Paper of the Week: 2nd December 2019

This week’s blog is brought to you by: Dr Joe McManners

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Full reference and title from the journal:

Waste in the US Health Care System; Estimated Costs and Potential for Savings William H. Shrank, MD, MSHS1Teresa L. Rogstad, MPH1Natasha Parekh, MD, MS2

JAMA. 2019;322(15):1501-1509.

Authors conclusion:

In this review, based on 6 previously identified domains of health care waste, the authors estimate the cost of waste in the US health care system to between $760 billion to $935 billion, this is approximately 25% of total US health care spending. The projected potential savings from interventions that reduce waste, (excluding savings from administrative complexity), range from $191 billion to $282 billion, representing a potential 25% reduction in the total cost of waste. Implementation of effective measures to eliminate waste represents an opportunity reduce the continued increases in US health care expenditures.

3V bottom line

This is a useful paper to identify waste in US health spend, but the discussion needs to move on to look at value as well as cost.

The authors estimate a huge amount of waste and what can be done about it, but they do not look at this in the context of population health spending in a way that identifies better value use of that spend on health care. In US healthcare there is clearly inequity and undertreatment. Addressing low value care and waste can be part of the solution to this. We would argue that the authors’ focus is on cost and waste (which is arguably the established view in US healthcare), but they need to make the next step in the argument which is to better allocate that resource for population health benefit.

3VH – Implications for value

‘The US wastes more money on health than the total yearly GDP of Holland.’

Today’s paper of the week is focused on waste in the US health system. The identification and management of waste is of vital importance, but we also need to consider why it is and what the ‘opportunity cost’ is of this waste.

The authors identify the number which is between $760 and $965 billion dollars. This is a phenomenal figure and so big it is hard to think about. It Is around the equivalent of the annual GDP of Holland. The authors probably conservative estimate is this is around 25% of total spend, previously Don Berwick has suggested it is around 30% or more.

Given the US spends around 18% of its GDP on health, even a quarter of this is still 4.5% of GDP. The authors also thoroughly quantify evidence based interventions that can address this waste, and they conservatively suggest 25% of the waste can be eliminated.

As a clinician, (and a potential patient), these sorts of numbers are troubling. In the EU we are likely to fair not a lot better (an OECD report on wasteful health spending estimates this is around 20% of budgets[i]), although we are likely to waste less on the largest category of waste identified here – administrative, as well as less on market failure in drug pricing.

It is troubling for two main reasons.

Firstly, healthcare can cause harm.

Low value care, which is care that does not significantly improve people and population’s health outcomes, can cause more harm than benefit. In this paper the authors explicitly identify low value care waste. This sort of waste includes overtreatment, for example the patient who is treated with antibiotics for a viral infection, the person who dies in an Emergency Department trolley rather than at home as they planned, or a person who has an operation for a dubious reason. This sort of waste is likely to include harm.

The authors include two other categories of waste that could cause harm.

‘Failure of care delivery’, and ‘failure of care coordination’.

Failure of care delivery includes a failure to follow best practice guidelines in prevention, for example the man who’s diabetes is allowed to run out of control, leading to renal dialysis and leg amputation, or the woman who isn’t able to access decent local antenatal care resulting in perinatal complications.

Failure in care coordination includes failure to link together services and communicate, this may result in an elderly person being readmitted to hospital or suffering a catastrophic loss of independence leading to longer term expensive institutional care.

All of this is waste, and it is low value care, as the resources of the health system (not just money, the time of the workforce, transport and buildings) are spent on delivering suboptimal and expensive outcomes.

The second reason for this amount of waste existing being troubling, is that this represents a huge lost opportunity to use resources on better value care.

The authors and the editorial talk about this to an extent. They use examples of health spending being spending that cannot be used on other public works (such as road building or education). Interestingly they don’t discuss how resources could be better used within health programmes, this may reflect the differences between Universal Health Systems and the US system. One of the advantages of population-based budgets for healthcare is that resources saved in one area can be reinvested in other areas, meaning we can and should allocate resources to maximise value.

