“Waste is worse than loss. The time is coming when every person who lays claim to ability will keep the question of waste before him constantly.”
– Thomas Edison

The escalating challenge of waste in U.S. medicine

The U.S. health care system is struggling with inefficiencies and waste that weaken its effectiveness, thus reducing accessibility and sustainability as a whole. According to a study by JAMA, between $760 and $935 billion is wasted annually within the U.S. health care system. This is outrageous, especially since it represents almost 25 percent of the nation’s health care costs, creating an incredibly resource-intensive problem.

Three main drivers of this waste are administrative complexity, over-treatment, and lack of care coordination—all driving up costs without improving patient outcomes.

Administrative complexity—or burritos with extra lettuce

In the U.S. health care system, one can argue that administrative complexity wastes far more money than fraud. That’s dramatic but makes a point. Such a fragmented structure exists partly because all payers (public and private) require extensive forms of billing or insurance-related activities. These activities are time- and resource-intensive.

According to The Commonwealth Fund, administrative costs make up almost 8 percent of U.S. health care spending, compared with less than 2 percent in other developed countries. The complexity arises from the need to work with multiple insurance providers, all of which have their own individual billing codes, coverage policies, and procedures. This has resulted in an elaborate system that providers must navigate, leaving much less time for actual patient care. As a result, doctors and their staff waste far too many hours managing paperwork and navigating billing systems, leading to inefficient patient care.

The problem of over-treatment and overuse

Another substantial waste in our health care system is over-treatment. As a clinician with 30 years of practice, I can assure you that defensive medicine is a large driver of this issue, where providers order more tests or treatments than necessary to avoid being sued.

Aside from this, the dominant fee-for-service system in the U.S. encourages more services, as doctors and medical institutions are compensated per procedure or test, rather than for what care is best. The Institute of Medicine estimates that up to 30 percent of U.S. health care spending goes toward services that do not contribute meaningfully to patient care. These practices not only increase costs but also put patient safety at risk—either from untoward effects of unnecessary medications or complications from procedures that were unwarranted.

The challenge of insufficient care coordination

The United States’ fragmented health care system makes it difficult to coordinate care for patients with chronic conditions who need continued treatment and management across multiple in-network providers. This lack of coordination leads to duplicated tests, conflicting treatments, and gaps in care, all resulting in increased costs and compromised patient safety.

For instance, a patient with diabetes might receive care from an endocrinologist, a primary-care physician, and a cardiologist concurrently. Lack of communication or coordination between these specialists can result in contradictory advice, repeated tests, and conflicting treatments, leading to a disjointed care experience. This can lead to avoidable comorbidities, hospital visits, and emergency room visits, putting more stress on the health care system.

Improving through perspective: solutions and best practices

These systemic problems cannot be fixed without a fundamental reorientation of the U.S. health care system, particularly in how care is delivered and reimbursed. One effective solution is the shift to value-based care. While the traditional fee-for-service model incentivizes volume and is often associated with high costs and low quality, value-based care rewards providers not for treating a higher volume of patients or ordering more services but for providing better treatment that leads to healthier outcomes. This method incentivizes disease prevention and optimal management of chronic conditions, translating into less need for high-priced interventions.

The Cleveland Clinic practices value-based care, with a focus on coordinating care and improving patient outcomes. With these measures, they have been able to drive down health care costs while increasing patient satisfaction. This change eliminates unnecessary medical interventions and aligns the interests of health care providers with those of patients, delivering a more comprehensive health plan.

In addition, streamlining administrative burdens is essential for limiting inefficiencies in health care. Two ways to achieve this are through streamlined billing systems and the adoption of standard electronic health records (EHRs). These steps are likely to reduce the administrative burden on health care providers and enable them to direct their expertise toward treating patients. This streamlined process not only lowers costs but also improves the quality of care by placing timely and accurate patient information in providers’ hands.

Lastly, integrated care systems can be quite effective in revolutionizing the patient care experience, offering a holistic approach that places patients at the center of their health journeys.

An example of such integration is Kaiser Permanente. Kaiser Permanente has the advantage of being both a health care provider and insurer, enabling it to provide its members with a top-down continuum of care from preventive services to specialized treatments. As a result, they have improved health outcomes and cost savings through fewer hospitalizations, reduced emergency room utilization, and fewer unnecessary tests.

As Peter Drucker once said, “Efficiency is doing things right; effectiveness is doing the right things.” Let’s start doing what’s right now.

Shakeel Ahmed is a gastroenterologist.