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Study outlines $3.6T in potential healthcare waste reductions
June 14, 2010 | Richard Pizzi, Editor
ANN ARBOR, MI – The U.S. healthcare industry can eliminate $3.6 trillion in healthcare waste over the next 10 years by addressing a series of operational inefficiencies, according to a new study by Thomson Reuters.
The report analyzes some of the top public and private sector efforts to reduce waste in the healthcare system and identifies five "real world" strategies to cut costs and improve patient care.
"Last year, we published a report concluding that the U.S. healthcare system wastes $700 billion a year," said Bob Kelley, vice president for healthcare analytics at Thomson Reuters and co-author of the report. "This new report describes a possible path for significantly reducing that waste."
Thomson Reuter officials claim that by systematically incorporating these best practices into the organizational structure of the healthcare industry, it's possible to cut waste 5 percent per year.
Over 10 years, that would add up to $3.6 trillion and keep total healthcare expenditures at their current rate of about 17 percent of the nation's gross domestic product.
"We started with a premise that RAND Health researchers put forth in a recent article in the New England Journal of Medicine – it is reasonable to set a goal of constraining healthcare spending to its current share of the GDP," said Ray Fabius, MD, chief medical officer at Thomson Reuters and co-author of the report. "Then we investigated initiatives that have successfully reduced healthcare costs without sacrificing quality – real-world examples of what's possible – and in some cases estimated the savings if they were widely replicated."
Among the strategies outlined in the paper:
- Engage Consumers: Engaging the public in discussions with their caregivers regarding the value and risk of specific treatment options could dramatically reduce money spent for unnecessary treatments.
- Coordinate and Share Information: Healthcare providers' lack of access to patient medical records leads to the duplication of tests and inappropriate treatments that are estimated to cost up to $50 billion annually.
- Manage Disease and Maintain Wellness: This strategy ensures that patients are actively engaged, along with their clinicians, in managing their health through attention to personal behavior, disease prevention, early detection and appropriate care for chronic diseases.
- Design for Patient Safety and Quality: Preventable medical errors account for $50 billion to $100 billion in annual healthcare spending. By implementing a simple checklist approach based on evidence-based best practices, several healthcare systems have improved patient outcomes and reduced costs.
- Reduce Opportunities for Fraud: In 2007, when the nation spent roughly $2.3 trillion on healthcare, fraud was estimated to account for as much as 5 percent to 10 percent of that spending, according to a report published by the George Washington University School of Public Health and Health Services. Computerized systems that track data anomalies to identify fraud and breaches in payment integrity have been proven to stem these costs in several state Medicaid programs.
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