Behind the Surge in Healthcare Cost: Healthcare Waste, by the Numbers

Behind the Surge in Healthcare Cost: Healthcare Waste, by the Numbers



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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:

5 50 30 on blue

For self-insured employers HCMS Group offers a free Healthcare Waste Estimator so you can know your 5-50-30 numbers. Please contact us at or call (877) 883-5786.

— Bob Simison on behalf of HCMS Group data analytics.


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