Healthcare Reform Starts With The Facts

• 27 Oct 2009

The U.S. healthcare system wastes between $600 billion and $850 billion annually, one-third of the nation’s healthcare bill, according a white paper published today by Thomson Reuters. The report identifies the most significant drivers of wasteful  spending — including administrative inefficiency, unnecessary treatment, medical errors, and fraud — and quantifies their cost.

Based on a review of published research and analyses of proprietary healthcare data, it delivers the good news that by attacking waste we can reduce healthcare costs without adversely affecting the quality of care or access to care,  identifying areas in the healthcare system that can generate game-changing savings. Building on the momentum of our Save $4 billion initiative, Start by Getting the Facts presents the U.S. healthcare industry with a comprehensive look at healthcare expenses and where they can be cut without undermining quality. Among the study’s key findings:

• Unnecessary Care (40% of healthcare waste): Unwarranted treatment, such as the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.
• Fraud (19% of healthcare waste): Healthcare fraud costs $125 billion to $175 billion each year, manifesting itself in everything from fraudulent Medicare claims to kickbacks for referrals for unnecessary services.
• Administrative Inefficiency (17% of healthcare waste): The large volume of redundant paperwork in the U.S healthcare system accounts for $100 billion to $150 billion in spending annually.
• Healthcare Provider Errors (12% of healthcare waste): Medical mistakes account for $75 billion to $100 billion in unnecessary spending each year.
• Preventable Conditions (6% of healthcare waste): Approximately $25 billion to $50 billion is spent annually on hospitalizations to address conditions such as uncontrolled diabetes, which are much less costly to treat when individuals receive timely access to outpatient care.
• Lack of Care Coordination (6% of healthcare waste): Inefficient communication between providers, including lack of access to medical records when specialists intervene, leads to duplication of tests and inappropriate treatments that cost $25 billion to $50 billion annually.