"Our health-care system is fraught with waste," says Gary Kaplan, chairman of Seattle's cutting-edge Virginia Mason Medical Center. As much as half of the $2.3 trillion spent today does nothing to improve health, he says.

Not only is American health care inefficient and wasteful, says Kaiser Permanente chief executive George Halvorson, much of it is dangerous.

Those harsh assessments illustrate the enormousness of the challenge that awaits President-elect Barack Obama, who campaigned on the promise to trim the average American family's health-care bill by $2,500 a year. Delivering on that pledge will not be easy, particularly at a time when the economic picture continues to worsen.

A high-performance 21st-century health system, they say, must revolve around the central goal of paying for results. That will entail managing chronic illnesses better, adopting electronic medical records, coordinating care, researching what treatments work best, realigning financial incentives to reward success, encouraging prevention strategies and, most daunting but perhaps most important, saying no to expensive, unproven therapies.

"There is more than enough money in the system," said former House speaker Newt Gingrich, who runs the District-based Center for Health Transformation. "We just are not spending it well." [...]

With those sorts of variations, the Dartmouth team concluded that as much as 30 percent of medical spending -- or $700 billion -- does nothing to improve care.

Even if only a third of that could be invested in critical programs, "imagine the possibilities," said Peter Orszag, head of the Congressional Budget Office, who was nominated last week to be director of the Office of Management and Budget in the Obama administration. "Given the scale of it, I am puzzled as to why we are not doing more to improve the efficiency of the health system."

The study cost $130,000,000 and included 42,000 patients. It compared the effectiveness of four types of blood pressure drugs: a calcium channel blocker, an alpha blocker, an ACE inhibitor, and a simple diuretic. The diuretic performed best. It was the sort of finding worthy of celebration. Health costs are too high, and rising too quick. Our flabby society gets bad readings when it straps on the blood pressure cuff, and soon enough we'll all be on these drugs. And here were study results saying that the diuretic, a generic drug which sells for pennies, outperformed its pricey, patented competitors. So what happened? Not a whole lot [...]

Diuretics sales jumped, but only by a few percentage points. "[They] should have more than doubled," says Curt Furberg, who chaired the study. And in a world where doctors prescribe medications based on a simple reading of the latest evidence, maybe they would have doubled. But we don't live in that world. We live in a world where pharmaceutical companies have big budgets and sophisticated public relations teams. Pfizer, for instance, put up $40 million to ensure that their Cardura, their alpha blocker, was included in the study. That proved a mistake. Patients on Cardura were more than twice as likely to require hospitalization for heart failure [...]

The basic reality was this: The pharmaceutical companies had a skilled team and a lot of money promoting their drugs. No one was promoting the generic diuretics. Folks looking to things like comparative effectiveness review to save the health care system should take the story seriously. Evidence is only effective if physicians use it. And right now, they have no real reason to use it. Even in a system this expensive, there's no internal incentives to aggressively cut costs. Maybe it's time there were. If doctors were paid by capitation -- if they got a fixed amount of money per patient, and they kept whatever they didn't use, as happens in England -- it's hard to imagine they wouldn't have been more interested in these study results.