Nature of the US health-care system – Waste in the US Health-care system


From an award acceptance speech by Dr Don Berwick, founder of the Institute for Healthcare Improvement and Administrator of the Centre for Medicare and Medicaid Services (2010-2011) on 7th December 2011. This is the full text.

Dr Berwick was then 65 years old. He had led a very full life as a practising paediatrician, professor at Harvard Medical School and pioneer in the improvement (in US terms!) of their health-care system.

His speech is worth reading in its entirety to give a flavour of the dysfunctional, excellent and abysmal free-market system of the US. His rallying cry is “How does it help the patient?” This is the underlying philosophy of the patient as “consumer”. Dr Berwick fails to mention at all the organizational and distributive function. A rational and necessarily rationing system of health-care administration is needed to provide the distribution to a population.

Instead he mentions disparate “pockets of excellence” in various places. This is not a “system”, it is a jungle. It is what we would call a “post-code lottery” here in the UK. There are no published standards, no Care Quality Commission inspections.


Causes of waste:


Overtreatment – the waste that comes from subjecting people to care that cannot possibly help them – care rooted in outmoded habits, supply-driven behaviours, and ignoring science.
Failures of Coordination- the waste that comes when people – especially people with chronic illness – fall through the slats. They get lost, forgotten, confused. The result: complications, decays in functional status, hospital readmissions, and dependency.
Failures of Reliability – the waste that comes with poor execution of what we know to do. The result: safety hazards and worse outcomes.
Administrative Complexity – the waste that comes when we create our own rules that force people to do things that make no sense – that converts valuable nursing time into meaningless charting rituals or limited physician time into nonsensical and complex billing procedures.
Pricing Failures – the waste that comes as prices migrate far from the actual costs of production plus fair profits.
Fraud and Abuse – the waste that comes as thieves steal what is not theirs, and also from the blunt procedures of inspection and regulation that infect everyone because of the misbehaviours of a very few. We have estimated how big this waste is – from both the perspective of the Federal payers – Medicare and Medicaid – and for all payers.

Research and analytic literature contain a very wide range of estimates, but, at the median,
the total annual level of waste in just these six categories (and I am sure there are more) exceeds $1 trillion every year – perhaps a third of our total cost of production.