Healthcare in the U.S. is inefficient because of wasteful spending

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Views expressed in opinion columns are the author’s own.

Affordable healthcare is a major concern for Americans — and for good reason. According to the Consumer Financial Protection Bureau, 58.5 percent of all bankruptcies filed between 2013 and 2016 were the result of unpaid medical bills. Everyone wants to be able to receive medical care without worrying about finances. When it comes to making healthcare more affordable, we tend to obsess about types of insurance plans, the rise in healthcare premiums and the types of coverage that should be available for all Americans. Instead, we should focus on determining the factors that contribute most significantly to the high cost of care and evaluate whether those factors are feasible to solve. 

One of the largest contributors to high healthcare costs is wasteful spending, which accounts for $765 billion a year. This is prevalent across the healthcare industry, but it’s also something that could be solved, as individual behaviors and standard practices can be changed to limit waste. Changing administrative practices can curtail waste in the industry, including methods such as increasing price clarity through adopting of standard prices for medical treatment and educating healthcare practitioners to cut unnecessary procedures and overdiagnosis.

So, what makes up wasteful spending, and how can we reduce it?

Wasteful spending is made up of several factors: administrative costs, disparities in procedure prices and inefficiencies in treatment and clinical waste.

One area of wasteful spending that could be considerably reduced is administrative costs. Currently, the U.S. is ranked first in spending the most money for administrative services, compared to other high-income nations. Administrative costs drive 25 percent of all hospital costs, partly due to the unnecessary complexity of the U.S. healthcare system. 

This complexity is due to the lack of price clarity and standardization of prices, which causes the same medical procedures and diagnostic tests in different hospitals to have vastly different costs — potentially up to hundreds of thousands of dollars in discrepancies. Because prices aren’t standard across the industry, some individuals pay inflated rates for services greater than their value. There’s no need for variance in prices for the same procedure if the value of service is the same. Enacting standards and eliminating additional complexities that occur from various billing practices would greatly reduce administrative waste. 

Another aspect of wasteful spending comes from inefficient healthcare practices due to overdiagnosis, poor coordination and unnecessary treatment, which contribute to $91 million of overall waste. Unnecessary care is quite prevalent, as doctors want to please and comfort patients. The Dartmouth Institute for Health Policy and Clinical Practice found that 30 percent of all medical spending could have been eliminated without affecting patient outcomes. 

Unnecessary treatment comes from repeated diagnostics tests, unshared medical information, pre-operational testing for low-risk individuals, overtreatment for health conditions and overprescribing medication.

Other wasteful health practices include poor coordination when patients change care settings, unnecessary hospital readmission and avoidable complications, which all increase national healthcare costs between $25 billion to 45 billion each year.

Healthcare practices are the most preventable of all. In a way, this form of waste is favorable to reduce costs because it only requires a change in clinicians’ behavior and more coordination within the healthcare system. Compared to other healthcare expenditures that may require policy implementation and could be quite arduous to enact, more mindful practices on the part of clinicians are relatively simple to incorporate into treatment.

The last form of wasteful spending comes from clinical waste. Healthcare practices and hospitals are notorious for over-ordering certain supplies and tossing out unused materials. Other forms of waste come from unused and expired drugs. If there were better recordkeeping, these practices could note supplies that were not used and only order what is needed. By paying more attention to waste outputs, we as a nation could save money overall.  

With the high cost of care in the healthcare industry, it’s interesting that Americans aren’t focused on reducing waste. Wasteful spending is simple to address, and it’s a crucial factor in health costs. When comparing factors that generate cost, the high-cost difference between the U.S. healthcare system and other nations, it all correlates to waste. It’s time to cut down on the cost of our healthcare system — and reducing waste is the first place to start.

Kayla Roy is a sophomore biochemistry and microbiology major. She can be reached at kayrroy12@gmail.com.

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