Friday, September 7, 2012

IOM Report Cites $750 Billion in Health Spending Waste

A staggering 30% of U.S. health spending in 2009—roughly $750 billion—was wasted on unnecessary services, excessive administrative costs, fraud, and other problems, according to a report released yesterday by the Institute of Medicine. The report,  “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America,” identifies six major areas of waste and their annual cost: unnecessary services ($210 billion), inefficient delivery of care ($130 billion), excess administrative costs ($190 billion), inflated prices ($105 billion), prevention failures ($55 billion), and fraud ($75 billion).

The report also lists 10 recommendations emphasizing tools that are available now—such as better use of health data systems and and a focus on patient-centered care—for creating a leaner health care system. Read the report here.

A 2011 report by the IOM stressed that when determining what benefits are essential to new insurance plans offered under the federal health care reform law, the government should consider both breadth of coverage and affordability and that the success of the Affordable Care Act will hinge on its ability to manage costs. For more information, see Psychiatric News here.

(Image: Helder Almeida/


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