$700 Billion Waste in US Healthcare System

Waste in the U.S. Healthcare System Pegged at $700 Billion in Report From
Thomson Reuters

ANN ARBOR, Mich., Oct. 26 2009/PRNewswire/ -- The U.S. healthcare system wastes
between $600 billion and $850 billion annually, according to a white paper
published today by Thomson Reuters.

The report identifies the most significant drivers of wasteful spending --
including administrative inefficiency, unnecessary treatment, medical errors,
and fraud -- and quantifies their cost. It is based on a review of published
research and analyses of proprietary healthcare data.

"The bad news is that an estimated $700 billion is wasted annually. That's
one-third of the nation's healthcare bill," said Robert Kelley, vice president
of healthcare analytics at Thomson Reuters and author of the white paper. "The
good news is that by attacking waste, healthcare costs can be reduced without
adversely affecting the quality of care or access to care.

"That's the point of this report -- to identify areas in the healthcare system
that can generate game-changing savings," Kelley said.

Here are some of the study's key findings:

    --  Unnecessary Care (40% of healthcare waste): Unwarranted treatment,
        such as the over-use of antibiotics and the use of diagnostic lab tests to
        protect against malpractice exposure, accounts for $250 billion to $325 billion 

in annual healthcare spending.

    --  Fraud (19% of healthcare waste): Healthcare fraud costs $125 billion
        to $175 billion each year, manifesting itself in everything from
        fraudulent Medicare claims to kickbacks for referrals for unnecessary services.

    --  Administrative Inefficiency (17% of healthcare waste): The large volume 

of redundant paperwork in the U.S. healthcare system accounts for 

$100 billion to $150 billion in spending annually.

    --  Healthcare Provider Errors (12% of healthcare waste): Medical mistakes account 

for $75 billion to $100 billion in unnecessary spending each year.

    --  Preventable Conditions (6% of healthcare waste): Approximately $25
        billion to $50 billion is spent annually on hospitalizations to address
        conditions such as uncontrolled diabetes, which are much less costly to
        treat when individuals receive timely access to outpatient care.

    --  Lack of Care Coordination (6% of healthcare waste): Inefficient
        communication between providers, including lack of access to medical
        records when specialists intervene, leads to duplication of tests and
        inappropriate treatments that cost $25 billion to $50 billion annually.

SOURCE  Thomson Reuters

David Wilkins of Thomson Reuters, +1-734-913-3397,
David.wilkins@thomsonreuters.com