The American medical system squanders 30 cents of every dollar spent on health care, according to new calculations by the respected Institute of Medicine. But in all that waste and misuse, policy experts and economists see a significant opportunity — a way to curb runaway health spending, to improve medical outcomes and even to put the economy on sounder footing.
The Institute of Medicine report — its research led by 18 best-of-class clinicians, policy experts and business leaders — details how the American medical system wastes an estimated $750 billion a year while failing to deliver reliable, top-notch care. That is roughly equivalent to the annual cost of health coverage for 150 million workers, or the budget of the Defense Department, or the 2008 bank bailout.
The institute’s analysis of 2009 data shows $210 billion spent on unnecessary services, like repeated tests, and $130 billion spent on inefficiently delivered services, like a scan performed in a hospital rather than an outpatient center.
It also shows the health care system wasting $75 billion a year on fraud, $55 billion on missed prevention opportunities and a whopping $190 billion on paperwork and unnecessary administrative costs. The Institute of Medicine is an independent adviser to the government and the public, and part of the National Academy of Sciences.
The report depicts a system that saves lives in miraculous fashion, but is also expensive and outmoded and in some cases downright Kafkaesque.
“If banking were like health care, automated teller machine transactions would take not seconds but perhaps days or longer as a result of unavailable or misplaced records,” the report said. “If home building were like health care, carpenters, electricians and plumbers each would work with different blueprints, with very little coordination.”
Along with the squandered money there is a human toll, the report said, as medical errors and inefficiencies mean that doctors fail to deliver the best and most timely care to patients.
“If the care in every state were of the quality delivered by the highest-performing state, an estimated 75,000 fewer deaths would have occurred across the country in 2005,” the report said.
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