Waste and healthcare costs

Dr Berwick has written two pieces in which he makes the case that waste broadly defined accounts for 20-30% of US healthcare expenditure. JAMA article requires subscription here and Boston Globe piece here.

He defines waste as follows:

1. Over-treatment
2. Failures of care coordination
3. Failures in execution of care processes
4. Administrative complexity
5. Pricing failures, and 
6. Fraud and abuse

I can certainly see items 1-5 occurring in our system; whether fraud contributes a substantial amount, I just dont have the data. I am guessing failed IT implementation falls into category 4. Interestingly the Vanguard organisation has provided initial estimates based on preliminary work that what they term failure demand (which would certainly fit into category 1-4 above accounts for a very substantial proportion of healthcare activity), for an example see here. 

Health care spend, any room to reduce it?

While not strictly looking at quality and cost at a hospital level, a paper just published by OECD examines the potential for savings in health expenditure. It suggest that countries can achieve savings up to 5% of GNP by all countries becoming as efficient as the best performing countries. Note that there does not appear to be much if any correlation between healthcare spend and outcomes across countries. The authors suggest that countries by reaching the level of the best performers would increase life expectancy at birth by two years; in contrast a 10% rise in health expenditure would increase life expectancy by three to four months.