IOM: Healthcare delivery wastes $750B a year

The Institute of Medicine has released a new report concluding that about 30 percent of all spending in the healthcare industry is wasted--a total of about $750 billion a year.

The waste is primarily pegged to unnecessary services, excessive costs for management and administration, and fraud, according to MedPage Today. However, a large lack of coordination and price transparency also is to blame, the Associated Press reported.

"If home building were like healthcare, carpenters, electricians and plumbers would work from different blueprints and hardly talk to each other. If shopping were like healthcare, prices would not be posted and could vary widely within the same store, depending on who was paying," the AP noted.

The report concluded that more than $210 billion was wasted on excess services in 2009 alone.

But the IOM report also cited instances of cost savings by hospitals. According to Kaiser Health News, Cincinnati Children's Hospital staggered the schedules of surgeons. The result was that beds were filled up more often and a $100 million expansion was no longer necessary.

"These methods of operations management exist in every other industry – it's only health care and education where they don't," Eugene Litvak, report author and chief of the Institute for Healthcare Optimization, told KHN,

The report suggested the use of more incentives to cut down on unnecessary care. Litvak said providers also need to be less resistant to changing their ways, according to KHN.

For more:
- here's the IOM report
- read the AP article
- read the MedPage Today article
- check out the KHN article