Waste in the U.S. Health Care System

A Conceptual Framework

Published In: The Milbank Quarterly, v. 86, no. 4, Dec. 2008, p. 629-659

Posted on RAND.org on December 01, 2008

by Tanya G. K. Bentley, Rachel Effros, Kartika Palar, Emmett B. Keeler

Read More

Access further information on this document at Blackwell Publishing

This article was published outside of RAND. The full text of the article can be found at the link above.

CONTEXT: Health care costs in the United States are much higher than those in industrial countries with similar or better health system performance. Wasteful spending has many undesirable consequences that could be alleviated through waste reduction. This article proposes a conceptual framework to guide researchers and policymakers in evaluating waste, implementing waste-reduction strategies, and reducing the burden of unnecessary health care spending. METHODS: This article divides health care waste into administrative, operational, and clinical waste and provides an overview of each. It explains how researchers have used both high-level and sector- or procedure-specific comparisons to quantify such waste, and it discusses examples and challenges in both waste measurement and waste reduction. FINDINGS: Waste is caused by factors such as health insurance and medical uncertainties that encourage the production of inefficient and low-value services. Various efforts to reduce such waste have encountered challenges, such as the high costs of initial investment, unintended administrative complexities, and trade-offs among patients', payers', and providers' interests. While categorizing waste may help identify and measure general types and sources of waste, successful reduction strategies must integrate the administrative, operational, and clinical components of care, and proceed by identifying goals, changing systemic incentives, and making specific process improvements. CONCLUSIONS: Classifying, identifying, and measuring waste elucidate its causes, clarify systemic goals, and specify potential health care reforms that--by improving the market for health insurance and health care--will generate incentives for better efficiency and thus ultimately decrease waste in the U.S. health care system.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/principles.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.