The American healthcare system overspends by $200 billion, 8% of its healthcare budget, because medications are not being used responsibly by doctors and patients every year, says a new report issued by the IMS Institute for Healthcare Informatics.
Irresponsible medication usage causes millions of avoidable outpatient treatments, emergency room visits, drug prescriptions and hospital admissions.
According to the Wall Street Journal, the cost of building the One World Trade Center, the skyscraper under construction at Ground Zero in New York, is approximately $4 billion. Therefore, medication misuse in the United States costs the equivalent of 50 One World Trade Centre skyscrapers every year, or 500 of them in one decade.
The authors of the report focused on six areas that push up healthcare costs unnecessarily:
- Medication non-adherence (non-compliance) – the patient forgets to take the medication, or does not complete the course.
- Delayed evidence-based treatment practice – treatments that are scientifically proven to be effective are not administered promptly
- Medication errors – the wrong medicine is prescribed, the drug is administered incorrectly, failure to prescribe the correct medication, usage of outdated drugs, lack of awareness of the adverse effects of some medication combinations.
- Underusing generic drugs – not using cheaper generic drugs. Generic drugs are just as effective as brand names, the active ingredient is the same, but generics are much cheaper.
- Misuse of antibiotics – prescribing antibiotics when there is no infection, or viral infections (antibiotics are for bacterial infections only). Also known as antibiotic abuse or antibiotic overuse.
Antibiotic resistance is a growing problem, not just for healthcare costs, but also public health. Antibiotic resistance has become a major threat to public health around the world, and for the large part, the cause is misuse of antibiotics, the European Centre for Disease Prevention and Control concluded in a report.
- Mismanagement of multiple medications (polypharmacy) in older patients – often inappropriate for older adults, because the risks outweigh the benefits.
These six areas use up enormous healthcare resources unnecessarily, involving an estimated four million emergency room visits, 246 million prescriptions, 78 million outpatients treatments, and 10 million hospitalizations every year.
The authors said that there are numerous ways of reducing these wasteful costs while at the same time making sure that patients receive the right medications at, and take them according to instructions.
Murray Aitken, executive director, IMS Institute for Healthcare Informatics, said “As our study makes clear, drugs are often not used optimally, resulting in significant unnecessary health system spending and patient burdens. Those avoidable costs could pay for the healthcare of more than 24 million currently uninsured U.S. citizens. Reaching a meaningful level of consensus and alignment among stakeholders, based on measured and proven success models, is a key step to unlocking the $200 billion opportunity identified in our study.”
The report – Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly – identified some areas where wasteful spending is being addressed.
Drug adherence among patients with diabetes, hypertension and hyperlipidemia has improved 3% to 4% since 2009. In 2007, twenty percent of patients with flu were prescribed antibiotics compared to just 6% today. In 2013, ninety-five percent of patients receive cheaper generic alternatives to brand medications (when available).
The report’s findings are highlighted below:
- Medication nonadherence – cause $105 billion in avoidable healthcare costs every year. When a patient does not follow the doctor’s medication guidance, the risk of complications rises, complications push up healthcare costs.
There are several underlying reasons for nonadherence. However, the increasing usage of analytics, plus better collaboration among pharmacists, providers and patients seems to be improving, which in turn helps patients understand the effectiveness of intervention programs.
- Delayed evidence-based treatment practices – leads to about $40 billion in extra costs. The authors identified four diseases areas, including diabetes, where patients were diagnosed too late, or treatment did not start straight away after diagnosis. Delay in diabetes diagnosis and treatment drives up costs the most.
If insurance coverage were expanded, and more patients at high risk of developing diabetes were screened regularly, avoidable costs would be reduced considerably.
- Misuse of antibiotics – is estimated to be responsible for about $34 billion in avoidable inpatient care costs. Furthermore, another $1 billion is wasted on approximately 31 million inappropriate antibiotic prescriptions that are dispensed annually, in most cases for viral infections.
However, efforts to promote responsible antibiotic usage appear to be working. The number of prescriptions given for flu and the common cold has dropped. Flu and colds are viral infections, viral infections do not respond to antibiotics.
The authors wrote:
“Many efforts are underway to address the underlying causes of avoidable spending and to improve medication use. A large number of initiatives are advancing across the healthcare landscape, including novel interventions, critical assessments of established solutions and pioneering models of stakeholder cooperation.
Many of these initiatives involve a greater role for pharmacists, an integrated approach to addressing patient issues, alignment of financial incentives, and greater use of healthcare informatics to guide decision-making and monitor progress.”
A 2011 report by Health Affairs found that American doctors charge considerably more in fees than their counterparts in other rich nations.
Milliman Medical Index published a report in 2011 showing that family healthcare costs rose from $9,235 in 2002 to $19,393 in 2011.
Written by Christian Nordqvist