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Healthcare system wastes $750B annually, report says

Managed IT support and efficient EMR systems are some of the most effective ways to reduce unnecessary healthcare spending.

Managed IT support and efficient EMR systems are some of the most effective ways to reduce unnecessary healthcare spending.

Over the course of eight years, the U.S. Department of Defense budgeted $757.8 billion for the war in Iraq. The U.S. healthcare system, meanwhile, wastes roughly $750 million – every year.

These numbers come from a recently released report issued by the Institute of Medicine (IOM). So what costs the system and taxpayers so much money that doesn't really need to be spent? The study breaks it down into the following six categories:

•  Unnecessary services – $210 billion
•  Inefficient delivery of care – $130 billion
•  Excess administrative costs – $190 billion
•  Inflated prices – $105 billion
•  Prevention failures – $55 billion
•  Fraud – $75 billion

What these numbers tell us is that there exists the potential to curb wasteful spending of billions of dollars through improved management of medical IT assets. Through electronic medical records (EMR) systems and managed IT support, healthcare practices can streamline data and workflows while providing clinicians with faster access to thorough patient information. This, in turn, will cut back on the frequency of ordering unnecessary tests and procedures.

Time management for administrative employees also becomes much easier, as less energy needs to be spent on sorting through inefficient paper filing systems or trying to decipher the oft-ridiculed chicken scratch handwriting of doctors. And then there are the savings associated with reduced cost of office supplies, which could prove to be staggering.

"Industry giants are already beginning to catch on to these ideas on their own, even independently of the Affordable Care Act, so chances are looking good that we'll soon cut down on at least some of these inefficiencies and wastes," writes associate editor Brian Fung for The Atlantic.

These initiatives can save hundreds of billions of dollars every year while improving the quality of care patients receive, and medical professionals are warming up to that idea.