Report: More than half of administrative healthcare spending in the US is wasteful

Editor’s Note

A report published in Health Affairs on October 6 claimed that up to 30% of healthcare spending is used for administrative purposes, and more than half of that is not significantly contributing to health outcomes, Becker’s Hospital Review October 10 reports.

In 2019, Health Affairs launched the Council of Health Care Spending and Value with the purpose of tackling the issue of wasteful healthcare spending. Excessive spending is defined by the council as “that which both diverges from a norm and is not commensurate with the health it produces.” The council’s recommendations are set to be released later this year.

According to Becker’s:

• Excessive spending accounts for $285 billion to $570 billion in annual healthcare spending. 
• If there was an established centralized claims clearinghouse, $300 million could be saved on a yearly basis.
• Not all administrative spending is wasteful; it is "necessary and efficient, facilitating coordination among multiple actors and allowing for a level of choice in insurers, benefits, plans, providers and procedures."

View the Health Affairs report here.