The magnificent development of medicine in the XX^th century caused that it has become one of the major and most important branches of the global economy. Depending on the adopted system, the amount of public and private funding destined in 2011 for healthcare in OECD countries varied between 5.9% (Estonia) and 17.7% (USA) of GDP (gross domestic product). In Poland the amount was 6.9% of GDP (including public funding as low as 4.5% of GDP), i.e., markedly less than the average of all OECD countries (9.3% of GDP).

As can be seen, the magnitude of health spending in the U.S. markedly differs from that of other countries. If the current trend continues, health expenditure will grow to approximately 20% of GDP in 2020. Other countries can be roughly divided into two groups: one with health spending between 11.9% of GDP (Holland) and 8.9% of GDP (Australia), and the other with health expenditure between 7.9% of GDP and 5.9% of GDP (Estonia).

Considering the size of GDP and a country’s population, total health spending varies between $1.2 billion in Estonia and $3 trillion in the U.S. The average per capita is from several hundred dollars in Poland to 10,000 dollars in the U.S. Health spending in Poland amounts to approximately PLN 100 billion a year ($25 billion), i.e., much less than $1,000 per capita.

While the goals to which the above mentioned financial resources are destined cause questions regarding fair spending, their size must give rise to reflection on reasonable spending. The rationality of spending should comprise both effectiveness (achievement of the best result at minimum cost) and thriftiness, i.e., waste avoidance.

The concepts of effectiveness and thriftiness partly overlap since efficient spending largely depends on waste minimization. In ethical and economic debates there has been a shift from an ethics of rationing healthcare resources to an ethics of waste avoidance (2). Although rationing is necessary from the economic point of view, it is “psychologically” difficult. These psychological difficulties stem from the professional virtue of the medical profession; physicians understand fidelity to the patient quite literally, i.e., they treat each patient individually without taking into account the costs thus disregarding the fact that even the wealthiest nations’ financial resources are not unlimited. Therefore, in healthcare funded by the progressive tax system, physicians owe loyalty to patients as a collective organism, i.e., a physician, contrary to a lawyer, must be aware of the needs of all patients, not only those who are under their direct care. The discrepancy between the loyalty to an individual patient and loyalty to a collective organism generates tension, which is difficult to overcome. Contrary to “rationing”, the principle of “waste avoidance” does not generate such tension; it also seems acceptable for the majority as it does not deprive anybody of anything. It does not mean the concept of “waste avoidance” does not give rise to a number of question and doubts. However, the doubts are not related to the principle itself, much rather to the meaning of the word “waste”. For the purpose of this text, “waste” will refer to misspending financial resources, i.e., using the available funds for interventions that do not benefit patients. To avoid all possible misunderstanding or doubts, it should be emphasized that fair remuneration of doctors, nurses and other healthcare employees cannot be considered misspending. Quite the opposite, such remuneration should be regarded as a good and appropriate investment. Again, however, what remains to be established is the meaning of the word “fair”.

Irrespective of circumstances, avoiding wastage of financial resources appears to be the most important component of rational spending thereof. It is not surprising the United States have been at the forefront of investigation and description of resource wastage. As already mentioned, the U.S. is the country with the highest per capita health spending in the OECD; hence, the biggest amount of money is probably also wasted.

It was estimated that, in 2011, wasteful spending in U.S. healthcare ranged from 21 to 47% of national health expenditures, the midpoint estimate being 34% (3).

I believe there are three major categories of waste in healthcare, including the following:

1. Administrative waste

Factors which, according to the American estimates, account for almost a half (45.2%) of the waste in health spending can be defined as administrative waste.

1a. Administrative complexity

The first among administrative waste subcategories is administrative complexity that consists of excess spending due to inefficient rules and overly bureaucratic procedures. Administrative complexity occurs both at the central level (legislative and governmental) and within agencies dealing with accreditation of healthcare organizations, insurance companies, other payers (public and private) and other entities that influence healthcare organization. According to various estimates, annual waste resulting from the organizational erroneousness and shortcomings in healthcare delivery in the United States ranges from $107 billion to $389 billion (average $248 billion), which equals to 27% of all wasted funds. Hence, administrative complexity is perhaps the biggest single factor responsible for waste in health spending (5, 6).

1b. Pricing failure

Administrative waste also includes failure to price medical services correctly. American analysts believe pricing failure results from lack of price transparency and inadequate competition. Inadequate prices can be caused by inflation of services’ costs or “nonchalant” attitude to the idea of fair profit. It is estimated that, in the U.S., pricing failure adds $84-178 billion annually (average $131 billion) in the wasteful spending thus accounting for approximately 14.4% of all waste in health spending (5, 7).

1c. Failures of care coordination

In between administrative and physicians’ services there emerges another cause of wasteful spending, i.e., lack of coordination in both the diagnostic and treatment processes. Inaccurate coordination is caused by organizational fragmentation of the healthcare system and the resultant long waits for outpatient or hospital care as well as examinations being performed in non-standard conditions entailing a need for repeat procedures. Lack of coordination also causes hospital readmissions, decline in the patient’s functional status and hence need for assistance. Failures of care coordination can increase costs by $25 billion to $45 billion annually (average $35 billion) (8, 9).

2. Clinical waste

Another 35% of wasteful spending in the U.S. is more directly associated with the actions of healthcare practitioners, i.e., physicians and other health are professionals. Healthcare funds can be wasted both due to failure of care delivery and because of ordering diagnostic tests and treatments that provide no health benefit. These are two aspects of a major and unsolved problem that has become even more challenging with progress in medical technology. Failure to deliver timely care frequently results in its inefficiency while ordering unnecessary tests and procedures is a classic example of wasteful spending.

2a. Failures of care delivery

Failure to deliver timely care, inadequate care, management options that do not meet professionally recognized and approved guidelines or standards of medical practices well as failure to observe the safety rules when dealing with a patient cause financial losses which, in the U.S., are estimated at $102-154 billion (average $128 billion), i.e., approximately 14% of all waste in health spending (5, 10).

2b. Overtreatment

Overtreatment is a very controversial category of wasteful spending. The prefix “over-“ means “beyond an agreed or desirable limit”. The controversies are associated with the definition of such a limit. Irrespective of doubts, which are unavoidable, the word “overtreatment” refers to medical interventions which, according to the state-of-the-art, are unlikely to result in the patient’s benefit or are against their preferences. All procedures or services so provided are redundant. Considering the specific character of medical services, all unnecessary actions put patients in danger of adverse effects and complications and are therefore harmful. Overtreatment can also result from overzealous diagnostic tests (“overdiagnosis”) which fail to help the patient, and, in the case of false positives, may lead to more tests and complications (2).