The U.S. healthcare system, one of the most advanced in the world, faces the significant challenge of unsustainable high costs. While the quality of medical technology and expertise is undisputed, inefficiencies within the system and rising expenses make access to healthcare difficult for many. In this post, we explore the root causes of the problem and compare the nation’s high healthcare costs with those of other developed countries. We unpack the effects of these costs on patients and providers and offer solutions such as Remote Patient Monitoring (RPM) to help mitigate the issues.

U.S. Healthcare System Inefficiencies

One of the biggest contributors to the high healthcare costs is system inefficiency. Unlike many other developed nations operating under streamlined, often government-managed healthcare models, the U.S. system is complex, fragmented, and burdened by excessive administrative overhead and financial incentives that prioritize volume over value.

1.    Administrative Overheads

Administrative costs in U.S. healthcare are significantly higher than in other developed nations. A study published in Annals of Internal Medicine found that administrative overhead in the U.S. accounted for about 34% of total healthcare costs, translating to over $800 billion annually. The complex web of insurance companies, billing systems, and regulations drives these costs. Doctors and hospitals must often employ entire staff teams to handle billing, coding, and insurance claims.

2.    Poor Continuity of Care and Fragmented Systems

Instead of focusing on unnecessary procedures and overutilization as the second primary inefficiency, the bigger issue may lie in poor continuity of care between healthcare providers. This fragmentation leads to redundant tests and treatments, as communication breakdowns and lack of shared patient records result in inefficiencies. Electronic health records (EHR) systems, which should facilitate smoother transitions between providers, often lack the interoperability required for seamless care, exacerbating the problem. Addressing these gaps can help reduce waste and improve care coordination, ultimately leading to lower healthcare costs.

3.    Rising Insurance Costs and High Deductibles

Another key issue is the recent rise in insurance premiums and high deductibles, making healthcare even less accessible for many Americans. Before insurance coverage kicks in, patients often face significant out-of-pocket costs, leading to delayed or skipped treatments. This problem is particularly prevalent among families with chronic health conditions, who are forced to choose between essential medical care and financial survival. High deductibles and co-pays, along with surprise billing practices, continue to plague the U.S. healthcare system and disproportionately affect those who need care the most.

The Impact of High Healthcare Costs

Impact on Patients

●       44% of Americans delayed or skipped necessary care due to cost concerns (2021 Commonwealth Fund study).

●       Includes missed treatments, follow-up visits, and prescriptions.

●       Rising premiums, co-pays, and out-of-pocket costs force families into tough decisions, affecting health.

●       41% of U.S. adults have medical debt (2022 Kaiser Family Foundation).

●       Many rely on high-interest credit or loans to pay medical bills.

●       Surprise billing practices worsen the financial burden with unexpected charges for non-covered services.

Impact on Providers

●       Healthcare providers, especially those serving Medicare patients, face significant challenges.

●       Medicare’s reimbursement model pays based on procedures, not outcomes.

●       This encourages doctors to prioritize quantity over quality of care.

●       Leads to physician burnout and results in poorer patient care.

Solutions for Reducing Healthcare Costs

To address the skyrocketing costs in healthcare, innovative strategies are emerging that prioritize efficiency and patient outcomes. Two key approaches gaining traction are value-based care, which shifts the focus from volume to quality, and remote patient monitoring. This technology-driven solution reduces hospital visits and improves chronic disease management. These solutions are helping reshape the healthcare landscape and curb unnecessary spending.

1.    Implementing Value-Based Care

One promising solution to reduce healthcare costs and improve patient outcomes is the shift toward value-based care. Unlike the fee-for-service model, value-based care rewards providers for delivering high-quality care and achieving positive patient outcomes. The Centers for Medicare & Medicaid Services (CMS) has begun implementing initiatives such as the Merit-Based Incentive Payment System (MIPS) and Accountable Care Organizations (ACOs), which focus on reducing hospital readmissions and improving chronic disease management.

Early results from these programs show promise. For example, CMS data reveals that ACOs saved Medicare nearly $1.8 billion in 2022 while improving quality measures such as lower hospital readmission rates and better management of chronic conditions like diabetes.

2.    Remote Patient Monitoring (RPM)

RPM services allow healthcare providers to monitor patients’ health data in real time, reducing hospital readmissions and emergency room visits by catching potential health issues early. Remote health monitoring is particularly effective in managing chronic diseases like diabetes and heart failure. A study by the American College of Cardiology found that RPM reduced hospitalizations for heart failure patients by 38% and saved over $10,000 per patient annually.

The Path Forward

The U.S. healthcare system faces substantial challenges due to inefficiencies and rising costs, but hope exists. Solutions like value-based care and remote patient monitoring offer a pathway to a more cost-effective, patient-centered healthcare system. By shifting incentives away from volume and toward outcomes and leveraging technology to monitor and manage chronic conditions, we can address the root causes of inefficiency and build a healthier future for all.

Contact us today to see how easy it is to get started with remote patient monitoring for your practice!