There’s an elephant in the healthcare cost room that nobody wants to talk about. It’s healthcare waste, and it adds up to almost $1 trillion.
Researchers including the government’s own Institute of Medicine have found that 30% of the nation’s $3.2 trillion in annual healthcare spending is wasted. According to research conducted by HCMS Group, waste in the form of over-treatment and over-consumption accounts for 30% to 40% of healthcare costs for risk-bearing employers and health plans.
Why not talk about it? Well, it’s a touchy subject. Who’s to say what waste is when we’re talking about someone’s health? What’s waste to you might seem like a life-or-death necessity to me.
Nonetheless, that’s what we focus on at HCMS Group, because reducing waste is the best way to lower cost for employers while improving health. Wasteful over-diagnosis and over-treatment by the health industry contributes to over-consumption by patients that increases their risks.
“Most healthcare providers know they over-treat people,” said Dr. Hank Gardner, the CEO of HCMS, based in Cheyenne, Wyoming. “They do it because that’s what patients expect – lots of tests and procedures and prescriptions – and the providers have to worry about customer satisfaction scores.”
To understand healthcare waste, it’s important to know these three numbers:
— Bob Simison on behalf of HCMS Group data analytics.