What is the Best Strategy to Reduce Medical Dollar Waste?
Medical dollar waste is a major concern for the US healthcare system as healthcare spending increases every year. It’s reported that healthcare expenditure is rising 1.1% faster than the annual GDP. With wasteful spending constituting 30% of the total annual healthcare spending, there is an excellent opportunity for reducing healthcare expenses by intervening in areas where valuable resources are getting wasted. Even though completely eliminating waste is a far-fetched thought; optimizing waste domains and bringing efficiency in administrative processes can lower wasteful spending by a considerable amount, helping the healthcare system save precious dollars, which can be invested in other vital avenues like drug discovery and development. It’s estimated that strategic interventions in the six waste domains identified by the Institute of Medicine (IOM) can save up to $282 billion. In this article, we will deep dive into the types of waste in the US healthcare system and what interventions can help save the healthcare industry precious dollars.
Types of waste in healthcare spending in the US healthcare system
The four major types of medical dollar waste that claim a significant amount from the total healthcare expenditure every year are –
Clinical waste – Clinical waste is waste that results from low-quality initial care or delayed diagnosis. Illnesses that are diagnosed early and treated with high-caliber medical care and attention are less likely to aggravate and claim high hospitalization costs. Furthermore, resource-intensive medical services can also give rise to clinical waste. Adopting less resource-intensive alternatives and standardizing practices can prevent clinical waste to an extent.
Administrative complexity waste – Administrative complexity waste is associated with expenses that are used for performing administrative tasks like billing, budgeting, patient data storage and sharing, credentialing and oversight. Complex administrative processes and operations eat up a chunk of resources that can otherwise be used for clinical purposes. Optimizing administrative tasks and infusing efficiency in organizational processes can help save this type of waste.
Excessive prices waste – Excessive prices waste With the unduly rising costs of pharmaceuticals and medical services, a lot of healthcare expenditure is going to the bin. Inefficient providers are surcharging for healthcare services, taking annual healthcare expenses off the roof. If services are appraised on the basis of outcomes and efficiency, unnecessarily high charges can be brought down, enabling the healthcare system to save money.
Fraud and abuse waste – Fraud and abuse waste is money spent on fraudulent schemes and illegitimate healthcare delivery. Healthcare scams are prevalent today and rob patients of their hard-earned money by duping them in the name of healthcare services.
The cost of administrative complexity-induced wasteful spending amounts to an annual $265.6 billion.
The annual waste due to excessive pricing is estimated to be from $230.7 billion to $240.5 billion.
Clinical waste accounts for an annual cost of $75.7 billion to $101.2 billion.
Annual cost from fraud and abuse waste is reported from $58.5 billion to $83.9 billion.
Medical dollar waste in the US healthcare system can be reduced in two primary ways; by promoting demand-side improvements like increasing consumer awareness regarding pricing and encouraging them to make smart decisions while purchasing healthcare services and by stimulating supply-side reforms like linking profits to outcomes and efficiency rather than mere volume for healthcare providers and organizations.
Demand-side changes
Demand-side changes can include spurring healthcare providers to offer consumer-centric health plans and transparency about the price and quality of the medical services they offer. Consumers should be able to choose where they would avail healthcare services based on the pricing and value offered by different healthcare providers just like they do while buying other products and services in the market. In a nutshell, consumers should become price sensitive while purchasing healthcare services, as is the case in the competitive market.
Supply-side reforms
Supply-side reforms include adopting alternative payment methods like bundled payments and budget capitation. These payment methods can encourage providers to optimize their care delivery processes and increase efficiency while delivering superior patient outcomes. Instead of a fee-for-service payment system where providers can overcharge without striving for efficiency, a fixed budget for providers to work with will induce efficiency-oriented decisions.
With a dedicated, consumer-centric health record bank, clinical waste can be reduced considerably. By having all their years of medical records securely stored in a single location, patients can easily and securely transmit entire data sets to their physicians for consultation, eliminating the need for re-evaluation and consumption of clinical materials. Furthermore, a major component of administrative complexity is data sharing across platforms as it claims a significant amount of resources. With a patient-owned healthcare bank, however, transmitting data from one system to another becomes seamless and less resource-intensive.
Provides reliable access to a patient’s health information
Discrepancies in patient data can lead to inaccurate treatment decisions, resulting in serious complications. A medical record bank, integrated with medical data recording devices, can securely store the most accurate and up-to-date patient data allowing physicians to make informed treatment decisions and improve outcomes.
Improves patient safety
Health record banks are safe locations for storing data. Patient-owned medical record banks like Health Wealth Safe’s healthcare data records bank are in patients’ hands and only they decide who to share their data with and for what.
Improves risk management
The clinical risks of basing treatment decisions on inaccurate or insufficient data can be severe. Health record banks help eliminate these risks by furnishing providers with up-to-date patient data leaving no room for unexpected complications and aggravations.
Health Wealth Safe is a reputable healthcare solutions provider and has recently introduced its one-of-a-kind health record bank. HWS’ healthcare bank is completely patient-owned and easily operable on mobile devices. Our medical records bank is a massive step toward clinical waste-cutting and inducing efficiency in treatment processes. To know more about the products and services we offer to patients as well as providers, reach out to us now. Contact us to know in detail about our medical records bank.
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