Parks Associates Blog

Monday, February 02, 2009

The U.S. Healthcare System Needs to Trim Fat

The McKinsey Quarterly released a research study showing that in 2006, the U.S. spent approximately $650 billion on healthcare more than it should when compared with countries with similar affluent levels and care standards. Most excessive spending comes from avoidable physician office visits for things like prescription refills and preventable use of acute care facilities like a hospital or ER. These services alone account for two thirds of the total excessive amount. The next item is spending on prescription drugs, as people in this nation place way too much faith in those pills. Guess what, $98 billion a year can be saved if U.S. patients start to use pharmaceuticals rationally. Another $91 billion can be saved if we can cut through layers of administrative clutters and simplify processes of healthcare services for patients and doctors. These areas are what we call the “fat” of our healthcare system. Savings of such a magnitude can be reinvested in other areas short on resources. The research actually highlights that the U.S. did not invest enough in the long-term care and home care sector. The 2006 gap was $53 billion.

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