The total costs of illness: a metric for health care reform

Systems thinking is a fundamental element of quality management and should be a fundamental element of health care reform. An implication of systems thinking is that one aim of health care should be to minimize the total costs of illness, not simply the direct medical expenditures. If we are to continue to improve health care over time, we should measure its impact on the total costs of illness to the patient, family, employer, and society. Thus a system of measurement is needed that quantifies total costs of illness and also suggests how these constituencies can collaborate to improve processes and reduce total costs. This article introduces the total costs of illness concept, contrasts it with societal costs of illness, describes a measurement system we developed to quantify it, and describes a case study examining the total costs of back injury illness to employers. We found that medical expenditures accounted for less than half of the total costs of illness, the average total costs of illness varied by over 350 percent among employers, and a simple metric (days off work) explained 62.5 percent of the variance in total costs of illness.
Direct medical costs of an illness or injury comprise less than half of the total costs of that condition. The application of systems thinking to healthcare reform requires that other cost components be measured as well, including indirect costs to employers, patients, families and society. An industry/education research group developed a cost metric that analysed employer medical payouts, nonmedical payouts and lost opportunity costs to come up with total costs associated with back injury. The healthcare industry is encouraged to work with employers to ensure that improvement in the delivery of healthcare also reduces the total costs.
'Systems thinking' (Senge 1990) is one of the most important elements of quality management (QM). In fact, Deming (1989) identified systems thinking as one of the four sources of 'profound [...]