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Healthcare Waste Eclipses U.S. National Defense Budget, Study Finds

Posted by David Fong on Oct 31, 2019 3:00:00 PM


The annual U.S. national defense spending budget represents a massive hard-to-imagine number. Now consider the amount of waste in the country’s healthcare system. Likely a large amount, but it must be less than national defense—right? According to a recent article on titled “Wasted health care spending in the U.S. tops annual defense budget, study finds,” the healthcare waste actually exceeds the FY2019 national defense budget, and is estimated at $760 to $935 billion per year. This is waste on a scale that’s difficult to imagine. It’s about a quarter of the sum total of healthcare spending. The study referenced in the article is from the Journal of the American Medical Association, and details the immense scale of the problem.


So where’s this waste coming from, and how can it produce such lofty numbers? The article details the main sources:

  • Administrative tasks are cumbersome and time-consuming. These include billing and coding and other clerical duties that result in approximately $266 billion in excess spending.
  • The other pool of wasteful spending comes from multiple factors such as price controls, fraud, and poorly-coordinated care.


The complexity of the healthcare system is especially felt by providers who must manage coding, different recordkeeping processes, and other administrative requirements. The article references a 2016 study funded by the American Medical Association that states physicians spend nearly double the amount of time on administrative work (49% of their time) as they do with actual patient work (27%). Physicians also took another one to two hours of clerical work home with them each night.


The article and study suggest reducing this waste by tying incentives to improved care, eliminating fraud, and making the payments and billing process more seamless and integrated.


Improving Coding to Cut Waste

Used effectively, an experienced outsourced medical coding company, like Aviacode, can help practices significantly reduce waste. Outsourcing coding dramatically reduces the time physicians and staff spend on paperwork, allowing them to fully attend to patients’ needs. Aviacode’s coders understand the ever-shifting healthcare compliance landscape, including the latest ICD-10 regulations. This experience allows them to code accurately and quickly, and thereby removes doubt and uncertainty from staff and physicians.  Our team of over 700 experienced and certified coders accurately code more than 10 million encounters per year, helping providers avoid costly mistakes and improve their revenue integrity.


Topics: ICD-10, Medical Coding, Pro-Fee Coding, Facility Coding