It is no secret that our healthcare system in the United States is complex and always evolving. Due to these ever-changing system complexities, the United States spends more on healthcare than any other country, with costs approaching 18% of the gross domestic product (GDP) and more than $10,000 per individual. Although estimates can vary, significant evidence shows that the United States is spending about twice as much as needed on the administration of health care. Even though there has been immense effort to reduce administrative overhead, improve patient quality of care as well as reduce fraud and abuse , a substantial amount of waste continues to surface within healthcare spending in the United States with each study that is conducted.
What is Healthcare Spending Waste?
Waste within the healthcare system is the over-utilization of services or other practices that directly or indirectly, result in unnecessary costs. Waste is generally not considered to be caused by criminally negligent behaviors, but rather a misuse of resources.
How Much Healthcare Spending Waste Did the Study Uncover?
Humana Inc. recently published a study in the Journal of the American Medical Association (JAMA) that uncovered the vast amount of waste that has continued to accumulate in the healthcare system in the United States. The study indicated that approximately 25% of all healthcare spending can be characterized as waste. This recent Humana Inc., research was a follow up to a 2012 study called “Eliminating Waste in U.S. Health Care.”
The purpose of the most recent study was to provide an estimation of spending waste within six, previously developed domains and to report potential savings within each domain. The six domains included failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud and abuse and administrative complexity.
According to the Humana study, the total annual costs of waste within those six domains was estimated between $760 billion—$935 billion and savings from interventions were estimated between $191—$282 billion. The study stated that each domain that was reevaluated may require a different approach in order to find an effective solution to reduce wasteful spending.
Bruce D. Broussard, Humana’s President and CEO, said the push toward data interoperability and value-based care models could reduce spending waste. Broussard also stressed the importance of collaboration between payers and providers, with partnership from the government.
“If we collaborate as health plans and providers, in conjunction with the government, we can deliver more effective care and improve health,” Broussard, said. “This research is so important because our industry is wasting money that could be used to improve the care experience so people can lead healthier lives.”
Signature Performance Impacts Healthcare Administrative Costs
At Signature Performance, we are dedicated to making a lasting impact in the nexus of healthcare by inhabiting the payer, provider, federal and community sectors. Our unmatched experience on both the payer and provider side of the business allows our team the opportunity to evaluate healthcare industry issues from a variety of perspectives and create custom solutions that get to the core of the problem. We believe the healthcare industry in the United States deserves only the best, and that sentiment is what motivates our dedicated team to do our very best each and every day. It’s our calling to bend the cost of healthcare administration by improving overall quality and minimizing resources.
Dawn Wierzbicki is the Senior Vice President of Partner Engagement at Signature Performance Inc., in Omaha NE. Signature Performance is an industry leader in reducing healthcare administration costs for private and public healthcare sectors. Our unmatched experience in serving both the payer and provider side of healthcare financial management allows us to implement innovative solutions for every administrative demand.