SOURCE: Health Affairs

For decades, the level and growth of US health care spending has diverged from both international and domestic norms, leading many to characterize rising health expenditures as “unsustainable.” Between 1970 and 2019, total US health spending grew from 6.9 percent of gross domestic product (GDP) to 17.7 percent of GDP, according to the Centers for Medicare and Medicaid Services (CMS). In 2020, amid unique strain on the health care system and a dramatic economic downturn due to the COVID-19 pandemic, health spending accounted for nearly one-fifth (19.7 percent) of US GDP. According to prepandemic analysis, health spending was not projected to reach this level until 2028, and it remains to be seen how the pandemic will affect the long-term trajectory of health spending. Meanwhile, the Organization for Economic Cooperation and Development (OECD) found that total health spending averaged 8.8 percent of GDP among member countries in 2019 compared with 16.8 percent in the US.

In 2019 Health Affairs launched the nonpartisan Council on Health Care Spending and Value to study excessive health spending in the US and recommend strategies to address it. The council, which plans to release its recommendations in late 2022, defines excessive spending as that which both diverges from a norm and is not commensurate with the health it produces. This research brief is one in a series of briefs that provides snapshots of key literature that informed the council’s inquiry into health spending drivers..

Why Focus On Clinical Waste?

Various factors, some of which are amenable to policy intervention and others that are not, are potential contributors to excess health spending and growth, including population growth, demographic changes, changes in disease prevalence, changes in utilization or prices, and changes in spending on care that is considered wasteful. This research brief outlines evidence pointing to clinical waste as driver of excess health spending and growth in the US. Throughout this brief, dollar figure estimates of waste and its components have been converted by the authors to percentages of total national health spending for the appropriate year.

Defining Terms

Health system “waste” is broadly defined as low-value spending. A widely used framework introduced by Donald Berwick and Andrew Hackbarth in 2012, building on earlier work from the Institute of Medicine (IOM), posits six drivers of waste in the health care system: failures of care delivery, failures of care coordination, overtreatment, pricing failures, administrative complexity, and fraud and abuse.

Precise measurement of wasteful spending is challenging. In a seminal 2010 report, “The Healthcare Imperative,” the IOM found that in 2009, from $750 billion to $765 billion in health care spending was wasteful, accounting for at least thirty cents of every health care dollar (based on total national health spending in 2009 of $2.5 trillion). After the IOM report, Berwick and Hackbarth estimated, based on a meta-analysis, that waste accounts for from 20 to more than 46 percent of total national health expenditures. In a 2019 update to this study, William Shrank and colleagues put that estimate at about 20–25 percent of total health spending (exhibit 1).

Estimates of national health spending by type of waste from both studies are presented in exhibit 1. This brief focuses specifically on “clinical waste,” which stems from three sources: failures of care delivery, failures of care coordination, and overtreatment. Together, these categories of waste (the first three rows of exhibit 1) account for between 5.4 and 15.7 percent of national health spending.

Failures Of Care Delivery Account For 2.7–5.7 Percent Of Total Health Spending

In the Berwick and Hackbarth framework, failures of care delivery are defined as “poor execution or lack of widespread adoption of known best care processes, including, for example, patient safety systems and preventive care practices.” The waste that results from these failures is spending that leads to patient injury and “worse clinical outcomes” than necessary. Overall, Berwick and Hackbarth estimated that failures of care delivery cost the US health system between $102 billion and $154 billion in 2011, or 3.8–5.7 percent of total national health spending. Shrank and colleagues, using a narrower definition, estimated that these failures accounted for from $102 billion to $166 billion in 2019, or  2.7–4.4 percent of overall projected national health spending.

Failures of care delivery can be roughly categorized as either “doing the wrong thing” (errors and adverse events) or “failing to do the right thing” (not providing care that is known to be useful). Medical errors and adverse events gained an unprecedented level of public attention after the IOM published its seminal 1999 report, “To Err Is Human,” which indicated that medical errors led to between 44,000 and 98,000 deaths per year in hospitals—more deaths than resulted from car accidents, breast cancer, or AIDS. The report lay the foundation for further analyses of medical error during the next two decades. Key studies from this literature are summarized in exhibit 2 and highlight the cost of common adverse events, both to patients and in terms of excess spending.

Failures Of Care Coordination Account For  0.7–2.1 Percent of Total Health Spending

Berwick and Hackbarth describe failures of care coordination as “the waste that comes when patients fall through the slats in fragmented care” and estimate that these failures resulted in between $25 billion and $45 billion in waste in 2011 (0.9–1.7 percent of overall health spending). In their estimates of waste resulting from failures of care coordination, Shrank and colleagues focused only on unnecessary admissions and readmissions, which they projected would cost between $27 billion and $78 billion in 2019 (0.7–2.1 percent of projected health spending).

