By Elaina Myers, Assistant Editor

America’s healthcare system is not just expensive but also incredibly wasteful. Experts estimate that between 25 percent and 50 percent of U.S. healthcare spending provides little or no added health benefit, costing between $760 and $935 billion annually, according to the JAMA Network. With national healthcare spending reaching $5.3 trillion in 2024, and accounting for 18 percent of gross domestic product (GDP), according to CMS.gov, waste is increasingly contributing to the nation’s growing debt.  

“Considering healthcare costs rise anywhere from 10 percent to 20 percent each year, we’ll reach a trillion dollars of healthcare waste very soon,” says Peter Basica, founder and CEO of 360 Smarter Care. “It is a staggering number.” 

The most common areas of waste in healthcare include: 

• administrative complexity 
• pricing failure 
• overtreatment or low-quality care 
• poor care coordination 
• failure of care delivery 
• fraud and abuse.  

Administrative waste remains one of the largest operational challenges. Complex coding systems, billing inefficiencies and claims processing consume huge amounts of labor and financial resources. Basica believes artificial intelligence (AI) could significantly reduce those costs.  

“Administratively, AI is going to take over a large portion of medical coding with the CPT codes and ICD-10s. That type of work will go away from physicians and administrators, and the error rates will go down,” Basica says. 

AI can also help hospitals analyze physician outcomes and reduce unnecessary procedures. Better data analysis could help identify which treatment approaches deliver stronger patient outcomes and experiences while avoiding wasteful spending.  

As healthcare spending continues rising faster than GDP, facility leaders will face increasing pressure to reduce operational waste while improving efficiency. 

“We are headed for disaster if nothing changes,” Basica says. “The next 20 years are going to be brutal if hospitals don’t act now.” 

Elaina Myers is the assistant editor of the facilities market. She has covered various topics from pest management to resilience to sustainability and is the beat writer for special days. She also runs the FacilitiesNet social media accounts. Elaina is an avid cat lover and spends all her free time and money traveling the world.