4c health blog the prudent perspective

The Prudent Perspective


What a Waste! Waste accounts for one-quarter of healthcare spending

Waste accounts for one-quarter of healthcare spending

Note:  No mention of the value of external and independent audits of all claims data, a process commonly employed in all other benefits–like retirement benefits, delivering both greater accountability and the insights necessary to better-address waste.

Modern Healthcare, October 7, 2019

A new study found waste accounts for roughly one-quarter of all U.S. healthcare spending, an estimate that’s in the same ballpark as its predecessors.

The cost of waste in the U.S. healthcare system ranges from $760 billion to $935 billion annually, according to a JAMA review of 54 peer-reviewed studies, government reports and other information, released Monday. The study found one-quarter of that could be cut using interventions found to reduce waste…

The current study divided waste into six previously identified categories. Administrative complexity accounted for the most waste, at $265.6 billion annually. Below that was waste due to pricing failure, which costs $230.7 billion to $240.5 billion annually. Failure of care delivery accounts for $102.4 billion to $165.7 billion annually. Overtreatment or low-value care results in $75.7 billion to $101.2 billion in waste annually. Waste related to fraud and abuse costs between $58.5 billion and $83.9 billion annually. Finally, failure of care coordination generates $27.2 billion to $78.2 billion in waste annually…

The key takeaway theme of the study, in Shrank’s mind, is that aligning payers and providers through value-based care initiatives can go a long way toward cutting waste.


October 8, 2019