Study: Waste accounts for 20% of healthcare spending

June 10, 2012

Six categories of waste account for about 20% of the nation's healthcare spending according to Donald Berwick, MD, former administrator of the Centers for Medicare and Medicaid Services.

Six categories of waste account for about 20% of the nation's healthcare spending, according to Donald Berwick, MD, former administrator of the Centers for Medicare and Medicaid Services.

In an article published in the April 11 Journal of the American Medical Association, Berwick, now a senior fellow at the Center for American Progress, and Andrew Hackbarth, an assistant policy analyst with the Rand Corp., say that fraud and abuse, poor care coordination, failures of care delivery, overtreatment, administrative complexity, and overpriced services are responsible for 20% of the nation's healthcare bill.

"The savings potentially achieved from systematic, comprehensive, and cooperative pursuit of even a fractional reduction in waste are far higher than from more direct and blunter cuts in care and coverage," according to the authors.

They warn, however, that reductions in healthcare spending could damage the nation's economy and will require "mitigation through careful transition strategies."