Deloitte warns health inequities could cost $1 trillion, and it's everyone's problem

When Deloitte set out to determine the cost of health inequities, Andy Davis anticipated the final number would have a lot of zeroes.

Andy Davis, principal for Deloitte Consulting’s Health Care practice

Even Davis, a principal at Deloitte Consulting’s Health Care practice, was surprised at the total. Deloitte’s actuaries found that inequities across the healthcare system cost Americans $320 billion annually.

Deloitte’s recent report on inequities called it “an unsustainable crisis for the industry.” Left unchecked, the costs could grow to $1 trillion annually by 2040.

In a way, Davis, a co-author of the report, said the more astonishing number is looking at the impact per person. Even now, health inequities cost each American $1,000 annually.

“The striking number is when we started to break it down,” Davis said. Before Deloitte’s analysis, Davis says he never would have guessed the cost per person would be $1,000 today. “I probably would have laughed at that number,” he said.

Health inequities would cost each American $3,000 annually by 2040 if current trends continue, according to Deloitte's projections. Think of that impact on a family of four, he says.

In an interview with Chief Healthcare Executive, Davis talks about the damage health disparities are doing to the country, the concrete steps healthcare leaders should be taking, and the need for providers and insurers to come together.

“Everyone has a responsibility to solve this,” Davis said. “It impacts every single person.”

• Related story: Health systems say equity is a goal. Many aren’t budgeting for it.

‘Let’s be intentional’

Deloitte analyzed how inequities contributed to excessive spending in certain diseases, such as diabetes. Black adults are 60% more likely than white adults to be diagnosed with diabetes. Nearly 5% of all spending on diabetes is tied to inequities, contributing to $15 billion in unnecessary spending, according to Deloitte's report.

In the past, healthcare leaders have been interested in addressing disparities in health outcomes among minority groups and those with lower incomes, Davis said. There are wide gaps in outcomes in cancer, heart disease and mental health, the Deloitte report notes.

But Davis said it hasn’t always been easy for healthcare leaders to take meaningful action. “It’s hard when you have to report to shareholders to say those investments are better for business,” he said.

President Biden’s administration has been very focused on health equity and the government’s top health officials say all healthcare initiatives are being weighed on how they can improve outcomes for all. The COVID-19 pandemic has also illustrated the stark differences in outcomes, as well.

In recent months, Davis has noted a shift in healthcare leaders when it comes to equity. “In the last 6 months, the conversation has shifted from, ‘Let's do something,’ to ‘Let’s be intentional about doing this.”

Increasingly, executives are seeing that improving health equity is the right move both morally and financially as well, Davis said.

More health companies are making investments, including the hiring of chief equity officers, Davis said.

• Related story: Nemours Children’s Health’s first chief equity officer looks at health beyond medicine

Healthcare companies need to do more than spend time and energy on health equity. They need to have people empowered at the highest level who can lead those efforts and be held accountable for reaching goals.

“We say things have to be measurable and they have to have executive accountability,” Davis said.

Organizations that have been able to show improved outcomes have set goals, held themselves accountable, and had high engagement from the C-suite, Davis said.

Health systems also must build trust with underserved communities and reach out to patients where they are.

Health systems have used mobile clinics as tools to distribute COVID-19 vaccines and also offer preventative care, Davis said. Telehealth also provides opportunities to engage patients who don’t have easy access to healthcare services.

“Telehealth and mobile clinics can help bridge trust gaps between certain patient populations, Davis said.

Getting the data

Healthcare organizations often don’t have the data they need on their patients to track outcomes. Davis said health systems and hospitals can take an important step in measuring outcomes by collecting accurate information on patients’ race, ethnicity, and gender.

Hospitals and health systems shouldn’t necessarily try to create new metrics to measure health outcomes among patients. Hospitals can start with areas they are already tracking, such as readmissions.

“Where you can find disparities in things that are already measured … it doesn’t feel like a giant leap,” Davis said.

“Start with things you are familiar with, that you get measured today,” he said.

Hospitals and health systems also need to consider turning to another source for data and outcomes: payers. Insurers are tracking outcomes and possess an immense amount of data on patients.

“I’ve seen my health insurance clients working with providers to bring data to them,” Davis said.

For smaller hospitals who may have limited resources to analyze data, insurers could offer invaluable assistance in helping providers get a better picture of what is happening with patients.

Ultimately, hospitals, health systems and insurers are going to need to work more collaboratively to reduce inequities in the healthcare system, Davis said.

“Health systems and payers have butted heads,” he acknowledged, clashing on rate negotiations and contracts.

But he added, “If we want to solve health equity, I think you have to be able to work together.”

“If we got that message out at all, and organizations started to take action on it, I think we will start to see meaningful change,” Davis said.