Key cuts to healthcare waste saves $3.6 trillion

WASHINGTON Mon Jun 14, 2010 12:01am EDT

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WASHINGTON (Reuters) - The U.S. healthcare industry can cut $3.6 trillion in waste over 10 years with a few common-sense steps to eliminate fraud, errors and to encourage efficiency and healthier behavior, according to an analysis by Thomson Reuters.

Recommended changes include giving patients a medical "home" to better coordinate care, eliminating a culture of fraud, encouraging patients to ask about healthcare costs, and rewarding quality improvement initiatives.

Such changes could reduce waste by 5 percent a year, adding up to $3.6 trillion over 10 years, according to the report.

"Last year, we published a report concluding that the U.S. healthcare system wastes $700 billion a year," Bob Kelley, vice president for healthcare analytics at Thomson Reuters, said in a statement.

"This new report describes a possible path for significantly reducing that waste."

Kelley and colleagues at Thomson Reuters, parent company of Reuters news agency, asked clients what they were doing that worked. They also read published studies on ways to cut waste.

The report, available at factsforhealthcare.com, outlines some of the best measures.

They include:

* Encouraging everyone to manage their own health through personal behavior to prevent diseases, early detection and appropriate care for chronic diseases.

* Using a simple checklist approach to prevent medical errors, which cost $50 billion to $100 billion a year. For instance, Dr. Peter Provonost at Johns Hopkins University in Baltimore estimates his checklist he uses when inserting a catheter to deliver medication, called a central line, reduced infection rates from 11 percent to zero. This prevented 43 infections and eight deaths and saved the hospital $2 million.

* Reducing opportunities for fraud. A George Washington University report estimated that in 2007, fraud accounted for 5 percent to 10 percent of the $2.3 trillion in healthcare spending.

"The goal is to change the culture of fraud," the report reads, adding that while most providers submit legitimate bills, "the public and the provider community need to be better educated about how fraudulent payments directly reduce resources available to patients for legitimate and necessary healthcare services."

* Reduce fragmentation in the delivery of care, better coordinating care among specialists and cutting administrative costs.

* Create a "culture of performance improvement" that promotes the quick dissemination and adoption of best practices.

"New Jersey's five largest health plans and five physician groups have created a pilot program allowing hospitals and physicians to communicate with health plans and address administrative tasks through a single Web portal," the report reads.

Electronic records are key, the report said. "The Minnesota Department of Health estimates that when fully implemented, a law requiring the standard, electronic exchange of routine healthcare business transactions will save the state more than $60 million per year," it reads.

Democrats in Congress passed a healthcare reform bill in March that largely focuses on health insurance. Republicans say the plan is too expensive at a time of monstrous federal budget deficits, but President Barack Obama has argued it is possible to use reform to save money.

"Great effort was expended to provide a balanced and specifically apolitical viewpoint equally weighing the concerns of patients, providers, payers, and purchasers," the Thomson Reuters report reads.

(Editing by Philip Barbara)

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Comments (8)
macman2 wrote:
No mention of the biggest waste of health care funds – the US private health insurance industry. We could save $400 billion annually with a single payer plan for this nation. It would much more efficient than the suggestions listed.

Jun 14, 2010 6:27am EDT  --  Report as abuse
Storyburn_has wrote:
Obamacare will never work unless we turn the health insurers into non profit entities.

Jun 14, 2010 7:06am EDT  --  Report as abuse
gwng99 wrote:
Our healthcare and insurance industry are the same as banking and mortgage filled with greedy management plus some unethical doctors. They take advantage of the inefficiency and ineffective of our governemnt and bureaucratic system. Basically they have been milking tax payers money for years.

Jun 14, 2010 9:24am EDT  --  Report as abuse
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