Reducing Waste in Health Care

Experts estimate that 30% of the $2.3 trillion spent on health care is wasted, meaning it could be eliminated without reducing the quality of patient care. But before this waste in our health care system can be eliminated, it must first be identified — where it is, why and how much.

Categories of Waste

  • Failures of care delivery.
    This category includes poor execution or lack of widespread adoption of best practices, such as effective preventive care practices or patient safety best practices. Delivery failures can result in patient injuries, worse clinicaloutcomes, and higher costs.
  • Failures of care coordination.
    These problems occur when patients experience care that is fragmented anddisjointed–for example, when the care of patients transitioning from one caresetting to another is poorly managed. These problems can include unnecessary hospital readmissions, avoidable complications, and declines in functional status, especially for the chronically ill.
  • Overtreatment.
    This category includes care that is rooted in outmoded habits, that is driven by providers’ preferences rather than those of informed patients, that ignores scientific findings, or that is motivated by something other than provision of optimal care for a patient.
  • Administrative complexity.
    This category of waste consists of excess spending that occurs because private health insurance companies, the government, or accreditation agencies create inefficient or flawed rules and overly bureaucratic procedures. For example, a lack of standardized forms and procedures can result in needlessly complex and time-consuming billing work for physicians and their staff.
  • Pricing failures.
    This type of waste occurs when the price of a service exceeds that found in a properly functioning market, which would be equal to the actual cost of production plus a reasonable profit. For example, Berwick and Hackbarth note that magnetic resonance imaging and computed tomography scans are several times more expensive in the United States than they are in other countries, attributing this to an absence of transparency and lack of competitive markets.
  • Fraud and abuse.
    In addition to fake medical bills and scams, this category includes the cost of additional inspections and regulations to catch wrongdoing.

 

How can we reduce this waste?

  • Improve providers’ capacity to collect and use digital data to advance science and improve care.
  • Involve patients and their families or caregivers in care decisions. Increasing comparative effectiveness research may help physicians, patients, and their families make more informed decisions.
  • Use clinical practice guidelines and provider decision support tools to a greater extent.
  • Promote partnerships and coordination between providers and the community to improve care transitions.
  • Realign financial incentives to promote continuous learning and the delivery of high-quality, low-cost care.
  • Improve transparency in provider performance, including quality, price, cost, and outcomes information.

As always, thanks for reading and if you have any thoughts or suggestions on how we can help to reduce the waste in health care, feel free to leave a comment.

*REFERENCE: Health Affairs

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