How Much of U.S. Healthcare Cost is Waste?

Are ALL the clerks and administrators in hospitals necessary?

25% according to an article at JAMA Network.

Let’s face it, there’s always going to be some waste. The authors of the study at hand figure that, whatever the dollar amount of waste is, we can reduce it by 1/4. Which could be $250 billion.

A prior study indicated that 30% of healthcare spending may be considered waste. Is that still valid?

Researchers reviewed the pertinent literature from January 2012 to May 2019 focused on the 6 previously identified “waste domains”:

  1. failure of care delivery
  2. failure of care coordination
  3. overt-reatment or low-value care
  4. pricing failure
  5. fraud and abuse
  6. administrative complexity

Waste-related costs were converted to 2019 dollars.

From the abstract:

Findings

The review yielded 71 estimates from 54 unique peer-reviewed publications, government-based reports, and reports from the gray literature. Computations yielded the following estimated ranges of total annual cost of waste: failure of care delivery, $102.4 billion to $165.7 billion; failure of care coordination, $27.2 billion to $78.2 billion; overtreatment or low-value care, $75.7 billion to $101.2 billion; pricing failure, $230.7 billion to $240.5 billion; fraud and abuse, $58.5 billion to $83.9 billion; and administrative complexity, $265.6 billion. The estimated annual savings from measures to eliminate waste were as follows: failure of care delivery, $44.4 billion to $93.3 billion; failure of care coordination, $29.6 billion to $38.2 billion; overtreatment or low-value care, $12.8 billion to $28.6 billion; pricing failure, $81.4 billion to $91.2 billion; and fraud and abuse, $22.8 billion to $30.8 billion. No studies were identified that focused on interventions targeting administrative complexity. The estimated total annual costs of waste were $760 billion to $935 billion and savings from interventions that address waste were $191 billion to $282 billion.

Conclusions and Relevance 

In this review based on 6 previously identified domains of health care waste, the estimated cost of waste in the US health care system ranged from $760 billion to $935 billion, accounting for approximately 25% of total health care spending, and the projected potential savings from interventions that reduce waste, excluding savings from administrative complexity, ranged from $191 billion to $282 billion, representing a potential 25% reduction in the total cost of waste. Implementation of effective measures to eliminate waste represents an opportunity reduce the continued increases in US health care expenditures.

Source: Waste in the US Health Care System: Estimated Costs and Potential for Savings | Health Care Policy | JAMA | JAMA Network

Here’a radical idea. Why not stay out of the healthcare system as much as possible by getting and staying as healthy as possible? I have few ideas how…

Steve Parker, M.D.

PS: Getting and staying healthy will help you avoid wasteful healthcare spending. Let me help.

Click pic to purchase book at Amazon.com. E-book versions available at Smashwords.com.

 

One response to “How Much of U.S. Healthcare Cost is Waste?

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