U.S. Healthcare System Wastes Between $600 Billion and $850 Billion Annually

[flpoljunkie]

(Show this to those friends and/or relatives who are concerned about the cost of 'Obamacare,' estimated, by the way, to cost less than $100 billion annually. Emphasis mine)

WASTE IN THE U.S. HEALTHCARE SYSTEM PEGGED AT $700 BILLION IN REPORT FROM THOMSON REUTERS

26 OCT 2009

Ann Arbor, MI October 26, 2009 - The U.S. healthcare system wastes between $600 billion and $850 billion annually, according to a white paper published today by Thomson Reuters.

The report identifies the most significant drivers of wasteful spending - including administrative inefficiency, unnecessary treatment, medical errors, and fraud - and quantifies their cost. It is based on a review of published research and analyses of proprietary healthcare data.

"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. "The good news is that by attacking waste, healthcare costs can be reduced without adversely affecting the quality of care or access to care.

"That's the point of this report - to identify areas in the healthcare system that can generate game-changing savings," Kelley said.

Here are some of the study's key findings:

Unnecessary Care (40% of healthcare waste): Unwarranted treatment, such as the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.

Fraud (19% of healthcare waste): Healthcare fraud costs $125 billion to $175 billion each year, manifesting itself in everything from fraudulent Medicare claims to kickbacks for referrals for unnecessary services.

Administrative Inefficiency (17% of healthcare waste): The large volume of redundant paperwork in the U.S healthcare system accounts for $100 billion to $150 billion in spending annually.

Healthcare Provider Errors (12% of healthcare waste): Medical mistakes account for $75 billion to $100 billion in unnecessary spending each year.

Preventable Conditions (6% of healthcare waste): Approximately $25 billion to $50 billion is spent annually on hospitalizations to address conditions such as uncontrolled diabetes, which are much less costly to treat when individuals receive timely access to outpatient care.

Lack of Care Coordination (6% of healthcare waste): Inefficient communication between providers, including lack of access to medical records when specialists intervene, leads to duplication of tests and inappropriate treatments that cost $25 billion to $50 billion annually.

http://thomsonreuters.com/content/press_room/tsh/waste_US_healthcare_system

[Recursion]

1. OK, find a way to palatably reduce the level of unceccesary care

Even without morons shouting "death panels" and "rationing", that's a hard sell to the person who has just noticed a lump where there wasn't one before. And the whole point is that it's only unnecessary in most cases: there will be that one guy whose life would be saved if they had just done that extra test that's useless 99% of the time, and his widow will go on Dateline and tearfully talk to Chris Matthews about how Bob could have been saved if only blah blah.

[flpoljunkie]

2. Not a problem. It can and must be done.

[Recursion]

3. Something can and must be done and still be a problem

So how do you propose limiting unnecessary care?

[flpoljunkie]

4. Take away doctor's and hospital's incentives to over treat, to begin with.

I expect you might get more stories of women who were over biopsied, scanned etc., than those who had a lump ignored. These are cases I know personally know of--and one was particularly egregious for a woman on Medicare.

[flpoljunkie]

5. You might find this article about Dr. Berwick of some value regarding your concerns

(And, you must realize Republicans will scream no matter what Obama does. Limbaugh, Beck and Hannity would have it no other way.)

With Donald Berwick's appointment, the doctor is (finally) in
By David Ignatius

Friday, July 9, 2010

In a rational world, Republicans -- caring about the fiscal dangers for the country if we don't reform the delivery system -- would have endorsed Berwick's nomination by acclamation. But Washington isn't a rational world. It's a never-never land where politicians from both parties bewail our debts and deficits -- and resist efforts to do anything about them.

Liberals, too, often overlook the crucial issue of efficient, low-cost delivery of care. Yes, it's a moral obligation to expand access, as the new legislation will do. But unless we reform the delivery process, the result will be a nightmare -- universal access to a bloated, costly mess. Health-care experts such as Denis Cortese, a former chief executive of the Mayo Clinic, and Toby Cosgrove, chief executive of the Cleveland Clinic, argue that we should use our existing "public options" such as Medicare and Medicaid to create models of lower-cost, higher-quality care that can spread nationwide.

