Healthcare spending...$850 billion wasted annually?

Link: Report: Americans waste up to $850 billion a year in healthcare | Healthcare Finance News.

According to a recent article from Healthcare Finance News, and a report from Thompson Reuters, unnecessary spending in healthcare is related to:

• Unnecessary care (40%), defined as over-use of antibiotics and diagnostic lab tests to protect against malpractice exposure
• Fraud (19%), covering everything from fraudulent Medicare claims to kickbacks for referrals of unnecessary services.
• Administrative inefficiency (17%), focused on excess paperwork.
• Healthcare provider errors (12%), defined as medical mistakes.
• Preventable conditions (6%), focused on hospitalizations to treat uncontrolled chronic conditions such as diabetes, which is less costly to treat when the chronic condition is properly managed through timely access to outpatient care.
• Lack of care coordination (6%), focused on inefficient communication between healthcare providers, leading to limited access to needed medical records and a resulting duplication of tests or inappropriate treatments.

How can an electronic health record and meaningful use help? A simple answer is in the form of fraud prevention, paperwork, coordination, health promotion/prevention and errors. Based on the figures from the report, these areas represent a potential savings of approximately 60%. Here are some examples:

• Computer Provider Order Entry and e-Prescribing: addresses medications, allergies, interactions, diagnostic test and lab results, and clinical summaries. This information, if available at the point-of-care can mitigate errors, and provide alerts for high risk and key clinical data.
  • Orders that use evidence-based order sets can provide guidance in clinical decision making at the point-of-care.
• Secure PHI transmission: EHRs with the ability to transmit PHI securely, can address care coordination issues.
• Mandatory Audits: Audits have the potential to identify areas of fraud.

Comments

[Zoleeta Myers-West]

I found this article to be quite interesting. I knew that some money was definitely being wasted (in the healthcare field). However, I didn't know it was $850 billion annually! EHR Systems and practically all means of Health IT has great benefits to the healthcare industry, and your article has definitely proved a major point.

[Deborah Leyva]

Zoleeta, thank you for your comment. You are probably one of the few that understand the magnitude and impacts of inefficient processing of patient health information. Of course, there is significant technology benefit in the area of clinical diagnostics.

The idea in this post was to present the idea that eliminating waste in administrative processing, what I call "the low hanging fruit," has the potential for a significant impact on the bottom line.