The United States spends nearly one-sixth of its economy on health care and more than $1.2 trillion of it is considered a waste of money.

About half of what is spent on health care each year is going down the drain, according to a recent report from the accounting firm PricewaterhouseCoopers' Health Research Institute.

The report identified 16 areas where wasteful spending is the worst, but Wyoming Medical Center and Cheyenne Regional Medical Center took a look at five areas that might be helped through health care reform.

Officials at both hospitals agreed wasteful spending occurs at their facilities in all these areas, but they are taking steps within their organizations to reduce costs in the mean time.

Too many tests

The largest area of wasteful spending, according to the report, comes from overtesting.

It's a huge driver of costs, said Dr. John Lucas, chief executive officer at Cheyenne Regional.

The report estimates about $210 billion is wasted every year on too many tests and procedures and when asked if it happens at WMC, Vickie Diamond said, "Oh yeah, particularly in the emergency department."

The chief executive officer at the Casper hospital said many doctors practice what is called "defensive medicine" to prevent themselves from being liable in a malpractice suit.

"Doctors are doing what medically and legally they think they need to do," Diamond said.

Currently, there has been no tort reform in Wyoming.

Patients also demand the latest treatments seen on television and physicians get paid for doing more, said Nancy Brandt, chief financial officer at WMC.

Too many tests is an "oversimplification of the problem," Lucas said. There is a lot of duplication of services and overtesting because there are variances in how each physician practices.

Health could bring more evidence-based medicineto help standardize the care system, he said. But currently, he has not heard much talk about tort reform.

Stacks of paperwork

Many employees and hours are needed to navigate the complicated insurance claims system, which includes hundreds of health insurance providers, each with its own form.

It's a "huge" expense for WMC, Brandt said. More than 56 people work in patient financial services at the hospital.

"Everyone wants to see it differently," Brandt said. "Everyone wants to pay us differently. Everyone wants different information."

Everyone has a different precertification process, Diamond said. One might need preapproval for an MRI while another only needs one for surgery.

Insurance claim filing is a "guessing game," Diamond said, and if the hospital doesn't get it right, it doesn't receive payment.

About 10 percent of a doctor's time is spent on paperwork, Lucas said.

He said a uniform billing system and better use of health information technology will help ease the cost of paperwork

"We wish every insurance company used the same claims form," Lucas said. "All that adds to the complexity, cost."

Coming back a second time

Readmissions to the hospital cost the country $25 billion, many of which can be prevented with proper follow up by both hospital and patient.

WMC and Cheyenne Regional has a hospital readmission rate of about 20 percent for certain diagnoses, which is right around the national average, according to www.hospitalcompare.com.

According to Diamond, readmission comes down to two key factors: can patients see their primary care physician and do they follow discharge instruction.

"For heart failure patients, if you go home and eat hot dogs and salt because you couldn't get it in the hospital, you are going to end up back here," Diamond said.

Hospitals must improve case management, Lucas said. He said hospitals need personnel to call a heart failure patient everyday and they should create better relationships with primary care physicians.

Also, moving to electronic medical records will help.

"The hand-off from hospital to doctor is critical and it is not done well with paper records," Lucas said.

Hospitals never had incentive to prevent readmissions in the past, but now reform measures being considered would refuse Medicare payment for hospital readmissions within 30 days.

Medical errors

Nurses and doctors are human and medical errors happen at every hospital across the country.

However, it costs about $17 million to treat them, according to the report.

"Medical errors are real because we are human," Diamond said. "I don't think we have a high incidence of injury, but it's real."

There are 50 steps between when a doctor orders a medication and a patient receives it, Lucas said.

Cheyenne Regional is in the process of implementing a bar-code system to reduce medication errors, while WMC has used bar codes for several years.

Both hospitals have undertaken large, organization-wide projects to reduce medical errors, especially now that Medicare refuses to pay for certain "never events," which include falls.

Fall rates at WMC have decreased, Diamond said.

More evidence-based medicine requirements and better information technology from health care reform could help hospitals decrease medical errors further.

Unnecessary ER visit

The emergency rooms at both hospitals get used as clinics instead being reserved for the sickest, most urgent patients.

About 50 percent of the cases treated in the ER at Cheyenne Regional could have been seen at a primary care physician's office, Lucas said.

Treating a patient in the ER is much more expensive.

"It could easily be a 10-fold difference," Diamond said."It costs $60 to $70 at Urgent Care and probably $500 for an ER visit."

Whether someone comes in for a sore threat or congestive heart failure, the patients starts with the same base cost

Uninsured people often use the ER, because they know they won't be turned away and they don't have to pay up front.

Hospital emergency rooms are required by law to see everyone.

Another reason is a lack of primary care physicians within the community, Diamond said. Sometimes it takes weeks to get into a primary care office.

Expanding or emphasizing primary care in health care reform will reduce "dependency on the ER," Lucas said.

Contact health reporter Allison Rupp at (307) 266-0534 or allison.rupp@trib.com.

Six wasteful areas that could be more efficient

1. Overtesting - $210 billion

2. Processing claims - $21 billion to $210 billion

3. Hospital readmissions - $25 billion

4. Medical errors - $17 billion

5. Unnecessary ER visits - $14 billion