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 Six types of waste in healthcare could be costing as much as $935
billion annually, according to the study published in JAMA.
The biggest source of waste is "administrative complexity," said the
study's lead author, Dr. William Shrank, chief medical officer at
Humana, Inc., a for-profit U.S. health insurance company based in
Louisville, Kentucky.
In layman's terms, that is the "work around the office that is not
focused on care but on administrative requirements for someone to
get care," Shrank said. "I think physicians feel pretty deeply mired
in it."
Shrank and his colleagues determined that money wasted through
administrative complexity (which includes billing and coding waste
and physician time spent reporting on quality measures) totaled
around $265 billion annually. Other big sources of waste, Shrank
said, involve excessively high prices (adding around $235 billion
per year) and poor coordination of care (costing $27.2 billion to
$78 billion annually).
Shrank isn't daunted by the task of rooting out waste. "There's no
reason we shouldn't see meaningful progress in all three of these
areas," he said.
To get a sense of how much money was going to waste in the
healthcare system, Shrank and his colleagues scoured the medical
literature looking for studies and reports that assessed costs and
waste. Ultimately, the researchers settled on 54 publications that
included information on six areas previously identified by the
National Institute of Medicine as important in quantifying waste:
failure of care delivery; failure of care coordination;
overtreatment or low-value care; overpricing of treatments and
medication; fraud and abuse; and administrative complexity.
Along with the money being wasted through administrative complexity
and poor coordination of care, the price-tags for other sources of
waste included: $102.4 billion to $165.7 billion for failure of care
delivery; $230.7 billion to $240.5 billion for overpricing; $75.7
billion to $101.2 billion for overtreatment or low-value care; and
$58.5 billion to $83.9 billion for fraud and abuse.
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The new report is "important," said Dr. Albert Wu, an internist and
professor of health policy and management at the Johns Hopkins
Bloomberg School of Public Health in Baltimore, Maryland. "It
confirms not only that the U.S. spends more on healthcare than any
other country but that it also wastes more than any other country."
All that wasted money could be put to good uses, such as insuring
the uninsured, if the wastage could be prevented, Wu said.
"Unfortunately, we have made very little progress over the last 10
years when a focus was first put on this problem and there are a lot
of reasons for that," Wu said. "Our healthcare financing is
increasingly byzantine and complex, and it's been resistant to
attempts to change that. Part of the reason is that there are many
who benefit from the money that is being wasted: One person's waste
is another person's income."
A major improvement could be made if waste tied to administrative
complexity could be cut, Wu said, noting that while administrative
costs make up an estimated 15% of total costs in private insurance,
with Medicare those costs are just 5%.
"This suggests at least a partial solution would be to expand
Medicare or some variant of that model," Wu said.
And now may be the right time to make some big changes, Wu said.
"The elections of 2018 suggested that the American public has an
increased appetite for good and affordable healthcare for all," he
added.
SOURCE: https://bit.ly/2M0kzvE , https://bit.ly/31VO33i , https://bit.ly/2opjFzH
, https://bit.ly/2AOYNo4 and https://bit.ly/2ASqk8a JAMA, online
October 8, 2019.
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