When it comes to healthcare delivery, our intent is to be ever quicker, more effective, and less expensive. We want to improve treatment experiences and patient outcomes without slipping on our efficiency scores; we aim to provide ever-soaring value for our providers, payers, and patients, but we don’t want to stop cutting costs. When those of us in the healthcare sector lay out our goals side by side, they seem to undermine and conflict. We have to ask ourselves — is it even possible to balance efficiency and value, or will we forever have to decide between one or the other?


I like to think that we can find an equilibrium. I don’t mean to say that the task will be easy; after all, the United States is known for its high costs and rampant inefficiencies. However, I do believe that if we can find a way to minimize waste and pursue a more value-oriented healthcare delivery system, we will be able to create a cost-effective and low-waste system.


As matters stand today, waste in healthcare is a significant concern. ProPublica estimates that the sector loses roughly $765 billion every year in avoidable waste — which, for context, amounts to approximately a quarter of what it spends annually. As a result, consumers and payers in the U.S. market are often subjected to significant additional healthcare costs.


The difference is stark in global comparisons; according to a 2017 report from the Organisation for Economic Cooperation and Development (OECD), “Health spending averages $9,892 per person in the United States, almost two-and-a-half times the average of the 35 OECD countries ($4,003) and 25% above Switzerland, the next highest spender (adjusted for local living standards).” These statistics are notable in part because despite spending more, the United States does not have a significantly better track record for healthcare outcomes when compared to lower spenders. Moreover, the country falls behind its peers for life expectancy, obesity, and population coverage.


The cost-to-value ratio is undeniably in need of a realignment. We need to pursue lower costs by reducing unnecessary waste, but we cannot do so at the expense of healthcare quality. To accomplish this, we need to develop an understanding of where our waste problem is coming from and create a long-term strategy for plugging the leaks.


There is no primary hole in healthcare’s metaphorical bucket; instead, resource loss in the industry stems from a thousand tiny inefficiencies and overly complex protocols. While there is no perfect way to organize these wastes, the waste can be divided into two sweeping — and by no means wholly comprehensive — categories. The first is administrative, which refers to losses caused by overly bureaucratic and unnecessarily complex billing protocols between insurers and providers. The second is operational waste, which encompasses inefficient care delivery protocols.


Administrative Waste

Unnecessary bureaucracy is a major culprit in healthcare overspending. According to research published by the Dartmouth Institute for Health Policy and Clinical Practice, a full third of all clinical care spending on Medicare enrollees could have been avoided without penalty to patient outcomes. For the most part, the waste can be attributed to the unnecessary complexity of the systems linking providers to private insurers and government agencies.


The total lack of standardization between disparate operators often forces provider organizations to decode diverse protocols and spend more time than necessary on billing and paperwork. Not only does waste time, but the unnecessary complexity also cuts down on the hours doctors have available to see patients, thereby leading to additional wastes in billable hours. The solution here is clear, if difficult to implement: the healthcare sector needs to cut down on unnecessary red tape and establish a standard protocol for handling billing and paperwork across payer and provider organizations. This will of course take years — but if we can manage it, we may be able to make a significant dent in unnecessary administrative expenses and time wasted.


Operational Waste

Eliminating operational waste will require provider organizations to improve their day-to-day efficiency without forcing their doctors into burnout or compromising their patient care quality. It’s not an easy task; too often, organizations struggle to separate speed from efficiency. The first refers to how quickly a doctor can move from patient to patient, while the second involves a doctor’s ability to provide quality care to a patient within a tight timetable.


With speed, the onus of productivity falls heavily on the provider even if the system they work within isn’t conducive to efficient work. For all that doctors and non-medical staff might work themselves to exhaustion, the quality of care they provide eventually flattens as a result of inefficient operations. Doctors spend too much time on paperwork, and not enough time providing medical care; the weight of organizational expectations for speed pushes them towards disengagement and burnout. As one writer for Modern Healthcare describes the matter: “Poorly designed delivery systems have led to widespread job dissatisfaction among physicians. And patients are unhappy that it’s often hard to get in to see the doctor and typical visits are too short.”


Healthcare organizations can only cut down on operational waste if they can put structures in place to streamline their doctors’ efficiencies. For some, a solution may be to bring on additional support staff to handle excess paperwork and allow doctors the time they need to treat patients without having to struggle through poorly-organized systems. This fix would need to be applied at a business level and take into account the specific logistical needs of the organization at hand.


At its heart, the problem we face isn’t one of overspending, but of systemic and organizational inefficiencies that prevent us from delivering affordable healthcare. We can strike a balance between pursuing efficiency and improving value — but the task will require significant effort from both individual organizations and the health care sector as a whole. If we do manage to eliminate waste and implement truly efficient systems, however, we will stand a chance of recasting the United States as a frontrunner in the global healthcare community.