6 Categories of Waste in Health Care

6 Categories of Waste in Health Care

Health care spending in America is rapidly growing. In 2009 alone, that waste as a whole totaled over $750 billion dollars, according to The Institute of Medicine. That obscene number has only increased in the years since. While that number may seem extremely high, when you factor in poor coordination between doctors, unneeded services, and additional appointments, it is easy to see how that money can add up.

To keep your hospital or healthcare clinic running as efficiently and effectively as possible and help your profit margins stay high, we have compiled a list of the 6 top categories of waste in health care. Take a look at them below:

Failures of care coordination

This includes poor planning on a doctor’s or physician’s part, where planning is not followed through, or where care has been split up. Problems can include but are not limited to undue hospital stays, extra time in the hospital, and highly avoidable complications.

Pricing failures

Pricing waste comes from the cost of a test or scan. An example of this pricing failure is shown by Berwick and Hackbarth, “Magnetic resonance imaging and computed tomography scans are several times more expensive in the United States than they are in other countries,” due to the lack of competitors on the market.

Overtreatment

Overtreatment can also be classified as defensive medicine. This form of practice includes requesting tests that are unnecessary or already completed. Overtreatment also often occurs when doctors try to treat the “early stages” of a medical condition while that illness may have never been a problem in the first place.

Fraud and Abuse

Fraud and abuse are exactly what you think they are. It is anything shady that goes on inside the administration or building. Aside from false bills and dishonest scams, it includes the cost of additional inspections that aim at catching these problems within a company.

Failures of care delivery

This includes effective preventive care, lack of patient safety practices and the general lack of using the safest practices. Problems with patients range from the minor, such as hypoglycemia or sickness, to the extreme, like kidney failure. These incidents lead to patient injuries, poor surgical outcomes and all around higher costs.

Administrative complexity

This category stems directly from the waste required by insurance agencies or the government due to bureaucratic procedures. This waste most commonly occurs in the billing and coding section of the medical teams. Administrative costs can be one of the largest burdens on a small office or in a large hospital.

A blue and orange logo with a sun in the middle.

Sunlit Cove Healthcare Consultants

We provide management and consulting services to help healthcare businesses run efficiently. Navigating the dynamic and complex revenue cycle management is a challenge for many health plans, health care vendors, and providers. Our consulting services are available to assist with your day-to-day operations and provide expertise in growth and change management. We manage all aspects of your enterprise from the development of the revenue cycle management process to the completion of your business cycle.

Related: Revenue Cycle Interim Management