Waste Works

Let us now praise waste.

According to a recent study, about 35 percent of all hospital employees’ time is spent on wasteful
work: locating equipment, waiting around for physicians, interminably long meetings, interruptions by
phone calls, completing multiple forms for the same task.

Eliminate just one percent of wasteful work, the study’s authors say, and you get a .25 percent
increase in your operating margin, plus a one percent increase in employee satisfaction and a .9 percent
increase in how employees rate the quality of care.

Personally, I’m surprised the waste factor in hospitals is only 35 percent. In the foundation and
public policy world, surely it’s much higher.

Foundation meetings alone account for a gigantic amount of waste. Health policy wonks have been going
to meetings and producing reports for the past 35 years, apparently to little effect. The system was
pronounced to be in crisis in the early 70s, and it’s thought to be in crisis today.

Nothing’s changed, except the numbers. Everything gets bigger in America, and that includes waste.

In another 20 years when health care is approaching 25 percent of the GDP, will we conclude we were
wasting our time back in 2004 on various reform efforts? What would happen if we really did achieve
universal health insurance coverage, persuaded people to lose weight and reduced health costs by
dramatically lowering the need for expensive acute care services?

Millions of people would be out of work, that’s what.

I’m all for cost efficiency and increasing the “operating margin,” whatever ethical misgivings one
might have in applying the language of accounting to what are often matters of life and death.

We simply need to remember that we can be cost efficient till the cows come home and still generate
huge amounts of waste.

Like most things, it comes down to definitions. What is wasteful to some is absolutely necessary
to others.

Take the vast amount of medical intervention that occurs in the last year of a person’s life. Is
the extra chemotherapy ordered for a 90 year-old patient diagnosed with lung cancer a waste of resources
and effort – given a miniscule chance for survival and any quality of life – or are these “heroic
measures” justified on a small glimmer of hope and the inherent dignity of every individual?

What about the army of filers and form fillers employed in physicians’ offices who push
administrative overhead costs above 50 percent? Are these people a waste of time and money, or are
they necessary to preserve our fractured health system of multiple insurance plans and consumer
confidentiality and choice?

Administrators pay taxes and support families, too. They probably figure they’re not wasting
their time.

How about physicians spending more time with patients? Some studies suggest that beyond a certain
point, physicians are wasting time talking to patients, since the outcomes are just as good with a
ten-minute visit.

Outcomes are often just as good when the nurse talks to the patient. Maybe it’s the family doc whose
extensive training is “wasted” in this role.

When it comes to health care, cost efficiency is not what Americans value first. If it were, we
wouldn’t have one of the world’s most expensive and inefficient health care systems.

Waste works. Our economy depends on it. Manufacturers and providers of services would see their
profits plummet if people focused first on what they “needed,” and not on what they wanted or, what
is more common in health care, what they thought they deserved.

No doubt it is possible to reduce some health care costs by eliminating waste in the system and
employing more efficient practices. Where we can both reduce costs and improve quality, we ought to get
on with it.

We just need to remember that waste in one part of the system generates work – and income – somewhere
else. If it turns out that health care really does comprise 25 percent of GDP in 2025, we’ll be able to
thank or blame the politics of waste for most of its growth.

Feedback? Send it my way: Roger.Hughes@slhi.org.
*The Drift reflects the views of the author, and does not represent the official view of SLHI’s Board of Trustees and staff.