America’s annual healthcare bill could be reduced by $600 billion to $850 billion if the nation learns how to reduce wasteful spending, according to a new report by Thomson Reuters.
“The bad news is that an estimated $700 billion is wasted annually. That's one-third of the nation's healthcare bill,” said Robert Kelley, vice president of healthcare analytics at Thomson Reuters and author of the white paper, in a press release. “The good news is that by attacking waste, healthcare costs can be reduced without adversely affecting the quality of care or access to care.”
According to the study, the biggest causes of waste in healthcare are:
- Unnecessary care (40 percent of healthcare waste, or $250 billion to $325 billion), defined as over-use of antibiotics and diagnostic lab tests to protect against malpractice exposure.
- Fraud (19 percent of healthcare waste, or $125 billion to $175 billion), which covers everything from fraudulent Medicare claims to kickbacks for referrals of unnecessary services.
- Administrative inefficiency (17 percent of healthcare waste, or $100 billion to $150 billion), focused on excess paperwork.
- Healthcare provider errors (12 percent of healthcare waste, or $75 billion to $100 billion), defined as medical mistakes.
- Preventable conditions (6 percent of healthcare waste, or $25 billion to $50 billion), focused on hospitalizations to treat uncontrolled chronic conditions such as diabetes, which is less costly to treat when the chronic condition is properly managed through timely access to outpatient care.
- Lack of care coordination (6 percent of healthcare waste, or $25 billion to $50 billion), focused on inefficient communication between healthcare providers, leading to limited access to needed medical records and a resulting duplication of tests or inappropriate treatments.