Reduce Wasteful Healthcare Spending To Fund Reform

A new study released yesterday by Thomson Reuters’ healthcare analytics arm found that the U.S. healthcare system wastes between $505 billion and $850 annually, or about one-third of the dollars we spend for healthcare In this blog, we have discussed this issue previously (here and here).

Among the culprits of this wasteful spending are unnecessary care such as overuse of antibiotics and laboratory tests (said to be responsible for 37% of the wasted dollars) and, no doubt, due to failure of medical providers to coordinate patient care. Fraud is responsible for more than one-fifth of wasted healthcare dollars—a segment on CBS’s program 60 Minutes on Sunday October 25 addressed the billions of dollars the Medicare program looses every year to fraudulent medical claims.

Other sources of waste are preventable chronic conditions and complications of disease, as many experts, including Dee Eddington, director of the University of Michigan’s Health Management Research Center, explained to a U.S. Chamber of Commerce meeting in a 2008 presentation.

Time will tell if the healthcare industry, Congress, and the Obama administration can cooperate on reducing healthcare waste, as they promised earlier this year, as part of health reform. And, yes, we can do this while improving healthcare quality and vice versa.