6 biggest drivers of healthcare waste

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With the Institute of Medicine concluding that the U.S. healthcare industry wastes about $750 billion a year, hospitals need to understand the types and levels of waste, as well as the barriers to eliminating it.

A Health Affairs policy brief published yesterday points to care delivery failures, poor care coordination, overtreatment, administrative complexity, pricing failures, and fraud and abuse as the greatest drivers of waste in healthcare.

Former CMS Administrator Donald Berwick has also called on healthcare leaders to focus on these six categories of waste that account for more than 20 percent of escalating healthcare expenditures.

For instance, poor execution of care delivery processes not only leads to higher costs but also patient injuries and low clinical outcomes, the policy brief notes.

It also recommends addressing fragmented care to prevent unnecessary hospital readmissions and avoidable complications. With poor care coordination, costs can jump by $25 billion to $45 billion a year.

Overtreatment accounts for extremely high levels of waste, with defensive medicine as the primary culprit. Doctors have admitted to providing too much medical care, but thanks to malpractice concerns, current reimbursement systems and clinical performance measures, more aggressive healthcare will likely continue.

Higher-priced services that don't provide greater health benefits than their less-expensive counterparts are another problem plaguing the healthcare system. But some hospitals, including Memorial Sloan-Kettering Hospital, are starting to say no to expensive drugs and devices that don't guarantee value.

The industry also needs standardized forms and procedures to get rid of complex and time-consuming billing work for providers. In fact, about 30 percent of every healthcare dollar goes toward paperwork and administrative tasks, Forbes reported.

However, the policy brief noted, eliminating waste in healthcare gets even more complicated with fears that cost-curbing efforts will jeopardize or ration patient care.

To learn more:
- here's the Health Affairs policy brief
- read the Forbes article

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