U.S. wastes $200 billion a year on healthcare

The U.S. wastes a whopping $200 billion a year on unnecessary ER visits, hospitalizations, and other treatments, according to a new report. This represents 8 percent of the country’s total healthcare spending. And cutting this waste would be enough to provide health insurance to the 24 million uninsured Americans. (And would prevent having to interfere with the 90 percent of Americans who already have health insurance. And prefer to keep it, compared to what is coming under Obamacare.)

Just how exactly do we squander so much healthcare money each year?

You may think it has to do with the grossly inflated prices of prescription drugs in this country. And without a doubt, we pay far more for prescription drugs than any other developed country in the world.

But that’s not what the new report uncovered.

Instead, the new report found that most healthcare waste in this country stems from the improper or unnecessary use of prescription drugs.

The IMS Health Institute for Healthcare Informatics conducted this research as a public service. In the report, the IMS pointed out six key areas that contribute to healthcare waste in this country.

As I have always said, some of the greatest burdens placed on the healthcare system stem from managing the serious side effects of prescription drugs. Very often, patients who suffer adverse drug reactions wind up in the ER. Or they get admitted to the hospital. And it costs a fortune to clean up this mess each year.

That brings me to the first big waste turned up by the IMS report…

Many doctors don’t prescribe patients with the right medications in the first place. Here’s what happens: A patient goes to the doctor complaining of indigestion. Instead of asking the patient about his or her diet, the doctor prescribes a drug like Nexium. After a few weeks, the patient doesn’t feel better. So he goes back to the doctor. The doctor switches the patient to another drug, to find one that may work better.

In the best-case scenario, the doctor eventually finds the “right” drug. (Although, for the treatment of indigestion, I doubt there is one.) But in the meantime, the patient visits the doctor multiple times unnecessarily. And spends money on drugs that don’t work.

In the worst cases, the doctor never finds the right drug. Or the patient has a serious side effect. And winds up at the ER or in the hospital. This results in greater waste.

Still other problems arise when doctors prescribe patients with multiple drugs. This is especially common among aging patients. According to another recent report, almost 40 percent of Americans age 60 and older take five or more drugs on a daily basis!

A primary care physician cannot possibly monitor a patient taking this many drugs. The risk of suffering an adverse event from any one drug is always a possibility. Now, give that patient multiple drugs. And you’ve got a disaster waiting to happen.

As you can imagine, aging patients taking multiple drugs very often wind up in the hospital with unexplained symptoms. In my experience, whenever this happens, the first thing you should do is to cut back on their medications. Usually, the patient will start to feel better.

The report also claims that expanding generic drug use could save $10 billion a year. But for many common conditions, the use of generic drugs has already reached 95 percent. So I just can’t see it making that big of a difference.

The IMS report also failed to mention the major problems associated with generic drugs. We are all told that generic drugs look and act exactly like their name-brand counterparts. But, as I reported in a recent article, that just isn’t true.

Generic drugs often act very differently. And this leads to unfortunate outcomes.  A generic version for a common statin drug turned out turned out to be a case of outright fraud.

The IMS report points to “nonadherence” as the biggest cause of waste in the healthcare system. “Nonadherence” describes patients who fail to take their drugs as prescribed. But in many cases, patients take their medicine less often than prescribed–or not at all–due to the high cost per pill. Or they just don’t like how the drugs make them feel, so they take them less often.

The IMS says this is where we should focus our energy. If we reduce nonadherence, hospital admissions will go down.

I agree. (At least, in theory.)

If a drug works, it should help keep patients out of the hospital. The problem is, not all drugs work the way they’re “supposed” to work. Or, if they do work, they make the patient feel terrible.

But here’s the real problem with the IMS report…

It presumes that we all need drugs to improve our health. And if we use them properly, we will cut the waste.

But this is a completely biased viewpoint. All too often drugs aren’t the only answer. And sometimes, they aren’t the answer at all.

Imagine the savings from using proven, natural approaches that are safe, effective, and cost-effective. I will keep you informed about these real alternatives in healthcare. They will save you money, reduce your risk of side effects, and help our overburdened and misdirected healthcare system.


1.  “Avoidable Cost in U.S. Healthcare,” IMS Institute for Healthcare Informatics (www.imshealth.com), June 2012

2. “Prescription Drug Use Continues to Increase: U.S. Prescription Drug Data for 2007-2008,” Centers for Disease Control (www.cdc.gov), September 2010