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Cutting the Waste in Medicine

By Dr. Sachin D. Shah
. 1 Comment(s)

Last week, the Institute of Medicine (IOM) released a 381-page report entitled Best Care at Lower Cost,” which is an indictment of how much we spend and needlessly waste in our current health care system. 

IOM chart


We spent $2.6 trillion on health care last year, which is about 17% of our nation’s GDP.  An astonishing one out of every six dollars spent was on health care.  But even more shocking was that 30% of that money was spent unnecessarily.  An estimated $750 billion worth of health care spending in 2009 did nothing to make anyone healthier.  The report identified many sources of waste, which should also be seen as opportunities to improve. 

A whopping $400 billion of the wasted spending went to unnecessary services and excess administrative costs. We could save $210 billion annually by eliminating unneeded tests, like imaging for simple low back pain, brain MRIs after fainting episodes without seizures, and repeating colonoscopies earlier than necessary. We could save another $190 billion by streamlining the crushing administrative costs generated by the many different procedures to bill multiple third party insurance companies. These costs clearly add up.


Another $235 billion went to inefficiently delivered and overpriced services. Medicine is a notoriously slow moving system, often entrenched in convention, unable to make rapid adjustments when new developments make it clear that a different approach is more efficient with better outcomes.


Simply sharing the medical records of patients between hospital systems or doctors offices is often a maddeningly difficult task.  A patient of mine admitted for chest pain at another hospital across town, perhaps closer to his home, will return to see me in follow up several days after discharge, and I will have no idea what happened during his hospitalization. What tests were performed, what medications were changed, what conclusions were drawn--nothing aside from what the patient is able to tell me.  Because most hospital systems, even within a few miles of each other, do not efficiently share records, patients are often vulnerable to dangerous medication errors, expensive and redundant testing, and missed opportunities to prevent complications which lead to re-hospitalizations.


We don’t learn from each other very well, either. If a health system in Utah has developed a model of care that significantly improves how patients with heart failure do, keeping them out of the hospital and living longer and healthier lives, every health system in the country should know and have an incentive to adopt that model. Instead, each region tends to have their own standards of care, some relatively effective, others relatively ineffective and oblivious to what is being shown to work better.  If we did a better job of collecting and sharing data effectively, we could adjust our practice to help optimize patient outcomes.  We must improve adherence to established, evolving, and evidence based clinical practice guidelines.


This is no small task, but the stakes are high. The IOM report estimated nearly 75,000 needless deaths could have been averted in 2005 if every state had delivered care on par with the best performing state.


Other recommendations include empowering patients more, improving coordination of care, and re-organizing our healthcare system in ways that help deal with the enormous complexity of modern medicine that no individual provider could possibly tackle on their own. The authors point to examples from the manufacturing industry, who have become far more adept at reacting with speed and agility to changes that could improve their products and save on costs.  Likewise, the aviation industry has dramatically reduced catastrophic errors by simple adherence to checklists. Atul Gawande, most recently in an August New Yorker piece, makes a similar case for systematic change to help standardize the way we practice medicine to improve the quality, drawing on the example of national restaurant chains.


Cost and quality based reforms have gained traction in recent years and are underway in many places.  The development and implementation of these models for change will be aided by measures in the Affordable Care Act like the Centers for Medicare and Medicaid Innovation (CMMI), but the task of changing the culture and inertia of conventional medicine is formidable.


Still, we have to get better. The status quo is unsustainable. We are clearly overspending for an underperforming health care system, which is straining our economy and diverting resources from other fundamental national priorities like education and infrastructure.  More importantly, we are doing so at the expense of people’s lives.

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  1. Scott Poppen

    Nice summary of some landmark work. And when they ask us "where are we going to get the money to cover the uninsured?" or "where are we going to get the money to pay for heath care reform?"...this single pie chart is a great visual.

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