Waste-cutting measures could save $191 billion to $282 billionannually. (Photo: Shutterstock)

Infuriating as medical bills are, particularly the high,out-of-network and surprise bills, it's even more infuriating toknow that waste accounts for approximately a quarter of all healthcare spending.

According to a JAMA review of 54 peer-reviewed studies,government reports and other information. Two 2012studies  estimated waste at roughly 30 percent and 34percent of total health care spending.

Related: When it comes to health care waste, employers areall talk, no action

And while the percentage may be down, the dollar figures aredizzying: every year $760 billion to $935 billion go to waste. Thestudy adds that a quarter of it could be cut just by usinginterventions that cut waste.

"There have been a lot of changes in the healthcare system inthe last seven years," says Dr. William Shrank, an author of the studyand chief medical and corporate affairs officer for health insurerHumana. "We thought it was an appropriate time to update thatstudy."

The waste percentage estimated may be lower than the earlierstudies, but part of that is due to the fact that the new study didnot extrapolate Medicare-only data to the broader population, whichis what the earlier studies did.

Waste was broken down into six categories in the study:administrative complexity, which accounted for $265.6 billion peryear, was the top money loser. That was followed by pricingfailure, accounting for $230.7 billion to $240.5 billion a year;failure of care delivery, at $102.4 billion to $165.7 billion;overtreatment or low-value care, at $75.7 billion to $101.2billion; fraud and abuse, at $58.5 billion to $83.9 billion; andfailure of care coordination, at $27.2 billion to $78.2 billion peryear.

Waste-cutting measures, the study found, could save $191 billionto $282 billion annually combined, or about 25 percent of the totalcost of waste.

However, none of the scientific intervention measures addressedthe biggest money-waster, administrative waste. According toShrank, businesses don't generally discuss the measures they taketo cut down on it; he hopes that the study will bring about sharingacross the industry. But while he's quoted in the study saying, "Inan environment where payers are pre-paying physicians or sharingrisk with physicians for the management of populations, much ofthese sources of administrative complexity can be reduced oreliminated or streamlined," other experts have other views.

According to former CMS Administrator Dr. Don Berwick, theInstitute for Healthcare Improvement senior fellow who wrote a 2012JAMA study on health care waste, value-based payment arrangements such asbundled payments and accountable care organizations bring about1 to 3 percent in cost savings—but a lot more will have tobe done.

And Dr. Ashish Jha, professor of health policy in the HarvardT.H. Chan School of Public Health, is cited saying that value-basedcare programs provide little to no improvement, with the mosteffective yielding no more than 3 percent.

"I've got literally dozens of studies I can point to that showit's having little to no impact," Jha says. "This is not one wherepeople just get to have differing opinions. You've got to bringsome evidence to bear for why it's going to be useful, because allthe data so far show things heading in one direction."

He believes that the "irrational pricing" of health care is theplace to tackle the problem—as well as hitting monopolies,stimulating competition and importing drugs or negotiating forlower drug prices.

Read more: 

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