Avoidable Costs in U.S. Healthcare

Avoidable costs of more than $200 billion are incurred each year in the U.S. healthcare system as a result of medicines not being used responsibly by patients and healthcare professionals, according to a new study by the IMS Institute.

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Summary

Avoidable costs of more than $200 billion are incurred each year in the U.S. healthcare system as a result of medicines not being used responsibly by patients and healthcare professionals, according to a study by the IMS Institute for Healthcare Informatics. This represents 8 percent of the country’s total annual healthcare expenditures and amounts to millions of avoidable hospital admissions, outpatient treatments, pharmaceutical prescriptions and emergency room visits for patients

Key Findings

Avoidable Cost Due to Non-Adherence

  • The avoidable cost opportunity from nonadherence is $105 billion, with a range of $68 billion to $146 billion
  • Among the six diseases analyzed in the study, hypercholesterolemia and diabetes have the biggest impact on avoidable costs
  • Despite the substantial avoidable costs incurred in different settings of care, there are encouraging signs that secondary nonadherence is improving for three of the most prevalent chronic diseases
  • The lower cost of widely used medicines after the loss of patent protection, as well as the growing number of effective interventions by pharmacists, healthcare professionals and payers, are driving these improvements in adherence

Avoidable costs due to delayed evidence-based treatment practice

  • The avoidable cost opportunity from delayed evidence-based treatment is $39 billion, with a range of $19 billion to $64 billion
  • Among the four diseases analyzed, diabetes has the largest impact, representing 90% of avoidable spending
  • A substantial part of avoidable costs is incurred through outpatient and inpatient care as a result of higher or premature morbidity
  • Providing patient treatment at the right time requires a better understanding and systematic tracking of the reasons for delayed evidence-based medicine use

Related Webinars

Executive Director Murray Aitken examines six areas in U.S. healthcare that contribute to unnecessary costs.

Executive Director Murray Aitken and General Manager Brad Ryan discuss how payers and providers can significantly reduce avoidable costs.

Progress to Date

This study finds that even though avoidable costs are significant, encouraging progress is being made in addressing some of the challenges that drive wasteful spending in many parts of the healthcare system.

1. Medication adherence among large populations of patients with three of the most prevalent chronic diseases—hypertension, hyperlipidemia and diabetes—has improved since 2009 by about 3%.

2. The proportion of patients diagnosed with a cold or the flu—both viral infections that do not respond to antibiotics—who inappropriately received antibiotic prescriptions has fallen from 20% to 6% since 2007.

3. For diseases where lower-cost generic medications are available, use of generics reached 95% in 2012.

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