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U.S. healthcare: A tortuous trail of inefficiency, waste, and fraud

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An Institute of Medicine study found $750 billion each year in waste, inefficiency, and fraud in the U.S. health care system. That’s about 30 percent of total U.S. healthcare costs.To put that in perspective, the official U.S. defense budget for fiscal 2013 is $633.3 billion. The entire U.S. public education system costs around $650 billion.

Follow with me, if you will, this tortuous trail through the medical world (not my experience, but that of someone in my family), and how it all costs you, whether you’re a patient or not.

You’re having increasingly severe knee pain, so you go to your personal physician, who orders X-rays and the usual bloodwork regimen. He writes a handful of prescriptions, send you on your way.

Drugs don’t help, so next step, referral to a specialist. You show up at the specialist’s with the disk containing your digital X-rays and print-outs of your bloodwork, only to be told, “We don’t need them — we prefer to do our own X-rays and bloodwork.” So, having driven 50 miles or so to see the specialist, do you say, “Well, I think that’s unnecessarily duplicative and costly” and refuse? Of course not — you grit your teeth and do it all over again.

The specialist prescribes a series of very expensive shots, requiring more travel, more time in waiting rooms. The shots don’t help.

You then decide surgery is the only solution, and this time opt for a specialist and a hospital in yet another city to be near family. More duplicative X-rays, yet another round of bloodwork.

And all along the way, at every doctor’s office and at the hospital until you’re wheeled into the operating room, reams of redundant patient information/history forms. You get your bionic knee, but does it end there?

Oh no, there’s rehab. More paperwork, more patient history. By the time it all finally ends, you’ve spent countless hours in waiting rooms, gone through several rounds of duplicative X-rays/bloodwork, generated hundreds of pages of duplicative patient information forms and medical histories, and accumulated tens of thousands of dollars in costs (which would have been significantly more had there been CT scans, MRIs, or other expensive imaging along the way).

Multiply all this hundreds of thousands, or even millions of times across the U.S. patient population and — you’ve got an ungodly, expensive mess. And we all pay, through higher insurance costs, higher taxes to pay for Medicare and Medicaid.

On a routine visit to one of my physicians recently, he was lamenting, “I’ve been forced to spend $150,000 on hardware and software for electronic patient records, but I can’t upload data from my system to the local hospital and I can’t access information on my patients once they go there. It’s ludicrous.”

These are just two small personal examples of what an Institute of Medicine study tallies out to $750 billion each year in waste, inefficiency, and fraud in the U.S. health care system. That’s about 30 percent of total U.S. healthcare costs.

To put that in perspective, the official U.S. defense budget for fiscal 2013 is $633.3 billion. The entire U.S. public education system costs around $650 billion.

The breakdown of those wasted dollars include $210 billion yearly in unnecessary treatments/duplicative tests, $190 million in excessive administrative costs, and $75 million in fraud. Another large chunk is the continued reliance by much of the medical establishment on paper records and electronic systems that don’t communicate with each other.

Elderly patients (Medicare) see an average seven doctors in four different practices each year, often taking as many as 19 different doses of medications each day because no one has evaluated who’s doing what and why.

Most insurance companies, including traditional Medicare, pay doctors, hospitals, and other medical providers under a fee-for-service system that reimburses for every visit, test, or procedure, resulting too often in overtreatment, mistreatment, and unnecessarily duplicative tests.

Mark Bertolini, CEO of the giant Aetna health insurance company, in an interview on NPR, noted that Medicare and Medicaid pay “well below a physician’s costs for reimbursement.” In today’s system, he said, “We pay for each unit of service provided, and there is an incentive then to do more units of service, particularly when the government cuts back on the reimbursement or units of service.”

In many cases, physicians or groups of physicians have invested in expensive imaging and/or testing equipment, and have a vested interest in seeing a return on that equipment.

Other studies have shown that the simplest of infection prevention steps — washing hands between patients — could prevent needless infections, hospital stays, and deaths, while saving millions of dollars yearly in healthcare costs. Yet, survey after survey shows 40 percent to 60 percent of doctors and nurses fail to do this most basic step (and doctors are more likely offenders than nurse’s aides way down the status chain).

Government data show spending on hospital visits, medications, and other care outpaced gross domestic product last year by 2-to-1, consuming 18 percent of the economy. Health care costs, the report notes, have increased at a greater rate than the U.S. economy in 31 of the past 40 years. Deaths due to poor care, medical mistakes, etc.: 75,000 — more than double the number killed in auto accidents.

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Discuss this Blog Entry 1

Dan (not verified)
on Jan 19, 2013

I've seen that picture! Ka-ching! Unfortunately so much of the health system covered by insurance (private and public) is exploited by providers with the help of patients. If "insurance is paying for it", well, then it’s free! Caveat emptor.

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