A recent study published in the Journal of the American Medical Association (JAMA) reports that about 25% of spending in the U.S. healthcare system is wasteful. The study points to six main areas outlined below with the midpoint of the estimated range of annual savings created by waste-reduction measures:
- Failure of care delivery – $68.8 billion
- Failure of care coordination – $33.9 billion
- Overtreatment or low-value care – $20.7 billion
- Pricing failure – $86.3 billion
- Fraud and abuse – $26.8 billion
- Administrative complexity – $265.6 billion (cost of waste as no savings data is available)
Viewpoints from Craig Hasday
The problems are clear, but I don’t think government alone can effectively mitigate this overspending.
Federal and state governments have been focused on drug pricing and it’s no wonder; this is the second-most impactful area of waste. Another government effort is in reducing waste and abuse in Medicare and Medicaid.
The insurance industry, however, has led the charge on value-based and risk-based contracting to reduce costs and provide incentives to be more efficient in care delivery.
And in the fast-moving pharmaceutical industry, I doubt the government can be agile enough to combat the quick-thinking pharma pricing sharks.
Since healthcare is approaching 20% of Gross Domestic Product (GDP), eliminating this waste represents a savings opportunity of almost 5% of our nation’s GDP. We need all hands at the ready to stand a chance.
Related Content
Products
Employee Benefits Consulting
Our dedicated EPIC benefits team is focused on delivering better outcomes – to both your benefits program ...
Industries
Healthcare
Our healthcare practice is known around the world for its expertise and passion in delivering exceptional ...
Products
Pharmacy Solutions
Our pharmacy experts work with the health and welfare teams to deliver certainty and direction for your ...