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Healthcare System in United States Wastes $800 Billion Annually

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Updated January 31, 2019 | Medical Malpractice |

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Thomson-Reuters released a report that indicates that the United States healthcare system wastes a staggering $800 billion every year 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 medical malpractice liability, a behavior which accounts for $200 billion to $300 billion of the wasted costs. Fraud makes up a substantial portion, making up almost $200 billion annually. Administrative inefficiency and redundant paperwork alone up to 18 percent of the total, and medical mistakes account for $50 billion to $100 billion.

Areas of Hospital Spending Waste

Overall, the report concluded that hospitals in the United States 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.

Several recent articles which have identified fees for service reimbursement as a primary motivator underlying this waste. In other words, healthcare 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 is often 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.

How Spending Affects Overall Healthcare Costs

Many studies have been unable to find defensive medicine as a significant cause of increasing healthcare costs. In studies where it was 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 performed 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.

Solutions to Wasteful Hospital Spending

The report indicates that significant savings can be realized by refining the administrative process, including moving away from paper-based systems that are inherently slow and increase the difficulty of sharing information between healthcare 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.

Contact a Medical Malpractice Attorney Today

If you or a loved one have been injured as a result of medical negligence or malpractice, you are urged to contact the attorneys of Wilson Kehoe Winingham. An experienced Indianapolis medical malpractice lawyer at WKW can help you get the compensation you deserve. Call 317.920.6400 or fill out an online contact form for a free, no-obligation case evaluation.

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