Mission Possible? Saving on Health Care Costs by Reducing Unnecessary Services
December 2, 2011
Michele J. Orza, ScD
Every recent and expected proposal for solving the nation's economic woes calls for reining in health care spending. Health care analysts estimate that 30 percent of the $2.5 trillion the country spends on health care is wasted, in that it does not serve to improve health and may even be harmful. The Institute of Medicine's Roundtable on Value & Science-Driven Health Care describes several categories of wasted spending, including unnecessary services, excessive administrative costs, inefficiently delivered services, prices that are too high, medical fraud, and missed prevention opportunities. With an estimated $210 billion in possible savings, the largest category is unnecessary services, which are driven by too-frequent use of some services, defensive medicine, and overuse of high-cost services. All services carry risks and, in the case of unneeded services, these are not balanced by benefits. The opportunity to save on health care costs without decreasing the quality of care and perhaps even improving it makes eliminating such services seem like a slam-dunk. However, stopping the delivery of unnecessary services may not be as easy as it sounds. The challenges are myriad, ranging from agreement about which specific services are unnecessary to routine implementation of optimal practices in a fragmented and complex health care system.
This Forum session provided an overview of excess health costs, causes identified, and possible solutions to wasteful health spending, with a focus on what is attributable to unnecessary health care services. It also examined an initiative of physicians to identify and curtail the delivery of commonly overused primary care services, and the approaches of two different types of health plans to manage such services.
Helen B. Darling
President and Chief Executive Officer
National Business Group on Health
Institute of Medicine Roundtable on Value & Science-Driven Health Care
Stephen R. Smith, MD, MPH
Professor Emeritus of Family Medicine
Warren Alpert Medical School
National Physicians Alliance Promoting Good Stewardship in Clinical Practice Project
Samuel R. Nussbaum, MD
Executive Vice President for Clinical Health Policy
Chief Medical Officer
Sharon Levine, MD
Associate Executive Director
The Permanente Medical Group, Inc.
Distributed at the session:
- "Choosing to Have Labor Induced: Safety and Harm" (Washington Business Group on Health, June 2011)
- "The 'Top 5' Lists in Primary Care: Meeting the Responsibility of Professionalism" (The Good Stewardship Working Group, Archives of Internal Medicine, 171, no. 15, August 2011, pp. 1385-1390)
- "The 'Top 5' Lists Top $5 Billion" (The Good Stewardship Working Group, Archives of Internal Medicine, 171, no. 20, November 2011, pp. 1856-1858)
Institute of Medicine, Roundtable on Value & Science-Driven Health Care
From the Forum:
"Medical Imaging Services: Utilization, Spending, and Appropriateness" (Forum Session, November 13, 2008) and our series on comparative effectiveness (six sessions in 2008).
See also "Caesar’s Ghost: The Effect of the Rising Rate of C-Sections on Health Care Costs and Quality" (Forum Session, March 30, 2012).