BOX 21-1Excess Cost Domain Estimates: Lower bound totals from workshop discussions*

UNNECESSARY SERVICESTotal excess = $210 B*
  • Overuse: services beyond evidence-established levels
  • Discretionary use beyond benchmarks

    Defensive medicine

  • Unnecessary choice of higher cost services
INEFFICIENTLY DELIVERED SERVICESTotal excess = $130 B*
  • Mistakes—medical errors, preventable complications
  • Care fragmentation
  • Unnecessary use of higher cost providers
  • Operational inefficiencies at care delivery sites

    Physician offices

    Hospitals

EXCESS ADMINISTRATIVE COSTSTotal excess = $190 B*
  • Insurance-related administrative costs beyond benchmarks

    Insurers

    Physician offices

    Hospitals

    Other providers

  • Insurer administrative inefficiencies
  • Care documentation requirement inefficiencies
PRICES THAT ARE TOO HIGHTotal excess = $105 B*
  • Service prices beyond competitive benchmarks

    Physician services

    1. Specialists
    2. Generalists

    Hospital services

  • Product prices beyond competitive benchmarks

    Pharmaceuticals

    Medical devices

    Durable medical equipment

MISSED PREVENTION OPPORTUNITIESTotal excess = $55 B*
  • Primary prevention
  • Secondary prevention
  • Tertiary prevention
FRAUDTotal excess = $75 B*
  • All sources—payer, clinician, patient
*

Lower bound totals of various estimates, adjusted to 2009 total expenditure level.

From: 21, Taking Stock: Numbers and Policies

Cover of The Healthcare Imperative
The Healthcare Imperative: Lowering Costs and Improving Outcomes: Workshop Series Summary.
Institute of Medicine (US) Roundtable on Evidence-Based Medicine; Yong PL, Saunders RS, Olsen LA, editors.
Washington (DC): National Academies Press (US); 2010.
Copyright © 2010, National Academy of Sciences.

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