Clinical Waste Accounts for Up to 15% of All Healthcare Spending

Clinical waste, including failures of care delivery, failures of care coordination, and overtreatment, accounts for up to 15.7 percent of all healthcare spending in the United States, according to a Health Affairs research brief.

Following the onset of the COVID-19 pandemic, healthcare spending was responsible for 19.7 percent of US gross domestic product (GDP) in 2020. Pre-pandemic research had projected that healthcare spending would not reach this level until 2028.

The Health Affairs Council on Health Care Spending and Value was launched in 2019 to study excess healthcare spending in the US. The council found that clinical waste, or low-value spending, is a primary driver of excess healthcare spending.

Clinical waste stems from failures of care delivery, failures of care coordination, and overtreatment. These categories account for between 5.4 and 15.7 percent of national healthcare spending, the research brief found.

Failures of care delivery consist of poor execution or lack of widespread adoption of known best care processes. They are generally categorized as errors and adverse events or not providing care that is known to be useful. Under this category, clinical waste is any spending that leads to patient injury and worse-than-expected clinical outcomes.

In 2011, failures of care delivery cost the healthcare industry between $102 billion and $154 billion, or 3.8 to 5.7 percent of total national healthcare spending. In 2019, this waste accounted for $102 billion to $166 billion of total healthcare spending, or 2.7 to 4.4 percent.

Failures of care coordination accounted for 0.9 percent to 1.7 percent of total healthcare spending in 2011 ($25 billion to $45 billion) and 0.7 percent to 2.1 percent of healthcare spending in 2019 ($27 billion to $78 billion).

This waste leads to unnecessary admissions and readmissions resulting from a lack of care coordination, such as communication between providers and complete EHRs.

Physician practices with solid capabilities in technology, management and culture, and patient-centered care are more likely to have lower spending than practices with weaker capabilities in these areas, researchers said.

The research brief defined failures of overtreatment as the waste that comes from subjecting patients to unnecessary care that will not help them. Overtreatment may stem from fear of malpractice, patient demand, and difficulty accessing prior medical records.

Overtreatment accounted for 5.9 to 8.4 percent of national healthcare spending in 2011, or $158 billion to $226 billion. When narrowly defined as low value-medication use; low-value screening, tests, or procedures; and overuse of end-of-life care, overtreatment cost between $76 billion and $101 billion in 2019, or 2 to 2.7 percent of total healthcare spending.

According to the research brief, identifying and reducing medical waste must be a critical component of any strategy to mitigate healthcare spending growth and improve patient outcomes.

Healthcare stakeholders have used state-level data collection and education efforts to identify and prevent this waste. Resident handoff programs, surgical safety checklists, and other interventions to promote a safe culture in hospitals can also help reduce clinical waste, researchers noted.

In 2020 alone, hospitals performed more than 100,000 low-value procedures on Medicare beneficiaries, the Lown Institute found.

In addition to generating clinical waste, low-value procedures can increase the risk of direct harm.