According to New England Journal of Medicine’s Journal Watch, Americans may be wasting half of the $3.6 trillion spent annually on healthcare. Researchers identified six studies, published from 2008 to 2019, in which components of our national medical waste were analyzed, and estimated the costs associated with each.

CategoryAmount ($ billions)
Excessive prices$169
Fraud and abuse$185
Clinical inefficiency$202
Administrative waste$281
Missed prevention opportunities$310

Estimated total waste was between $600 billion and almost $2 trillion. The Pareto Analysis of these costs looks like this.

Pareto Chart of Category in Healthcare Waste
Pareto Chart of Category in Healthcare Waste

Anyone familiar with Lean can immediately spot opportunities for applying Lean to this mess. The Pyzdek Institute’s Lean Healthcare Specialist program covers a wide range of tools and techniques for doing this.

While the dollar amounts are literally too huge to grasp, the fact is that unnecessary healthcare spending also adds to human suffering. Unnecessary tests and treatments are often harmful to patients so money is spent making sick people even sicker, hardly the goal of doctors and nurses. Dollars cannot begin to cover this cost, but in the end it may be even larger than the quantifiable dollar cost.

NEJM Healthwatch, Vol 41, No. 3, February 1, 2021, page 28. Tallying the Waste in American Healthcare.

One response to “Healthcare Waste”

  1. Stephen Czupryna Avatar
    Stephen Czupryna

    Again, Tom Pyzdek applies Lean Principles and Statistical Thinking to improve quality and quality-of-life.

    Based on hard results posted since my 2009 Pyzdek Lean Six Sigma Black Belt, I can clearly state that Tom’s approach works incredibly well in manufacturing, biotechnology and other industries. I have no doubt they’d work equally well in a medical environment.

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