A recent review by Shrank, Rogstad, and Parekh (2019) estimated the current amount of money spent on waste by the United States health care system. They found that nearly $1 trillion of annual spending can be classified as waste. This amounts to one quarter of the total amount the United States spends on healthcare. The study grouped these costs into several “waste domains” including:
- Administrative complexity ($265.6 billion)
- Pricing failure ($230.7 billion to $240.5 billion)
- Failure of care delivery ($102.4 billion to $165.7 billion)
- Overtreatment or low-value care ($75.7 billion to $101.2 billion)
- Fraud and abuse ($58.5 billion to $83.9 billion)
- Failure of care coordination ($27.2 billion to $78.2)
As part of the administrative complexity domain, billing and coding waste accounts for $248 billion annually. This is followed by medication pricing failure, which costs the United States health care industry $169.7 billion each year. Shrank, Rogstad, and Parekh (2019) also outlined the estimated savings of various cost-cutting interventions. The most helpful of these is the integration of physical and behavioral health, amounting to a potential savings between $31.5 billion and $58.1 billion. Interventions focused on insurers can save between $31.4 billion and $41.2 billion.
Reference:
Shrank, W. H., Rogstad, T. L., & Parekh, N. (2019). Waste in the US Health Care System: Estimated Costs and Potential for Savings. JAMA. https://doi.org/10.1001/jama.2019.13978
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