in-depth report estimates that 30 percent of health care spending in the United
States is completely wasted — and the overall numbers are so big, that 30
percent equates to $750 billion.
The report from the Institute of Medicine says America's health care system has
become too complex and costly to continue business as
usual. Inefficiencies, an overwhelming amount of data, and other economic
and quality barriers hinder progress in improving health and threaten the
nation's economic stability and global competitiveness, the report says.
However, the knowledge and tools exist to put the health system on the right
course to achieve continuous improvement and better quality care at lower cost,
added the committee that wrote the report.
The costs of
the system's current inefficiency underscore the urgent need for a systemwide
transformation. The committee calculated that about 30 percent of health
spending in 2009 — roughly $750 billion — was wasted on unnecessary
services, excessive administrative costs, fraud and other
problems. Moreover, inefficiencies cause needless suffering. By one
estimate, roughly 75,000 deaths might have been averted in 2005 if every state
had delivered care at the quality level of the best performing state.
upgrades and changes by individual hospitals or providers will not suffice, the
committee said. Achieving higher quality care at lower cost will require
an across-the-board commitment to transform the U.S. health system into a
"learning" system that continuously improves by systematically
capturing and broadly disseminating lessons from every care experience and new
research discovery. It will necessitate embracing new technologies to collect
and tap clinical data at the point of care, engaging patients and their
families as partners, and establishing greater teamwork and transparency within
health care organizations. Also, incentives and payment systems should
emphasize the value and outcomes of care.
threats to Americans' health and economic security are clear and compelling,
and it's time to get all hands on deck," said committee chair Mark D.
Smith, President and CEO of the California HealthCare
Foundation. "Our health care system lags in its ability to adapt,
affordably meet patients' needs, and consistently achieve better outcomes. But
we have the know-how and technology to make substantial improvement on costs
and quality. Our report offers the vision and road map to create a
learning health care system that will provide higher quality and greater
The report was
sponsored by the Blue Shield of California Foundation, the Charina Endowment
Fund and the Robert Wood Johnson Foundation. Established in 1970 under the
charter of the National Academy of Sciences, the Institute of Medicine provides
objective, evidence-based advice to policymakers, health professionals, the
private sector and the public.