Health-Care Dollars Down the Drain

The leak is more a torrent than a trickle

down-the-drainFor people living from paycheck to paycheck without health insurance, it would take a hefty cash advance or personal loan just to step inside a doctor’s office. And for people who have health insurance or extra cash stashed away for medical expenses, more than half of every dollar spent on medical care is a waste. According to a recent study by PricewaterhouseCoopers’ Health Research Institute (HRI), approximately $1.2 trillion of the $2.2 trillion spent on medical care annually in the United States is the result of wasteful health-care practices.

The HRI report describes three general areas of waste:

  • Behavioral where individual behaviors are shown to lead to health problems, and have potential opportunities for earlier, non-medical interventions.
  • Clinical where medical care itself is considered inappropriate, entailing overuse, misuse or under-use of particular interventions, missed opportunities for earlier interventions, and overt errors leading to quality problems for the patient, plus cost and rework.
  • Operational where administrative or other business processes appear to add costs without creating value.

Before you light up or take another bite . . .

40 years ago, this was not the norm.

Big may be beautiful, but it's an enormous waste of health-care resources.

The report concludes that the impact of obesity, alcohol abuse, smoking, and non-adherence to medical advice and prescriptions are exponential factors affecting all three categories. Every year, these risky choices and behaviors result in an avoidable $493 billion waste.

Some of the specific contributors to the $1.2 trillion leak are:

  1. Over-testing: $210 billion
  2. Processing claims: up to $210 billion
  3. Ignoring doctor orders: $100 billion
  4. Ineffective use of technology: up to $88 billion
  5. Hospital re-admissions: $25 billion
  6. Medical staffing turnover: $21 billion
  7. Medical errors: $17 billion
  8. Unnecessary emergency room visits: $14 billion
  9. Prescriptions written on paper: $4 billion
  10. Hospital-acquired infections: $3 billion
  11. Over-prescribing of antibiotics: $1 billion

Too many tests

Defensive medicine – the ordering of tests or procedures based on concern for liability or to pad income — is the single biggest waste of health care dollars. In a recent CNN report, Dr. Arthur Garson, provost of the University of Virginia and former dean of its medical school said, “Sometimes the motivation is to avoid malpractice suits, or to make more money because they are compensated more for doing more. Many are also convinced that doing more tests is the right thing to do. But any money that is spent on a patient that doesn’t improve the outcome is a waste.”

Those annoying claim forms

Inefficient claims processing is the second-biggest area of wasteful expenditure. Doctors spend enormous amounts of time and money trying to get paid by insurers. They also spend a lot of time and money getting advance approval from insurers for higher-priced or non-routine procedures. Those necessary efforts significantly increase the cost of medical care

Using the emergency room as a clinic

Because emergency rooms are legally obligated to treat all patients, more insured and uninsured patients are getting their primary care in emergency rooms. An emergency room visit for a routine condition can cost 10 times what the same medical care would cost at an urgent care clinic. Not only are unnecessary emergency room visits a waste of medical resources, many uninsured patients cannot or do not pay their emergency room bills, and medical providers ultimately find ways to pass on the costs to insured patients and uninsured patients who do pay out-of-pocket.

Going back to the hospital

Frequently – to the tune of $25 billion a year — patients don’t follow care instructions after being discharged from the hospital and wind up being readmitted for complications that could have been avoided. Preventable re-admissions are also common among elderly patients who are discharged prematurely because of insurance shortages or hospital bed unavailability.

Spreading it around

Infection control is ever-evasive in a building full of sick people. Patients sometimes come in with infections which then spread in the hospital. The problem is one of enormous proportions, and the ironic fact is that the hospital is a very dangerous place to be when you’re vulnerable to infection. Something as simple as hand-washing often can reduce the problem, but the risk of infection is enormous and so is the $3 billion annual bill for hospital-acquired infections.

Start Your Loan Application

Other recent posts by bryanh