Healthcare System Wastes $800 Billion Annually
A Thomson Reuters report released on Monday proposed that fixing some of the most obvious inefficiencies, preventing mistakes, and fighting fraud could pay for U.S. healthcare reform.
The report from Robert Kelley, vice president of healthcare analytics at Thomson Reuters, found that the U.S. healthcare system wastes between $505 billion and $850 billion every year.
It said that America’s healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial.
Kelley said the bad news is that an estimated $700 billion is wasted annually, and that would make up about one-third of the nation’s healthcare bill.
"The good news is that by attacking waste we can reduce healthcare costs without adversely affecting the quality of care or access to care," he said.
The report noted that a paper-based system that discourages sharing of medical records accounts for 6 percent of annual overspending.
"It is waste when caregivers duplicate tests because results recorded in a patient’s record with one provider are not available to another or when medical staff provides inappropriate treatment because relevant history of previous treatment cannot be accessed," the report reads.
Other findings from the report include:
- Unnecessary care such as the overuse of antibiotics and lab tests to protect against malpractice exposure makes up 37 percent of healthcare waste or $200 to $300 billion a year.
- Fraud makes up 22 percent of healthcare waste, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams.
- Administrative inefficiency and redundant paperwork account for 18 percent of healthcare waste.
- Medical mistakes account for $50 billion to $100 billion in unnecessary spending each year, or 11 percent of the total.
- Preventable conditions such as uncontrolled diabetes cost $30 billion to $50 billion a year.
The report cited dozens of other research papers that showed the average U.S. hospital spends one-quarter of its budget on billing and administration, nearly twice the average in Canada.
It also quoted a 2003 New England Journal of Medicine paper by Harvard University researcher Dr. Steffie Woolhandler that said American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor.
However, it also said that primary care doctors are lacking, forcing wasteful use of emergency rooms.
Meanwhile, Americans spend more per capita and the highest percentage of GDP on healthcare than any other OECD country, yet the U.S. has an unhealthier population with more diabetes, obesity and heart disease and higher rates of neonatal deaths than other developed nations.
Senate Democratic leaders are close to securing enough votes to pass legislation to start reform of the country’s $2.5 trillion healthcare system, according to Democratic Senator Charles Schumer.
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