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Recent report says $800 billion a year wasted in US health care system

October 26, 2009 Info Articles, Medical Malpractice

A recent report released by Thomson-Reuters indicates that a staggering $800 billion is wasted every year in the U.S. health care system due to inefficiency, fraud, medical mistakes and lack of preventative care.

The report claims that doctors routinely overprescribe antibiotics and order unnecessary tests to protect from malpractice liability, a behavior which accounts for $200 to $300 billion of the wasted funds. Fraud also makes up a substantial portion and accounts for almost $200 billion a year. Administrative inefficiency and redundant paperwork account for up to 18 percent of the total.

The report also states that medical mistakes account for $50 to $100 billion of the total. Medical mistakes may not necessarily be classified as medical malpractice but can cost patients and insurance companies substantial amounts of money in treatment that would have been otherwise unnecessary.

The overall conclusions of the report found that U.S. hospitals spend nearly twice as much as comparable Canadian hospitals on administrative costs and demand more time from doctors who spend an average of eight hours each week on paperwork instead of attending to patients.

As medical malpractice attorneys in Indiana, we have also seen several recent articles which have identified “fee for service reimbursement” as a primary motivator underlying this waste. In other words, heath care providers’ bottom lines are dependent primarily on how much “medicine” they deliver as opposed to how well the patient does. Thus, much of the identified waste is overutilization which may be rationalized as defensive medicine so as not to question the physician’s motivations. True fraud requires dishonest intent. Waste rationalized as “defensive medicine” effectively diminishes or removes any dishonest intent and replaces it with a rational fear of a litigation system run amok.

Concerning “defensive medicine”, many studies have been unable to find this to be a significant cause of health care costs. In those studies in which it has been found to be a contributor to “waste” the information was obtained by asking the physicians whether they were ordering tests in order to protect themselves legally. In such a study, the reviewer simply has to trust that the physicians were motivated by fear.

However, many tests carry risks themselves, such as CT scans and the radiation burden associated with them. If a physician truly orders that a test should be done even though they expect it to show nothing simply to cover themselves from liability, then they have essentially admitted exposing their patients to an unnecessary risk of harm for the benefit of the doctor. If a CT scan reveals something dangerous or rules out a potential diagnosis, then that test is far from unnecessary or wasteful.

The report indicates that significant savings can be realized by refining the administrative process, including moving away from paper-based systems which are inherently slow and increase the difficulty of sharing information between health care providers as well as contribute to redundant or incomplete record keeping. In addition, moving towards a system which emphasizes preventative care over the lifetime of the patient could also result in significant savings by avoiding costly treatments and surgeries later in life due to complications from poorly maintained chronic conditions such as diabetes, heart disease and obesity.

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