We all know that healthcare is pricey. In fact, it's something most Americans have come to accept. The worst part about the cost of healthcare, however, is knowing that about 25% is considered wasteful spending.
That 25%, is exactly what The Journal of the American Medical Association (JAMA) recently discovered in a study.
Wouldn't it be nice if there was something we could do to decrease healthcare waste? In other words, our cost of healthcare?
It’s a difficult dream to disagree with, but it’s a lot easier said than done. When it comes down to it, the source of wasteful spending in healthcare 2020 is difficult to pinpoint.
With that being said, the following examples show us where most money disappears in healthcare.
Read on to uncover what JAMA has found to be some of the major reasons of wasteful spending:
1. Coordination Issues Between Providers
There can be a lot of unnecessary overlap in patient care, treatment, and diagnostics in healthcare.
There are specialists for everything, and when, for example, a primary caregiver refers out to a specialist, there may be a breakdown in continuity of care. Which can also mean overlapping or redundant care.
When patients are discharged from hospital stays, they usually visit a primary care provider, in a different care system than that of the hospital.
When this happens, records are transferred, and it’s quite possible that medical records systems aren’t intuitive enough to communicate with each other.
In short, there's a communication breakdown due to silos in the healthcare system that can create wasteful spending.
2. Administrative Complexity Causes Wasteful Healthcare Spending
Wasteful spending in healthcare 2020 can be blamed largely on administrative complexity. It's easy to point the finger at all the moving parts of healthcare, but the fact is, these systems are necessary.
According to JAMA, administrative complexity accounts for $265.6 billion in wasteful spending each year.
But what is considered administrative complexity?
It’s the time, manpower, and resources at the operations level of healthcare. It could include billing, records, coding, or collaboration.
Studies are being conducted to find ways to eliminate the complexity of the administrative side of healthcare. However, unless healthcare moves to a one-payer option, it will be difficult to trim the fat.
3. Lack of Effective Prevention
Preventing the very instances that cause many Americans to turn to healthcare could save billions of dollars each year.
For some reason, the nation is stuck in a reactive state rather than preventative. And heading off disease before it takes over, could easily save patients money.
4. Unnecessary Care and Services
When patients are treated in excess, meaning, the treatments aren’t necessary, there’s a lot of extra spending on the patient’s part. Therapy that doesn’t have a direct outcome, like better health, or longevity, is pointless.
Extra fluff in healthcare goes hand-in-hand with the next two areas of waste because it all comes down to understanding why and where the money is being spent.
5. Prices in Wasteful Healthcare Spending
It’s not surprising that pricing in the healthcare system is the next major wasteful expense, second to administrative complexity.
In other countries, price control is in place to prevent overcharging and padding in healthcare. Some of the same medical procedures executed in the United States are a fraction of the cost in other competitive healthcare markets.
Cost of medication, especially big brand names, is also an area of concern when it comes to pricing healthcare and waste.
There’s a fine line that needs to be monitored closely, however.
For example: Does paying hospitals or clinics less have a direct effect on the quality of care patients receive? It’s an important question that cannot be ignored.
6. Price Transparency
Healthcare is not a productized system. This means patients (in the case of this example, customers), do not know the price of the service they are receiving before they buy it. The ability to compare costs, and shop around for the best price, isn't typically an option.
Additionally, consumers don’t have the time, patience, or know-how to look into the price tag of treatment, so they often avoid confusion by simply accepting the price given.
This is unheard of in other markets...in fact, most retail environments would accept a lowest-price guarantee on a can of corn. In healthcare, these negotiating formats are not as widely accepted.
It is like comparing apples to oranges, but when it comes down to it, why shouldn't patients have better access to all of their options?
Healthcare waste spans across many different areas of the system, and it can be difficult to find ways to cut back on the waste. With that being said, one thing is for sure. Our healthcare system needs to start finding ways to cut down on these unnecessary costs, otherwise more people will be unable to afford quality healthcare.