Don Berwick and Andrew Hackbarth have identified the sources of cost-savings in the healthcare system and estimated the magnitude of savings available. The original manuscript can be found at JAMA here.
A quick summary of the $400 billion savings opportunities:
- Administrative Complexity:
Cause: “Inefficient or misguided” rules implemented by regulatory agencies or payors.
Solution: Simplification of rules and regulations, and user-friendly information management tools.
Savings: Between $107 billion and $389 billion.
Cause: Patient preference such as excessive use of antibiotics or surgery, when waiting might be better.
Solution: Identifying procedures, tests, medications and other services that do not benefit patients.
Savings: $158 billion to $226 billion.
- Fraud and Abuse:
Cause: Fake claims and bills.
Solution: Early detection, prediction and disincentives.
Savings: Between $82 billion to $272 billion.
- Failures of Care Delivery:
Cause: Poor execution of care programs such as patient safety and prevention.
Solution: Better training, monitoring and learning models.
Savings: Between $102 billion and $154 billion.
- Pricing Failures:
Cause: Pricing fluctuations based on geographic location.
Solution: Pricing transparency and consumer advocacy.
Savings: Between $84 billion and $178 billion.
- Failures of Care Coordination:
Cause: When patients fall through the cracks of fragmented care.
Solution: Team orientation and information sharing across primary / specialty and in-patient / out-patient care settings when treating patients.
Savings: $25 billion to $45 billion.
The solution to the above savings opportunities will require a strong leadership agenda to develop a combination of applying policy levers, reimbursement models, training and management principles.