Study: US healthcare system wastes $800 billion a year

October 26, 2009

This study from the healthcare analysis unit of Thomson Reuters has a high degree of truthiness, it seems to confirm what many Americans intuitively think and believe:

One example — 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.

Some other findings in the report from Thomson Reuters, the parent company of Reuters:

* 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 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.

Me:  In one way this does confirm what Democrats have been saying, that it is possible to cut spending without hurting quality.  Getting at the waste and inefficiency is tough, though. Obamacrats seems to have scant interest in tort reform. And one reason that Medicare has low administrative costs is that it doesn’t make the same effort as private insurance companies to go after fraud. And doing IT reform over such a large and complex system is already proving difficult and is some cases making patient care worse.

2 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Bravo to Robert Kelly and Reuters. This is the data we all need to see to eliminate any uncertainty about the urgency for reform. It also shows that with appropriate commitments, the cost of covering better healthcare for all is well within reach. Cleaning up the waste will require a much larger staff than CMS now has. It will also require input from an independent medical advisory council to ensure that appropriate standards of care are established and maintained. Tort reform needs to be part of this process as well to eliminate a large part of the fuel behind the abuse. Hopefully our Congressional leaders will hear this message loud and clear.

[...] so does the visibility into the amount of money that is being wasted in healthcare each year. A recent report on the U.S. Healthcare System suggests that $505 to $850 billion is wasted annually on preventable mishaps and inefficiencies. [...]

On the contrary, the current Health Care legislation does not address the “waste” problems. In fact, these reforms have more potential to acerbate the problems. Tort reform would go a long way towards reducing unnecessary care, if in fact this is about malpractice exposure. How is (current) reform going to change the fraud aspect. Fraud and government programs go hand-in-hand. By adding more government, it will not only increase the fraud, but it will add to the third item, administrative inefficiency and overhead. There are things that can be done to attack these problems, but the “democrats” just want bigger government–not better.

Posted by Gary Rue | Report as abusive