How much does low-value care cost the U.S. health system, and can clinician-level measurement reduce it?

When confronting a problem as massive as the hundreds of billions of dollars wasted annually on low-value health care, it is easy to assume the solution must be equally massive, requiring a sweeping federal initiative, industry-wide task force or years of regulatory reform.

But that is the wrong way to think about it.

The unnecessary spending that burdens our health care system is not the result of a single catastrophic failure. As the Institute of Medicine (IOM) has long recognized, waste stems from multiple sources across the health care system — from administrative complexity to pricing, fraud and unnecessary services. Yet one significant contributor has never been addressed in a rigorous and sustained way: the quality of everyday clinical decision-making. Every day, clinicians decide whether to order an imaging study, prescribe a medication or recommend a procedure. While many decisions align with the best available evidence, others do not. Ordering imaging that is unlikely to change treatment, prescribing a brand-name drug when an equally effective generic is available or using antibiotics for viral infections may seem insignificant in isolation. Repeated across millions of patient encounters, however, these decisions become a meaningful source of unnecessary spending and unwarranted variation in care.

Solving this problem does not require reinventing health care. It requires helping clinicians consistently make evidence-based decisions and measuring them.

Measuring what matters

Few people dispute that the U.S. health care system is remarkably inefficient. Building on the IOM's foundational work on health care waste, a landmark 2019 review published in JAMA estimated that between $760 billion and $935 billion is wasted annually across the U.S. health care system. The review identified six major sources of waste: failure of care delivery, failure of care coordination, overtreatment and low-value care, pricing failure, fraud and abuse, and administrative complexity.

Of those categories, roughly $400 billion each year is attributable to clinicians not consistently adhering to standards of care, leading to overtreatment and low-value services. Unlike administrative complexity or fraud, this type of waste can be reduced without restructuring the health care system, introducing new regulations or involving law enforcement.

The underlying issue is straightforward: clinicians do not always follow established standards of care. And the majority of them are unaware that they are not following current evidence.

Professional societies across virtually every specialty — such as the American College of Cardiology, the American Academy of Orthapaedic Surgeons and others — as well as leading medical journals like The New England Journal of Medicine and The Lancet continually publish and update evidence-based clinical guidelines. While every guideline must allow room for clinical judgment and patient-specific circumstances, greater adherence would improve outcomes while eliminating a significant amount of unnecessary care.

Health care already measures quality extensively through programs such as HEDIS, CMS Star Ratings, MIPS, total cost of care, and prior authorization programs. These measures focus on organizational performance, episodic costs or claims after services have already been delivered.

What they largely fail to measure is the quality of individual clinical decision-making.

That is the next generation of health care measurement.

Measurement 2.0

No single policy or organization creates low-value care. Instead, it emerges from scores of independent clinical decisions made every day.

Consider a patient who visits her primary care physician with uncomplicated lower back pain. Despite strong evidence that routine imaging rarely improves diagnosis or treatment in these cases, an X-ray or MRI is likely to still be ordered.

That financial burden is distributed among many health care stakeholders: the patient, employer and health plan. But the true cost extends much further. It includes unnecessary use of imaging resources, clinician and patient time, administrative documentation, claims processing, and the downstream testing that often follows incidental findings.

Each individual decision may seem insignificant.

Collectively, millions of similar decisions account for hundreds of billions of dollars in unnecessary health care spending every year.

Because these costs originate with individual clinical decisions, improvement efforts must begin there.

Today, advances in health care analytics allow provider organizations to evaluate physician decision-making against evidence-based standards while enabling health plans to analyze claims patterns across clinicians, specialties and organizations.

It is now possible to identify where waste occurs — and why — and to share clinician performance insights to drive real change, clinician by clinician.

Turning measurement into improvement

The value of clinician-level measurement is not punishment; it is data-driven improvement.

Most clinicians who deviate from best-practice guidelines are not intentionally providing inappropriate care. More often, they are unaware that their practice patterns differ from current evidence and their peers. When presented with objective, data-driven feedback, many are eager to align more closely with established standards because doing so benefits both their patients and their practice.

Provider organizations can use these insights to prioritize clinical improvement initiatives, incorporate appropriateness measures into clinician profiles and reward evidence-based practice through value-based reimbursement and risk-sharing arrangements.

Health plans can benefit from individual clinician measures, too. They can encourage guideline adherence through incentive programs, recognize high-performing physicians within provider networks, and make evidence-based performance more visible when members, care managers or referring physicians search for specialists.

The future of health care measurement

Some degree of inefficiency will always exist in a health care system as large and complex as ours. But the enormous financial and clinical burden created by low-value care is no longer inevitable.

Health care now has analytical tools to measure the clinical decisions that ultimately determine whether care delivers value in the first place.

Organizations that embrace this next generation of measurement will not only reduce unnecessary spending. They will improve consistency, strengthen evidence-based practice, and ultimately deliver better care for patients. And together, we will address the $400 billion in annual waste that unnecessarily burdens our health care system.

Jeanne Cohen is CEO of Motive Medical Intelligence, a health care data and analytics company advancing clinician-level performance measurement and value-based care through its Practicing Wisely platform that measures physicians, advanced practice providers, and allied health professionals.