Did you know that an estimated $765 billion are wasted each year by the U.S. healthcare system? That number is about a quarter of the money spent by the entire healthcare system annually. Increases in medical costs have substantially outpaced economic growth for decades; however, physicians, hospitals, and non-profits alike are working to show that it is possible to reduce or eliminate some of the waste.
While it is possible to reduce some of the waste, excess spending generates revenue and profit for the medical-industrial complex, and some argue that these powerful forces benefit from the waste. Dr. H. Gilbert Welch, professor of medicine at the Dartmouth Institute for Health Policy & Clinical Practice contends, “There are a number of people who can imagine ways to solve things, but the political will and the forces at work can stop them pretty easily.”
Still, reducing waste remains a must. If fewer dollars go to waste, the price of insurance premiums and out-of-pocket costs will decrease, which could then lead to more resources for education, retirement, and wage increases.
A recent study was conducted of more than a million Medicare patients showing that a considerable proportion of the patients had received care that was, in lack of better terms, worthless. The study focused on how often people received one of 26 tests that many professional organizations have deemed un-beneficial or harmful to public health. Within one year, the research shows that 25-42% of Medicare patients received at least one of the useless tests and treatments.
Another group, the Washington Health Alliance, is leading the way towards a more transparent, affordable, and safer healthcare system. Looking at over 1.3 million patients insurance claims in Washington, the group found many unsettling facts: more than 600,000 patients underwent treatment they didn’t need costing around $282 million; more than one third of the money spent on tests and services went to unnecessary care; about 85% of lab tests done to prep low-risk surgery patients were excessive costing around $86 million; needless annual heart tests on low-risk patients consumed $40 million; and 3 in 4 annual cervical cancer screenings were performed on women who had adequate prior testing, costing $19 million.
But Washington isn’t alone when it comes to useless spending. An analysis in Virginia found $586 million in wasted expenditures in one year alone. Minnesota examined a few treatments and found $55 million in unnecessary spending.
Dr. H. Gilbert Welch said the findings are “Economics 101.” “As long as people are paid more to do more, they will do more,” he said. “Incentives matter.”
At the very least, the report will hopefully change assumptions made by patients and healthcare providers that lead to unnecessary care. Overall, the system needs a transition from paying for the volume of services to having “honest discussions” with providers who then enable patients to pay for the value of what is provided.