The Institute of Medicine calculates that the U.S. system wastes $750 billion annually, but the practice of medicine and approaches to reform are uniquely immune to standard economic analyses.
On September 6 the well-respected Institute of Medicine (IOM) released its report, "Best Care at Lower Cost." Its authors argue that the U.S. health-care system is falling far short of its potential and continuing to rack up unsustainable cost increases. For example, they estimate that fully one-third of annual U.S. health-care expenditures -- $750 billion-- are wasted, and fully one-third of the 40 million Americans hospitalized each year are harmed during their stay.
The solution, they argue, is for the health care system to adopt practices already in use by other industries. The non-transferability of medical records between practitioners can be remedied by mimicking online banking. The solution to the growing complexity of medical care is to adopt the information technology systems that enable manufacturers to manage vast supplier networks. The way to prevent medical errors is to follow the airline industry's lead in learning from mistakes.
Consider the problem that nearly two-thirds of patients do not know the cost of their care until they receive their bill. The authors argue that medicine needs to allow patients to shop for medical care as they do for appliances and hotels. Someone wanting to buy a dishwasher or book a hotel room can go online and compare reviews of performance and prices. Why shouldn't a patient seeking treatment for diabetes or a knee replacement be able to do the same?