One of the good features of Obamacare (redeeming its many flaws) is that it mandates such experiments in the public health-care programs. As Atul Gawande noted several months ago in one of his superb New Yorker essays, such a process of experimentation makes more sense right now than trying to impose, at one stroke, a change in the nation's entrenched culture of fee-for-service health care. Such pilot programs will demonstrate what works -- and build momentum for comprehensive change.

That's Berwick's challenge -- to encourage an urgent process of innovation. If you want a sense of what he will bring to the job, check out the Web site of his institute (http://ihi.org). He describes some of the ideas he has been developing over the past several decades for implementing change. The list includes "breakthrough series collaboratives" to share knowledge; "bundles" of procedures that establish protocols for treating common problems; the use of medical records to better forecast bad events; and the use of operations research to improve the efficiency of emergency rooms.

These experiments will take the nation into new and difficult territory. The system that's coming is one in which doctors won't be so quick to order tests and procedures; it will force us to take better care of ourselves; it will require that we plan how we want to be treated at the end of our lives.

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/08/AR2010070804276.html

[Jeff In Milwaukee]

7. Here you go

This is just a drop in the bucket from a comparatively small healthcare system (two hospitals). In this case, the double testing is utterly without any medical benefit -- and note that both hospitals have changed their practice to eliminate most double tests.


A small example? There are just under 6,000 hospitals in the United States, and assuming that they all have the same relative level of wasteful and expensive testing, there are literally hundreds of millions of dollars that can be saved. We can, through administrative and clinical efficiency, save enough in healthcare costs to provide healthcare for every American at no additional cost.

Hospitals above average in CT scans

[cornermouse]

12. I disagree.

You don't know why they did the double testing and you appear to ignore completely the following sentences from your own article.

"Double scanning is not standard practice for most patients walking through the door, said Dennis Foley, a radiologist at the Medical College of Wisconsin in Wauwatosa. Instead, it's needed in specific situations, in patients diagnosed with specific types of liver, kidney and pancreatic tumors, he said."

Furthermore, apparently not having gone to electronic health records, you have not yet found out whether they live up to their advertisement or not. I'll stop at that and let your find out the awful truth for yourself.

[Jeff In Milwaukee]

18. I know the awful truth....

The system has admitted that the test were unnecessary and they've changed their standard of care, in addition to providing for more experienced oversight.

[rucky]

14. Start by letting doctors do their job.

How many of these decisions are made to please, protect themselves from, or game the insurers?

[flpoljunkie]

16. Profit. You forget the profit motive, rucky. That goes for hospitals, as well.

Healthcare is really big business-- over15% of our GDP, about $5711 per capita.

http://www.visualeconomics.com/healthcare-costs-around-the-world_2010-03-01/

[Jeff In Milwaukee]

20. Read up on the Mayo Clinic....

Most healthcare systems pay their physicians on what's called a "Productivity Model" meaning that the more patients you see and the more treatment they receive, the more the physician gets paid. So spending five minutes with a patient and ordering ten tests is more profitable than spending twenty minutes with a patient and ordering five tests.

It gives the both physician and the hospital a financial incentive to run up the bill.

Yes. It's legal.

No. It shouldn't be.

Now look at the Mayo Clinic. World-renowned as one of the best places on earth to receive healthcare, AND it's one of the least-expensive places to get healthcare in the United States. How can you get that kind of quality at such a low price? Because the doc's at the Mayo Clinic are all on salary. They don't have any incentive to see thirty patients in one day and they have no incentive to order a bazillion tests.

You want to slash healtcare costs? There it is.

Ba-zinga!

[flpoljunkie]

21. Have read how Mayo Clinic operates. We definitely need their model to spread.

[MedicalAdmin]

28. Every single decision.

Every one

[w4rma]

6. Is insurance company overhead included in the 17% for Administrative Inefficiency?

Or is insurance company overhead completely ignored in this report?

