KEY DATA: According to an overview published by data analysts at Clever in September, the average American pays 101 percent more for healthcare than they would have in 1984, and the number of people choosing to forgo insurance is also climbing, with a 7 percent increase in the last year.

What’s causing the wasteful spending?

According to an analysis of wasteful healthcare spending published by the JAMA: “Administrative inefficiency,” like billing and coding waste and physician time lost to insurance coordination, to the tune of $265 billion; “pricing failures,” like spikes in the cost of medications, doctor’s visits, and emergency services, that max out at around $240 billion; plus overtreatment, failures in care coordination and delivery, plus Medicare fraud.

Per JAMA the review yielded 71 estimates from 54 unique peer-reviewed publications, government-based reports, and reports from the gray literature. Computations yielded the following estimated ranges of total annual cost of waste:

• failure of care delivery, $102.4 billion to $165.7 billion
• failure of care coordination, $27.2 billion to $78.2 billion
• overtreatment or low-value care, $75.7 billion to $101.2 billion
• pricing failure, $230.7 billion to $240.5 billion
• fraud and abuse, $58.5 billion to $83.9 billion; and administrative complexity, $265.6 billion.

In this review based on 6 previously identified domains of health care waste, the estimated cost of waste in the US health care system ranged from $760 billion to $935 billion, accounting for approximately 25% of total health care spending, and the projected potential savings from interventions that reduce waste, excluding savings from administrative complexity, ranged from $191 billion to $282 billion, representing a potential 25% reduction in the total cost of waste. Implementation of effective measures to eliminate waste represents an opportunity to reduce the continued increases in US health care expenditures.

Opt Ed

Like the CEO of Merck recently said “pharma is in the crosshairs”. While there certainly are a LOT of instances of why pharma is in the crosshairs the media and politicians are doing the public a great disservice. Moving to digital records was supposed to decrease healthcare costs but obviously that still has a long way to go.

And a note to readers: I have talked about the things that some pharma companies do that upset me because I know what happens when we put patients first. Despite my posts there are a LOT of people who are trying to make a difference and put patients first. They fight everyday to try and focus what is right as opposed to what is financially responsible but their efforts go largely ignored because investors are the primary customers today.

Until we tackle waste, get unhealthy consumers to start taking better care of themselves and reign in insurance companies and PBM’s our healthcare costs are going to continue to be out of control.