This Is How Many Billions America Wastes On Healthcare Each Year

Getting medical care is expensive in the United States. More than $3.5 trillion was spent on healthcare services in 2017. That averages to $10,700 for every patient.

About 71% of all medical expenses are mitigated via private and public health insurance. Yet 10% of that $3.5 trillion estimate is paid directly out-of-pocket by patients without medical insurance.

There is a lot of money flowing between the medical industry and patients. And, according to a new medical study, about $1 out of every $4 is wasted on bureaucracy, processing inefficiencies, and unnecessary procedures.

In other words, more than a quarter of $3.5 trillion is wasted annually — up to $935 billion each year.

According to new findings, this problem will only worsen and progressively become more complicated and expensive to remedy the longer it takes to solve.

The waste quandary

The study was written by representatives of Humana Health Care and medical experts at the University of Pittsburgh School of Medicine and published in the Journal of the American Medical Association.

The study was led by Dr. William Shrank, chief medical and corporate affairs officer for Humana, and Dr. Natasha Perekh of UPSM.

This multi-year study starkly demonstrates the institutionalized waste that has become normalized within the medical industry.

According to the study, more than $265 billion is wasted on administrative bureaucracy and complexities alone. This includes the overlapping processing and billing task undertaken by doctors and insurance companies.

For example, the study found that a doctor spends two hours on administrative tasks for every hour spent on a patient. Another $240 billion is wasted on unnecessarily high prescription medication costs and medical services.

Over $282 billion in waste is created in inefficient outpatient services and in-hospital medical mistakes. Additional waste is caused by unnecessary procedures, aggressively executed services, and more.

Recognizing waste to eliminate it

According to Dr. Shrank, recognizing and streamlining established medical bureaucracy inefficiencies now is the best way to eliminate systematic waste.

“If we take a more active role to eliminate waste, address affordability, and improve care, we don’t need to fundamentally disrupt the health care system,” wrote Dr. Shrank.