More than half of all health spending wasted

Some late night Web surfing led to a blog about one of my favorite topics: reducing health care costs. In April 2008, PricewaterhouseCoopers hosted the 180° Health Forum in Washington D.C. The results of that conference are published as: The price of excess: Identifying waste in healthcare spending,

As part of its preparation for the 180° Health Forum, PricewaterhouseCoopers’ Health Research Institute (HRI) interviewed more than 20 participants, reviewed more than 35 studies about waste and inefficiency in healthcare and surveyed 1,000 consumers to understand the public’s perception of waste and inefficiency in the system. From that research came The price of excess: Identifying waste in healthcare spending. …

Key Findings
Our research found that wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion spent in the United States, more than half of all health spending. Defensive medicine, such as redundant, inappropriate or unnecessary tests and procedures, was identified as the biggest area of excess, followed by inefficient healthcare administration and the cost of care necessitated by conditions such as obesity, which can be considered preventable by lifestyle changes. PricewaterhouseCoopers’ paper classified health system inefficiencies into three “wastebaskets” that are driving up costs:

Behavioral where individual behaviors are shown to lead to health problems, and have potential opportunities for earlier, non-medical interventions.
Clinical where medical care itself is considered inappropriate, entailing overuse, misuse or under-use of particular interventions, missed opportunities for earlier interventions, and overt errors leading to quality problems for the patient, plus cost and rework.
Operational where administrative or other business processes appear to add costs without creating value. [My added emphasis.]

Some of these are easier to attack than others. Number 1 on my list would be administrative and business process costs.

See also: The Innovator’s Prescription, The Innovator’s Prescription #1, Reducing Costs, Reducing the Risks of Complexity [and costs]


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