However, in any resource-limited environment, waste will represent opportunity cost. This should be problematic for clinicians as resources spent on waste and low value care for a patient or a group of patients represents resources that cannot be used on other patients.

This is put very well in the Academy of Medical Royal Colleges report from 2014: ‘Protecting resources, Promoting Value: A doctors guide to cutting waste in clinical care’[ii]

‘How reducing waste leads to higher value care

A doctor’s primary motivation for reducing waste is that it enables the savings to be used
more effectively elsewhere. This process creates a higher value health care system where resources: cash, carbon and staff time, are released from some parts of the system to develop new services or support struggling services. Reducing waste in today’s climate of constrained resource is really about creating the health care system that we want to have. It is not just about cutting corners or reducing spending. As responsible stewards, doctors can provide a more effective use of constrained economic and environmental resources. ‘

6 Categories of waste[iii]

Failure of Care Delivery

“Waste that comes with poor execution or lack of

widespread adoption of known best care processes, including, for example, patient safety systems and preventive care practices that have been shown to be effective. The results are patient injuries and worse

clinical outcomes.”


Failure of Care Coordination

“Waste that comes when patients fall through

the slats in fragmented care. The results are

complications, hospital readmissions, declines in

functional status, and increased dependency,

especially for the chronically ill, for whom care

coordination is essential for health and function.”


Fraud and Abuse

“Waste that comes as fraudsters issue fake bills

and run scams, and also from blunt procedures of

inspection and regulation that everyone faces

because of the misbehaviours of a very few.”


Administrative Complexity

“Waste that comes when government,

accreditation agencies, payers, and others create

inefficient or misguided rules. For example, payers may fail to standardize forms, thereby consuming limited physician time in needlessly complex billing procedures.”




Overtreatment or Low-Value Care

“Waste that comes from subjecting patients to care that, according to sound science and the patients’ own preferences, cannot possibly help them—care rooted in outmoded habits, supply-driven behaviours, and ignoring science. Examples include excessive use of antibiotics, use of surgery when watchful waiting is better, and unwanted intensive care at the end of life for patients who prefer hospice and home care.”


Pricing Failure

“Waste that comes as prices migrate far from those expected in well-functioning markets, that is, the actual costs of production plus a fair profit. For example, because of the absence of effective

transparency and competitive markets, US prices

for diagnostic procedures such as MRI and CT scans are several times more than identical procedures in other countries.”


There are three editorials accompanying the review. Berwick’s editorial[iv] explores some of the reasons why waste, despite being identified, is hard to remove. He talks about ‘Fermi’s paradox’, Fermi was a physicist who in 1950 when discussing how many potentially habitable planets are out in space, asked where all the extra-terrestrials are. His point is that waste is similarly hard to see in health, but this paper does identify it. He then looks at four possible explanations why health systems do not tackle waste:

‘First, maybe the waste is not really there. Second, maybe the waste cannot technically be extracted. Third, maybe it is not interesting enough yet to reduce waste. And fourth, maybe politics paralyzes change.’ Berwick favours the latter, which would resonate with experiences in the UK of attempts to change healthcare systems (although the ‘politics’ he mainly is talking about is vested industry interests in healthcare which is less applicable outside the US).

Another potential reason for waste (especially low value care) not being removed is likely the disincentive for providers and clinicians to reduce low value care and cost, by not being able to reallocate or reinvest that resource into higher value care to improve outcomes and reduce inequity. This builds on the second and third reason, and touches on the third. Perhaps now we can classify waste, identify it, and look at evidence bases solutions, we should now also discuss why practioners and providers often do not follow through. The reasons may well lie with the culture of resource use and the lack of trust to reallocate resources that are saved in better value care.

If we get this right, we can continue to be shocked by the level of waste, but then be motivated by the potential to reinvest this resource. Clinicians and leaders can demonstrate how using resources better can invest in improving equity in health outcomes, if we can develop mechanisms to reduce waste and reinvest it to do this we will start to make some progress in this tricky area.



[iii] [iii] Berwick DM, Hackbarth AD. Eliminating waste in

US health care. JAMA. 2012;307(14):1513-1516. doi: