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Report: US Healthcare System Wasted $750B in 2009

Health experts suggest ways to fix the problem (Sept. 6)

America's healthcare system has become too complex and costly to continue business as usual, according to a report from the Institute of Medicine, based in Washington, D.C. The report was issued on September 6.

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 system- wide transformation. The committee calculated that about 30% of health spending in 2009 –– roughly $750 billion –– was wasted on unnecessary services, excessive administrative costs, fraud, and other problems.

Incremental 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 healthcare organizations. In addition, incentives and payment systems should emphasize the value and outcomes of care.

Better use of data is a critical element of a continuously improving health system, the report says. About 75 million Americans have more than one chronic condition, requiring coordination among multiple specialists and therapies, which can increase the potential for miscommunication, misdiagnosis, potentially conflicting interventions, and dangerous drug interactions. Health professionals and patients frequently lack relevant and useful information at the point of care where decisions are made. Also, it can take years for new breakthroughs to gain widespread adoption. For example, it took 13 years for the use of beta blockers to become standard practice after they were shown to improve survival rates for heart attack victims.

Healthcare costs have increased at a greater rate than the economy as a whole for 31 of the past 40 years, the report notes. Most payment systems emphasize volume over quality and value by reimbursing providers for individual procedures and tests rather than paying a flat rate or reimbursing based on patients' outcomes. The report calls on health economists, researchers, professional societies, and insurance providers to work together on ways to measure quality performance and to design new payment models and incentives that reward high-value care.

For more information, visit the Institute of Medicine Web site.

Institute of Medicine

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