I have a feeling that it is completely ignored. Why is it ignored?

[Jeff In Milwaukee]

8. I'm betting that its some of each....

I work in healthcare, and there are two types of mind-numbing paperwork -- patient records and insurance billings. We have a small army of cubicle-dwellers who do nothing both push patient billings through the insurance company swamp. And we have another army that does nothing but patient records.

The good news is that hospitals are making HUGE strides in creating electronic medical records. I can't begin to tell you how important that is, both in the saving of time and the saving of lives. When we completely wired, you could be in a car crash in Tibet and the local physician will have access to your medical history. That's friggin' huge.

[nightrain]

9. and the privacy issues with electronic records are huge and need to be addressed,

particularly emotional health and substance abuse issues. Just wait til someone hacks a patient's emotional health record and damage is done.

[Jeff In Milwaukee]

19. That's true....

But that being said, we all know that there's no such thing as a secure server. You want to conduct business transactions online, you're always at risk of having your financial data hacked. Same with health records.

The question, then, is does having an electronic health record improve your quality of care enough to offset the risk that somewhere, somehow, your data could be leaked. And inmy mind, the answer is a resounding "Yes."

Quite often, when we ascribe to a "medical error" is simply the fact that a physician didn't have the patient's entire medical history available. Patients may not know or fully understand their medical history, or the patient may not be in a state to provide information to a doctor. And so medication is sometimes prescribed that would otherwise be contra-indicated if the physician had the whole picture.

[nightrain]

22. actually the question is--why should I, or my clients risk exposure of

incredibly private data, for nefarious or other purposes.

Just wait until your personal private confidential data is used by _______ for a purpose that you never intended.

The risk, currently, is too great. Improvements need to be made before we adopt this whole hog.

I work in health care also.

[Jeff In Milwaukee]

23. Because it can save their life

I totally agree that improvements can be made -- they always can -- but if you're asking me to choose between my privacy and my life, the choice is a no-brainer.

And we can them "patients" were I work.

[nightrain]

25. LOL! You're being overly dramatic.

snotty, aren't you? "Client" is a perfectly acceptable term in my line of work. You apparently are not a clinician.

[704wipes]

10. not to mention

All the duplication of administration costs times however many insurance 'providers' there are.
Consolidate all that into a single payer system.

No duplication of corporate headquarters costs, buildings, bloated staff, heating, cooling, executive perks and security.
No duplication of corporate jets, junkets to conventions, etc, etc, all funded with dollars that should be going to real healthcare.

[Festivito]

11. I think it's more like two to three times that. 1.5T$. /nt

[golfguru]

13. Malpractice insurance is very high for surgeons, ob-gyne, hospitals,

and even family physicians. Every dime of that expense is passed
on to the patients whether insured or uninsured.

The consumer/patient always pays for everything in the end.

[Jeff In Milwaukee]

24. Here's the thing..

They done studies to compare the cost of care in areas that are known for having high malpractice payouts vs. those where malpractice payouts are significantly lower. The studies have found little corelation between cost of care and medical malpractice.

On a broader scale, Public Citizen investigated trends in Medical Malpractice payouts and found that the number of lawsuits and the size of the award has actualy declined since the early 1990's, but the cost of care and the cost of malpractice insurance have increased.

Sort of makes you go, Hmmmmmmm.

[flpoljunkie]

26. MedMal insurance coompanies needed to make up their stock market losses. That's why rates went up.

[MedicalAdmin]

29. Malparactice premiums are very low in single payer countries

Not because there are no lawsuits but because the cost of ongoing care is absorbed by the single payer system. It's the biggest cost of payouts so...

We are so stupid.

[SunsetDreams]

15. Thank you, K&R and bookmarked

[Vinca]

17. Add that to the profits big insurance rakes in and there is no way

we wouldn't be better off with a single-payer system. Guess the key word is "profits," isn't it?

[flpoljunkie]

27. No way we will get single-payer system, when what Obama got passed is called 'socialism!'

The ignorance and gullibility of our citizens is evidently, limitless.