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Fact or fiction? Productivity will save billions

Claim: Medical care providers can become as productive as other sectors of the economy.

The Democrats' health care reform bills aim to reap huge savings in federal spending by reducing Medicare payments to hospitals, hospices and other medical care providers, a proposed cut of more than $200 billion from 2010 to 2019. The bill would lower the payments on the assumption that medical providers will become more efficient, by caring for patients with fewer unnecessary tests and procedures, and by getting more work from the same number of workers or fewer workers.

Fact or fiction?
Unclear. In the past three decades, American manufacturing has achieved remarkable productivity increases. Manufacturing a car took 41 hours in 1979, but only 24 today. Productivity in manufacturing has risen by about one-third since 2000. Can hospitals and hospices achieve comparable productivity gains? "Doubtful," said Richard Foster, the chief Medicare actuary in a Dec. 10 report. Taking care of sick people requires lots of nurses, doctors, janitors, and cooks, just as it did 30 years ago. In fact, since the recession began, the health care sector has added 613,000 jobs. Foster said there was no evidence demonstrating that medical providers could achieve productivity improvements equal to those of the economy at large. He said cutting Medicare payments assuming that hospitals would become more productive could make it hard for them to remain profitable and lead them to exit Medicare.

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