Where We’re Wasting Money On Health Care

The health care industry wastes $1.2 trillion on unnecessary health care treatments each year, according to a recent study done by PricewaterhouseCoopers’ Health Research Institute. That amounts to half of the $2.2 trillion the United States spends on health care each year. According to the study, there are 16 different areas where health care funds are wasted. Of those, 6 of the areas stood out as the biggest problems.

1. Too Many Medical Tests

Too many doctors are ordering unnecessary medical tests for patients. Why? Two main reasons stand out. The first reason: concern over medical liability lawsuits. To be honest, we can’t really fault the doctors for this. Medical malpractice lawsuits have become so widespread and devastating these days, that doctors are undoubtedly scared. By requesting more tests, they’re simply hoping to “cover all their bases.” There has been a lot of discussion over how to avoid this problem, and hopefully a solution will be reached. But the second reason isn’t as understandable: attempting to increase their income. I know we’re all looking to make more money these days, but doctors really shouldn’t be ordering unnecessary tests just to increase their income. This is causing unnecessary financial stress on way too many people.

Unnecessary Medical Testing costs us $210 billion every year.

2. Inefficiency With Insurance Claims

Because every insurance company has their own forms and procedures, it’s very difficult for hospitals and medical offices to automate this work. According to the study, some practices spend nearly 40% of their revenue filling out paperwork that has nothing to do with direct patient care. Medical offices also spend a lot of time getting “pre-certifications” from health insurance companies for high-priced procedures, like MRIs. The solution is quite simple: standardize the procedures. If doctors, hospitals, and insurance companies exchanged the same information in the same format – using advanced technology – much time and money would be saved.

Inefficient Insurance Claims Processing wastes $210 billion every year.

3. Abusing The Emergency Room

We’ve been talking about this one for a long time: people are relying on the Emergency Room for their primary health care, instead of for emergencies only. The ER is legally required to treat all patients, regardless of ability to pay. Many uninsured Americans simply can’t afford to visit their primary care physician when something is wrong. So, they visit the ER when they need medical attention – even if it’s not an emergency. For example, Emergency Rooms across the country are noticing a huge rise in people visiting the ER for Strep Throat. But, look at this statistic: Going to the doctor for strep throat costs around $65-$70. Going to the ER for strep throat costs $600-$800. Yikes.

Using the ER as a clinic is a waste of $14 billion every year.

4. Medical Errors

We’ve also talked about this issue quite a bit, since it’s becoming increasingly more problematic. The potential for medical errors is huge: prescribing the wrong medication, not adequately monitoring patients, amputating the wrong limb, etc… That said, there are a wide variety of ways to avoid these mistakes, such as computerized prescription processing and electronic health records.

Medical mistakes cost us $17 billion every year in wasted expenses.

5. Patients Returning To The Hospital

Surprisingly, this happens quite a bit because patients are often discharged too soon – either because of insurance problems, cost problems, or the unavailability of beds. Many times, patients will not follow their discharge instructions at home. When complications arise, they are readmitted to the hospital – usually after only about a week, and usually for a much longer period of time! If the patient had been allowed to stay in the hospital in the first place, they could have completely recovered before being sent home. In most cases, complications would not have arisen at home, and there would have been no reason to re-admit the patients.

Re-admitting patients because we discharged them too soon costs our nation $25 billion annually.

6. Hospital-Acquired Infections

This one’s actually quite shocking: Billions of dollars are wasted every year on the treatment of infections that are acquired while in the hospital. So, really, billions of dollars are wasted every year simply because of carelessness. There are so many things that hospitals and medical staff can do to prevent these infections. Most importantly: hand washing. If the medical staff was just a bit more proactive about these precautions, the number of infections would drop drastically.