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US Healthcare System Wastes $800 Billion a Year

The U.S. healthcare system loses between $505 and $850 billion a year to mistakes, inefficiency and fraud, according to a report by Thomson Reuters. This amounts to one-third of all national healthcare spending.

"America's healthcare system is indeed hemorrhaging billions of dollars," the report says.

According to the report, unnecessary medical procedures and treatments -- including antibiotic overuse and superfluous tests -- account for 37 percent of all wasted spending, $200 to $300 billion per year. Fraud -- including false Medicare claims and kickbacks for referrals or prescriptions -- accounts for another 22 percent, as much as $200 billion a year. Medical errors are responsible for 11 percent of excess spending, or $50 to $100 billion yearly. Preventable health problems, such as diabetes, cost the healthcare system $30 to $50 billion per year.

One of the easiest areas to repair might be administrative inefficiency, which accounts for a full 18 percent of medical overspending.

"The average U.S. hospital spends one-quarter of its budget on billing and administration, nearly twice the average in Canada," the report says. "American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than in Canada."

Administrative inefficiency can also lead to other wasteful practices.

"It is waste when caregivers duplicate tests because results recorded in a patient's record with one provider are not available to another or when medical staff provides inappropriate treatment because relevant history of previous treatment cannot be accessed," the report says.

Although the United States has the highest per capita healthcare spending and spends a higher proportion of its GDP on healthcare than any other nation in the Organization for Economic Co-operation and Development (a group of predominantly high income Western democracies), it has the highest rates of heart disease, obesity, diabetes and neonatal death in the developed world, as well as the unhealthiest population.

Sources for this story include: http://www.reuters.com.

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