Reducing Waste in Health Care / Minimum $568 Billion per year

Health Policy Briefs provide clear, accessible overviews of timely and important health policy topics for policymakers, journalists, and others concerned about improving health care in the United States. They are produced by Health Affairs through a grant from the Robert Wood Johnson Foundation.

Long article / http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=82

CATEGORIES OF WASTE: Researchers have identified a number of categories of waste in health care, including the following:

  • Failures of care delivery. This category includes poor execution or lack of widespread adoption of best practices, such as effective preventive care practices or patient safety best practices. Delivery failures can result in patient injuries, worse clinical outcomes, and higher costs. A study led by University of Utah researcher David C. Classen and published in the April 2011 issue of Health Affairs found that adverse events occurred in one-third of hospital admissions. This proportion is in line with findings from a 2010 study by the Department of Health and Human Services’ Office of Inspector General (OIG), which found that Medicare patients experienced injuries because of their care in 27 percent of hospital admissions.These injuries ranged from “temporary harm events,” such as prolonged vomiting and hypoglycemia, to more serious “adverse events,” such as kidney failure because of medication error. Projected nationally, these types of injuries–44 percent of which were found to be clearly or likely preventable–led to an estimated $4.4 billion in additional spending by Medicare in 2009, the OIG found. Berwick and Hackbarth estimate that failures of care delivery accounted for $102 billion to $154 billion in wasteful spending in 2011.
  • Failures of care coordination. These problems occur when patients experience care that is fragmented and disjointed–for example, when the care of patients transitioning from one care setting to another is poorly managed. These problems can include unnecessary hospital readmissions, avoidable complications, and declines in functional status, especially for the chronically ill. Nearly one-fifth of fee-for-service Medicare beneficiaries discharged from the hospital are readmitted with 30 days; three-quarters of these readmissions–costing an estimated $12 billion annually–are in categories of diagnoses that are potentially avoidable. Failures of care coordination can increase costs by $25 billion to $45 billion annually. (See the Health Policy Brief published on September 13, 2012, for more information on improving care transitions.)
  • Overtreatment. This category includes care that is rooted in outmoded habits, that is driven by providers’ preferences rather than those of informed patients, that ignores scientific findings, or that is motivated by something other than provision of optimal care for a patient. Overall, the category of overtreatment added between $158 billion and $226 billion in wasteful spending in 2011, according to Berwick and Hackbarth.An example of overtreatment is defensive medicine, in which health care providers order unnecessary tests or diagnostic procedures to guard against liability in malpractice lawsuits. A September 2010 Health Affairs study led by Harvard University researcher Michelle M. Mello estimated that in 2008, $55.6 billion or 2.4 percent of total US health care spending was attributed to medical liability system costs, including those for defensive medicine. Overtreatment can also result from overdiagnosis, which results from efforts to identify and treat disease in its earliest stages when the disease might never actually progress and when a strategy such as watchful waiting may have been preferred. For example, in July 2012 the US Preventive Services Task Force recommended against prostate-specific antigen-based screening for prostate cancer because of “substantial overdiagnosis” of tumors, many of which are benign. Excessive treatment of these tumors, including surgery, leads to unnecessary harms, the task force said.Overtreatment also includes intensive care at the end of a person’s life when alternative care would have been preferred by the patient and family, or excessive use of antibiotics. Another form of overtreatment is the use of higher-priced services that have negligible or no health benefits over less-expensive alternatives. When two approaches offer identical benefits but have very different costs, the case for steering patients and providers to the less costly alternative may be clear–for example, using generics instead of brand-name drugs. There is also provision of many services that may once have been considered good health care but that now have been discredited as lacking in evidence of benefit. Under the umbrella of the American Board of Internal Medicine Foundation’s “Choosing Wisely” initiative, nine different medical specialty groups and Consumer Reports have identified a series of regularly used tests or procedures whose use should be examined more closely. In 2013, 21 additional medical specialty groups will release similar lists in their respective fields.
  • The National Priorities Partnership program at the National Quality Forum, a nonprofit organization that works with providers, consumer groups, and governments to establish and build consensus for specific health care quality and efficiency measures, has produced a list of specific clinical procedures, tests, medications, and other services that may not benefit patients. The next step is for physicians and payers to change their practices accordingly. After requesting public input, CMS on November 27, 2012, posted on its website a list of procedures or services that may be overused, misused, or provide only minimal health care benefits. They include lap-band surgery for obesity, endoscopy for gastroesophageal reflux disease, and lung volume reduction surgery. CMS said that these services may be evaluated to determine whether they should continue to be reimbursed under Medicare.
  • Administrative complexity. This category of waste consists of excess spending that occurs because private health insurance companies, the government, or accreditation agencies create inefficient or flawed rules and overly bureaucratic procedures. For example, a lack of standardized forms and procedures can result in needlessly complex and time-consuming billing work for physicians and their staff.In an August 2011 Health Affairs article, University of Toronto researcher Dante Morra and coauthors compared administrative costs incurred by small physician practices in the United States, which interact with numerous insurance plans, to small physician practices in Canada, which interact with a single payer agency. US physicians, on average, incurred nearly four times more administrative costs than did their Canadian counterparts. If US physicians’ administrative costs were similar to those of Canadian physicians, the result would be $27.6 billion in savings annually. Overall, administrative complexity added $107 billion to $389 billion in wasteful spending in 2011.
  • Pricing failures. This type of waste occurs when the price of a service exceeds that found in a properly functioning market, which would be equal to the actual cost of production plus a reasonable profit. For example, Berwick and Hackbarth note that magnetic resonance imaging and computed tomography scans are several times more expensive in the United States than they are in other countries, attributing this to an absence of transparency and lack of competitive markets. In total, they estimate that these kinds of pricing failures added $84 billion to $178 billion in wasteful spending in 2011.
  • Fraud and abuse. In addition to fake medical bills and scams, this category includes the cost of additional inspections and regulations to catch wrongdoing. Berwick and Hackbarth estimate that fraud and abuse added $82 billion to $272 billion to US health care spending in 2011.

 

Bonus! Artificial nails… very real risks.

Porteous J1. General Hospital Operating Room Department, Health Sciences Centre, Winnipeg, Manitoba.

 

Abstract: The current social trend towards personal esthetics has come into conflict with safe perioperative care practices. While artificial nails have become very popular they pose a significant risk to patients. Surgical personnel who scrub while wearing artificial nails are putting their patients at higher risk for post-surgical wound infection. Artificial nails harbour microbes and cannot be cleaned as effectively as short, natural nails. We cannot rely on surgical gloves to always contain these hand organisms. There are reported cases where artificial nails have been the cause of post-surgical infections and even death. OR personnel who scrub should not wear artificial nails.

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One thought on “Reducing Waste in Health Care / Minimum $568 Billion per year

  1. Actually, a rather sizable percentage of people believe the whole of healthcare spending – yes, all of it – is the very worst kind of waste.

    Their solution: eliminate the entirety of medicine as it’s currently understood, and return to the (magickal) days of a millenium and more ago. (After all, they believe they have ‘full and complete control of all facets of life from conception to decomposition’, and therefore remaining healthy is purely a matter of correct thinking, speech, and behavior!)

    How I wish that were true!

    Like

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