Reducing waste, rather than cutting programs, is a less harmful and more sustainable strategy for lowering health care costs in the U.S., according to a new article in the Journal of the American Medical Association.

Authors Donald M. Berwick, MD, MPP; Andrew D. Hackbarth, MPhil say that the opportunity for waste reduction is "immense," and identify six major categories of waste that would produce the most savings.

"The savings potentially achievable from systematic, comprehensive, and cooperative pursuit of even a fractional reduction in waste are far higher than from more direct and blunter cuts in care and coverage," they write. However, they cautiion: "The potential economic dislocations, however, are severe and require mitigation through careful transition strategies."

The categories that are prime for waste review: overtreatment, failures of care coordination, failures in execution of care processes, administrative complexity, pricing failures, and fraud and abuse.

"No matter how polarized politics in the United States have become, nearly everyone agrees that health care costs are unsustainable," say Berwick and Hackbarth.
They note that health care costs accounted for nearly 18 percent of the gross domestic product (GDP) in 2011 -- which reduces the resources for other government programs, erodes wages and undermines the competitive of U.S. industry.

"Although Medicare and Medicaid are often in the limelight, the health care cost problem affects the private sector just as much as the public sector. Both need serious relief."

But how to cut waste? Berwick and Hackbarth suggest delivering better care through a wider adoption of known best care processing, improving care coordination, reducing overtreatment (such as unwanted intensive care at the end of life for patients who prefer hospice and home care), simplify administrative processes, control pricing so that it represents the actual costs plus a fair profit and eliminate fraud and abuse.

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