Cost of Waste in U.S. Health System Estimated
TUESDAY, Oct. 8, 2019 -- The estimated cost of waste in the U.S. health care system varies from $760 to $935 billion, according to a special communication published online Oct. 7 in the Journal of the American Medical Association.
William H. Shrank, M.D., from Humana Inc. in Louisville, Kentucky, and colleagues estimated current levels of waste in the U.S. health care system and reported estimates of potential savings from interventions shown to reduce waste-related costs.
The researchers found that the estimated ranges of total annual cost of waste were $102.4 to $165.7 billion for failure of care delivery; $27.2 to $78.2 billion for failure of care coordination; $75.7 to $101.2 billion for overtreatment or low-value care; $230.7 to $240.5 billion for pricing failure; $58.5 to $83.9 billion for fraud and abuse; and $265.6 billion for administrative complexity. Measures to eliminate waste resulted in estimated annual savings of $44.4 to $93.3 billion for failure of care delivery; $29.6 to $32.8 billion for failure of care coordination; $12.8 to $28.6 billion for overtreatment or low-value care; $81.4 to $91.2 billion for pricing failure; and $22.8 to $30.8 billion from fraud and abuse. The estimated total annual costs of waste ranged from $760 to $935 billion, while estimated savings from interventions ranged from $191 to $282 billion.
"The best available evidence about the cost savings of interventions targeting waste, when scaled nationally, [shows that these savings] account for only approximately 25 percent of total wasteful spending," the authors write.
Two authors received support from Humana Inc.; one was employed by UPMC Health Plan.
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Posted: October 2019
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