Healthcare's wasted billions
Why we lose $700 billion – and how to get it back.
Charlottesville, Va. — Seven hundred billion – sound familiar? Yes, that's the cost of the financial-services industry bailout, but it's also about the amount of money America is wasting every year on unnecessary healthcare expenses.
If we could take the steps needed to save that $700 billion, we could take "just" $100 billion to cover the uninsured and have $600 billion left over for Wall Street.
Here's the math: Our current healthcare spending is approximately $2.1 trillion (that's up from $1.3 trillion noninflation adjusted in 2000). We waste an estimated one-third – or about $700 billion – on unnecessary procedures, unnecessary visits to the doctor, overpriced pharmaceuticals, bloated insurance companies, and the most inefficient paper billing systems imaginable.
Saving that wasted money can begin with you and me. Medical experts say that 40 percent of our life expectancy can be attributed to lifestyle. We spend about $100 billion per year on costs related to obesity alone.
We must examine our role in healthcare. How often do patients visit the physician unnecessarily when a call to the nurse would have been fine? Or rush to get medication for every little cough? We spend 10 percent of all our medical care dollars in the last year of life – about $210 billion – much of which is fueled by demands from patients and families. To best understand how to deal with illness, patients need to make sure the lines of communication are open with their healthcare provider.
Surprisingly little is known even among doctors about whether one medicine works better than another. And in many situations, doctors don't even know how often a patient needs to be seen. Try this: Next time your physician says, "Come back in a year," ask, "Why aren't you telling me two years – or six months?" Asking questions and taking an informed role will help individuals understand how to get the right amount of care.
Rethinking the way we pay doctors would also help significantly to curb waste. Right now, many doctors have incentive to provide services, because they get paid for every one – whether an office visit or an operation. In different parts of the country, patients get two to three times as much care for the same disease, with the same result. If doctors practiced in the lower-cost way (again, with no difference to the patient), some experts estimate $50 billion in savings – just on Medicare expenses.
Insurers are another big culprit in racking up unnecessary expenses. Many have different requirements for massive numbers of nurses who "preapprove" expensive procedures, from imaging tests such as X-rays, to blood tests not related to diagnosis. Doctors should be allowed to practice according to established guidelines and then allow the insurance companies to check for compliance.
Let's consider our medical record-keeping model. It is perhaps one of the most obvious, yet overlooked places where costs can be curbed. For the most part, the process has not changed in the past 50 years. Why?
Electronic health records are one of the best ways to improve quality and cost of care. They give doctors instantaneous and the most up-to-date information on how to treat a patient.
The current method of using billing clerks (often two per physician) can add up. Automatic electronic billing direct to the insurance company would not only be more economical it would certainly be more efficient – just think, no more duplication of tests. We're talking an estimated savings of at least $80 billion per year, according to some studies.
What about malpractice costs? Doctors must police doctors, before mistakes rack up, not lawyers after the fact.
And last, the pharmaceutical and device manufacturers: Many other countries have independent boards that assess the value (yes, both the effectiveness and the cost) of drugs and devices. We are overdue for the same.
What does this have to do with the next president? Plenty. Both candidates have talked in generalities about future savings to pay for the uninsured, though Barack Obama has specifically proposed a plan to eventually require electronic health records.
The next president, whoever that is, should start by appointing a group made up of those responsible for wasting our dollars – as well as members of Congress and the administration – to examine ways to save and then implement them. It could take at least five years to generate savings, so we have no time to lose. When we save this money and figure ways to apply it to the uninsured, we will have a long-term superwin: better competitiveness and healthcare for all.
• Arthur Garson Jr., MD, MPH, is the executive vice president, provost, and former dean of the School of Medicine at the University of Virginia. He is coauthor of "Health Care Half Truths: Too Many Myths, Not Enough Reality."