Report: Health Care System Wastes $750 Billion
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A report from the Institute of Medicine (IOM) finds that America’s health care system is so inefficient that $750 billion was wasted in 2009, more than one year of the Pentagon’s budget.
The Associated Press (AP) notes the major areas of waste:
[U]nnecessary services ($210 billion annually); inefficient delivery of care ($130 billion); excess administrative costs ($190 billion); inflated prices ($105 billion); prevention failures ($55 billion), and fraud ($75 billion). Adjusting for some overlap among the categories, the panel settled on an estimate of $750 billion.
Our system is burdened with poor communication among health care providers, a lack of coordination, a focus on procedures instead of results, and little price transparency. The IOM report analogizes the cumbersome nature of the system:
- If banking were like health care, automated teller machine (ATM) transactions would take not seconds but perhaps days or longer as a result of unavailable or misplaced records.
- If home building were like health care, carpenters, electricians, and plumbers each would work with different blueprints, with very little coordination.
- If shopping were like health care, product prices would not be posted, and the price charged would vary widely within the same store, depending on the source of payment.
- If automobile manufacturing were like health care, warranties for cars that require manufacturers to pay for defects would not exist. As a result, few factories would seek to monitor and improve production line performance and product quality.
- If airline travel were like health care, each pilot would be free to design his or her own preflight safety check, or not to perform one at all.
Some lessons from The Cheesecake Factory are in order, perhaps?
One area for improvement is information technology. The report reads, “Advances have made vast computational power affordable and widely available, while improvements in connectivity have allowed information to be accessible in real time virtually anywhere,” but the “infrastructure for this type of connectivity, however, is largely lacking.” IOM notes that only 34% of office-based doctors used electronic health records in 2011.
Electronic systems to share patient data securely could improve patient safety, according to IOM. “One study found that implementation of a computerized physician order entry (CPOE) system reduced potential adverse drug events by 41 percent,” the report states.
Additional recommendations include better coordination among health care providers, helping patients to become smarter consumers, and paying providers for good results instead of paying for procedures.
This report is another reminder that there’s much room to improve our health care system to improve quality, access, and affordability.