Billions of dollars spent on US healthcare labeled wasteful

1. In this systematic review analyzing data over the past 8 years, a quarter of total health care expenditure was deemed wasteful spending in the US healthcare system.

2. Implementation of targeted measures to reduce waste were only predicted to save about 25% of the total wasteful expenses.

Evidence Rating Level: 1 (Excellent)

Study Rundown: Healthcare spending is a major concern in the United States, as it accounts for a significant portion of the country’s GDP and is more than any other country. However, it is still unclear what the sources of wasteful spending are and how they can be addressed. In this systematic review, 25% of total health care expenditure in the US healthcare system is attributed to wasteful spending, ranging from an estimate of $760 billion to $935 billion. The wasteful expenses that created this estimate were from failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud and abuse, and administrative complexity. The projected potential savings from targeted measures to reduce waste were estimated to be only $191 billion to $282 billion (25-30%), but this estimate excludes savings from administrative complexity, as there were no studies that directly addressed this.

The study analyzed a large portion of unique peer-reviewed publications, government-based reports, and reports from the gray literature, which helps successfully identify areas of savings and form the basis of new cost-saving interventions. On the other hand, targeted research is still lacking interventions for the administrative complexity domain, which was found to be the largest contributor to wasteful spending and represents the biggest area for potential savings.

Click to read the study in JAMA

Click to read an accompanying editorial in JAMA

Relevant Reading: Health care spending in the United States and other high-income countries

In-Depth [systematic review]: 54 unique peer-reviewed publications, government-based reports, and reports from the gray literature from January 2012 to May 2019 were analyzed, which yielded a total of 71 estimates. Six domains of wasteful spending were previously identified by the Institute of Medicine and Berwick and Hackbarth: failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud and abuse, and administrative complexity. Studies that identified translatable costs to the broader Medicare population were investigated. Single-site studies (1 hospital or 1 clinic) and/or ones representing a subset of a patient population (pediatrics) and/or single disease states with the exception of overtreatment or low-value care were excluded. The literature review estimated the total cost of wasteful expenditure and potential savings as high as $760 billion to $935 billion and $191 billion to $282 billion, respectively. Overall, more than $3.8 trillion go towards the US healthcare system annually, which is 17.8% of the nation’s GDP, of which 25% can be attributed as wasteful expenditure.

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