IOM: Health system wastes $750 billion a year

The Institute of Medicine released a report yesterday estimating that almost a third of health care spending, or $750 billion annually, is used on uneeded care, paperwork, fraud or other waste (Source: "Report: 30% of medical spending wasted," Associated Press via Columbus Dispatch, Sept. 7, 2012).

The IOM report, which was authored by a panel of 18 experts including doctors, executives and public officials, identified six major areas of waste in health care:

• Unnecessary services ($210 billion annually)
• Inefficient delivery of care ($130 billion)
• Excess administrative costs ($190 billion)
• Inflated prices ($105 billion)
• Prevention failures ($55 b illion)
• Fraud ($75 billion)

The report also concluded that the health care system needs to take cues from other industries.  For
example, the report pointed to the prominence of electronic transactions, particularly through ATMs, in the banking industry as a model for more efficient use of electronic health records. Likewise, the airline industry's use of standard checklists for pilots was highlighted as a concept that surgeons should consider.