Both Berwick and Hackbarth and Shrank and colleagues define care coordination narrowly. Estimating the cost impact of care coordination is challenging because “coordinated care” is difficult to define and may be most easily observed in its absence. The Council of Accountable Physician Practices describes coordinated care in terms of communication among one’s physicians, presence of complete electronic health records (EHRs), collaboration between inpatient and outpatient providers, and not having to “repeat yourself or keep track of your own medications, test results, or X-rays.”

As a practical matter, researchers studying the impact of coordinated care have often focused on specific interventions that have been given that label and compared them with the absence of the intervention, with predictably mixed results in terms of cost savings. A less direct way to evaluate cost savings associated with care coordination is to examine organizations that are considered to be delivering more coordinated care and compare their per capita costs or growth with that of other organizations. For example, research indicates that physician practices with robust capabilities in technology and innovation (including the use of EHRs), management and culture, and patient-centered care have lower spending than practices with less robust capabilities in these areas. Meanwhile, research about integrated delivery systems such as Kaiser Permanente, the Cleveland Clinic, and similar organizations has not consistently shown that these groups have lower per capita spending or growth than other providers. However, it is nearly impossible to isolate the financial effects of care coordination amid the myriad other differences between integrated delivery systems and other providers, including market conditions, regulatory frameworks, and patient populations.

Survey research reveals fair US performance on care coordination measures relative to comparable countries. A 2021 Commonwealth Fund survey of providers and patients evaluated care coordination by measuring the degree of information sharing and effective communication between providers. Among the eleven nations studied, the US ranked fifth, after New Zealand, Switzerland, the Netherlands, and Norway. However, the authors noted that none of these countries had succeeded in implementing “good communication between the primary care and hospital, emergency department, and home-based care provider,” and that all eleven countries did relatively poorly on measures of coordination with local social services providers.

Different definitions of overtreatment lead to varying estimates of its cost. The IOM estimated that unnecessary services added $210 billion (8.4 percent of national health spending) to health care spending in the U.S. in 2009. “Unnecessary services” included overuse beyond evidence-established levels, discretionary use beyond benchmarks, and unnecessary choice of higher-cost services. Berwick and Hackbarth estimated that overtreatment cost the US health system from $158 billion to $226 billion in 2011, or 5.9–8.4 percent of national health spending making it one of the larger categories of waste, behind administrative complexity and fraud. Shrank and colleagues more narrowly defined overtreatment as low-value medication use; low-value screening, tests, or procedures; and overuse of end-of-life care, putting the cost at between $76 billion and $101 billion in 2019 (2.0–2.7 percent of projected total health spending).

The Choosing Wisely campaign, founded by the American Board of Internal Medicine in 2012, identifies common types of “low-value care” (which, for the purposes of this brief, is synonymous with overtreatment) and educates physicians and consumers about how to avoid them. To that end, the campaign has published more than 100 consumer-friendly guides regarding specific unnecessary tests, procedures, and treatments. A 2015 study of the campaign by Carrie Colla and colleagues examined the national average annual prevalence of eleven low-value services among Medicare enrollees between 2006 and 2011; the prevalence ranged from 1.2 percent (for upper urinary tract imaging in men with benign prostatic hyperplasia) to as high as 46.5 percent (for preoperative cardiac testing for low-risk, noncardiac procedures). Moreover, the authors found widespread variation in the prevalence of these procedures across hospital referral regions, indicating that the provision of low-value care is unevenly distributed across the United States.

Research also reveals racial and ethnic disparities in the provision of low-value care, with a 2017 study of Medicare administrative data by William Schpero and colleagues finding that Black and Hispanic patients were more likely to receive low-value care than White patients.

Importantly, research suggests that the prevalence of some of the low-value services identified by the Choosing Wisely campaign has remained about the same or slightly decreased in recent years. A 2019 report by the Research Consortium for Health Care Value Assessment (a collaboration between Altarum and VBID Health) examined a private insurer’s spending on five specific low-value services and five high-value services between 2014 and 2016 and found that spending growth on all five of the services (2 percent) was slower than the total growth in health spending during the same period (22 percent). The study by John Mafi and colleagues of patients with fee-for-service Medicare who received at least one of thirty-two identified low-value services found that the provision of low-value care decreased marginally between 2014 and 2018.


The Council on Health Care Spending and Value is not focusing specifically on clinical waste, despite the savings potentially available, because other prominent groups and experts are making important strides in this area. This brief has already noted the important work of the Choosing Wisely project. Others are also working to identify and address clinical waste, including through state-level data collection and education efforts. Research on medical error also highlights a range of interventions with the potential to reduce waste and improve quality, including resident handoff programssurgical safety checklists, and other interventions to build “safety culture” in hospitals. Identification and reduction of medical waste must be a key component of any broad strategy to moderate health care spending growth and improve patient outcomes.