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1 in 4 Dollars in US Health Care Is Wasted: Analysis

Michael Rainey

A new analysis published Monday in JAMA: The Journal of the American Medical Association finds that about 25% of all U.S. health care spending goes to waste.

The authors, Drs. William H. Shrank, Teresa L. Rogstad and Natasha Parekh, reviewed dozens of reports published over the last seven years to calculate the value of waste in the overall health care system. They found total estimated waste of $760 billion to $935 billion per year in 2019 dollars, broken down into six areas:

  • Administrative complexity, including inefficient rules, forms and requirements: $265.6 billion.
  • Pricing failure, including high prices driven by a lack of competition: $230.7 billion to $240.5 billion.
  • Failure of care delivery, including poor execution or the failure to adopt best practices: $102.4 billion to $165.7 billion.
  • Overtreatment or low-value care, including treatments that offer no benefits to patients: $75.7 billion to $101.2 billion.
  • Fraud and abuse, including fake bills and scams: $58.5 billion to $83.9 billion.
  • Failure of care coordination, including complications and readmissions: $27.2 billion to $78.2 billion.

Waste could be reduced significantly using a variety of known interventions, the authors said, with projected savings ranging from $191 billion to $282 billion, a potential reduction of roughly 25%.

Read the full analysis at JAMA.

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