productivity with minimal wasted effort or expense. Productivity is the amount of effectiveness or productive effort. In healthcare, this may mean reaching a level of health, wholeness, or wellness that is achievable and realistic in light of various constraints.

Efficiency illustrates a functional relationship between inputs (e.g., treatment, investment, medication) and outputs (e.g., improved A1C levels, cardiac output, more steps walked). However, efficiency isn't the outcome; it's achieving output with the right amount of inputs.

How health equity can support healthcare efficiency

Health equity focuses on ensuring that the individuals who need assets (inputs, as described in the paragraph above) the most receive them and can achieve better outputs (outcomes or results). In this light, health equity and efficiency are not at odds but intimately related. Many believe as we do that efficiency is dependent on equity.

One example of how efficiency can help achieve better equity is a study on colorectal cancer racial and ethnic screening disparities, which are well-documented. The clinical trial utilized text messages and mailing at-home Fecal Immunochemical Tests (FIT) screening kits to all participants, of whom 90% were Black. This straightforward and efficient approach led to a nearly 10-fold increase in colorectal cancer screening completion.

Another example is from Dr. Anderson's research published in the May 2023 issue of Health Affairs. When he and his team looked at the costs of preventable heart failure admission disparities among Medicare beneficiaries in 6 states in the US South, they found that “disparities explained 48% of costs for Black, 14% of costs for Hispanic, and 51% of costs of American Indian and Alaska Native beneficiaries (over $60 million annually) attributed to the Medicare program."

The opportunity cost of ignoring health inequities

Pay now or pay more later. That's the reality of not taking a health equity-forward approach to each aspect of healthcare, like value-based care, population health, quality improvement, preventive care, chronic care management, and patient safety.

Recent analysis bears this out. Researchers found that US health inequities cost about $320 billion annually and are probable to reach $1 trillion by 2040 if not addressed. Other analysis estimates the economic burden of mental health inequities to be $278 billion between 2016 and 2020.

The challenge of health inequities becomes partly a story of economic burden demonstrated by ongoing and excessive cost, lives lost, and decreasing societal and familial productivity. Implementing efficient interventions to address health inequities can eliminate or reduce future costs, improve health in the short- and long-term, and enhance overall outputs. Those gains are invaluable for the individual as well as for their community, the country, and the healthcare organizations that benefit from cost and quality improvements.

As a non-health example, a 2019 study assessed the economic impact of removing discriminatory workforce barriers for all women and all Black workers between 1960 to 2010. That analysis determined that placing these workers where needed accounted for 20 to 40% of the total growth aggregate market output per person in the US. That's an example of a high opportunity cost that the country lost.

Taking a creative approach that focuses on health equity versus equality

Each of us who are leaders in healthcare must ask ourselves, “How can we think more inclusively and holistically that will have an immediate and long-term impact?"

As Dr. Anderson stated, “The belief in a tradeoff between equity and efficiency is misguided. Centering equity as the goal of the US health system can improve efficiency in the allocation of resources."

Using a health equity viewpoint requires recognizing that economic and social obstacles—like poverty, education, job opportunities, and discrimination that are unequally distributed—are creating inherent inefficiency or drag on resources before they're even offered or deployed.

Ensuring equity as a component of efficient healthcare would entail identifying those inefficiencies (that we call barriers) and removing them as part of planning, strategy development, and implementation.

An example of a missed opportunity for health equity during COVID-19

The distribution of COVID-19 at-home tests to US households is a well-documented case study. It demonstrates how equity could have been considered more deeply. This program was designed on the principle of equality, not equity. Every household was eligible to receive 4 tests. If this program had been oriented to be most efficient (inputs to achieve outputs), the distribution would have considered recipients' unique needs and barriers based on a social risk score.

Comparing households with more than 4 people: Only 17% of White homes have more than 4 individuals, whereas other ethnicities have a larger percentage over 4, including Hispanic with 36%, Asian with 25%, and Black with 23%. Households with more than 4 people would have received an adequate number of tests, representing greater efficiency and possibly saving more lives.

RTI Health Advance helps healthcare organizations develop an equity-first approach

Health systems, payers, and community-based organizations can achieve more outstanding quality, improved outcomes, and control costs by considering health equity as a requirement for efficiency.

Our team comprises clinical, health policy, population health, digital therapeutics, data science, quality, and health equity experts. Together, we deliver evidence-based, practical insights and solutions for clinical, business, and programmatic leaders to achieve their most urgent care, quality, and financial objectives. Contact us to initiate a conversation.