OECD official: 20% of all health spending in Europe is pure waste

Mark Pearson: "By waste, we do not just mean things that can be done better, we mean things that do no good at all, or are actually bad for patients." [Shutterstock / Deflet]

This article is part of our special report Europe’s health after COVID-19.

Europe’s current health systems have been facing long-standing malfunctions which have led to almost 20% of health spending in Europe being “pure waste”, a senior official of the Organisation for Economic Cooperation and Development told EURACTIV in an interview.

“The problem is not individuals, it is the system which fails both patients and those who have to pay for health systems,” OECD’s Mark Pearson said.

Mark Pearson is the deputy director of employment, labour and social affairs at the Organisation for Economic Cooperation and Development (OECD). He provided written replies.


  • 10% of all hospital spending is correcting errors made in treating people
  • Health spending overwhelmingly goes on curative care, not prevention
  • The flow of data to decision-makers should be improved
  • Health decision-makers should avoid confusing messages to the public
  • Integrated budgets can help promote better care for people

Full interview

What is the situation with waste in Europe’s healthcare systems? Do you have figures showing that there is waste that can be avoided?

By waste, we do not just mean things that can be done better, we mean things that do no good at all, or are actually bad for patients. Unbelievably, a huge amount of health spending is wasteful in this sense: 10% of all hospital spending is correcting errors made in treating people in hospitals.

Too often, people receive unnecessary/inappropriate care (about half of all health treatments that people actually receive in OECD countries do not follow medical guidelines. In lower-middle-income countries, the figure could be even higher). Not all of this is waste, but much is (e.g. hip replacements and tonsillectomies for people who do not need them).

Costs of antimicrobial resistance. When drugs no longer work, people get much sicker. We use antibiotics far too much in some European countries. The Netherlands has an excellent health system but uses far fewer antibiotics than in other countries. We should all copy them. Health systems often buy expensive on-patent drugs when generics are available.

Administrative costs are sometimes far too high, and corruption raises costs.

Add these things up, and you get (easily) to 20% of all health spending being pure waste – not lost efficiencies (which would be a much higher number), but the equivalent of burning money. It is hard to tackle waste. Patients are sometimes ill-informed and want a treatment (antibiotic, surgery) even when it is inappropriate.

Sometimes health care professionals do not have the training, or the information, necessary to make appropriate decisions. No surgeon deliberately makes a mistake when doing surgery. The problem is not individuals, it is the system which fails both patients and those who have to pay for health systems. Taking a systems-based approach to tackling poor quality patient care and eliminating waste is the first step to finding what measures we need to take.

When it comes to healthcare budgets, what is your opinion regarding integrated budgets? What do we mean by that and how could Europe economically benefit from these budgets?

Integrated budgets do not pay providers for each health care activity, but rather for caring for whole episodes of care, or even on a per capita basis.  This gives providers an incentive to promote care in the most appropriate setting, and even invest in prevention, rather than cure.

Evidence suggests that, when done well, integrated budgets can help promote better care for people, and sometimes even also lower costs.  There is also a need for rethinking the integration between health systems, labour markets, social protection systems, value chains, etc. Integrated budgets can help to achieve this, but they cannot deliver integrated policy-making in isolation from other measures, such as better alignment of result/outcome frameworks, skills, shared information systems, etc.

Mark Pearson |Photo by Andrew Wheeler

The crisis has highlighted in particular problems in the interaction between health and social care. Failure to see elderly care as part of the wider health care system led to disastrous results in some countries and contributed to an inability to manage effectively a pandemic that disproportionately affects elderly people.

Many countries recognise that their response in care homes and home care settings was not as good as it should have been – PPE in social care settings was not prioritised, elderly care facilities lacked the infection control protocols, workforce capacities and skills, people were discharged from hospitals into social care without tests or transfer of health records, etc.

Integrating health and social care budgets can help to make sure health and social care are better integrated, but addressing things such as skill frameworks, quality measurement, shared information systems, and common infections protocols are also important.

A number of health stakeholders say Europe has learned a lot of lessons through the COVID-19 pandemic. Which ones would you prioritise?

The pandemic offers opportunities to learn lessons for health system preparedness and resilience, for example:

  1. The need for greater focus on building population resilience, by addressing wider socio-economic determinants of ill-health and addressing the underlying source of poverty and inequality. Yet as today health spending overwhelmingly goes on curative care, not prevention – leaving too great a part of the population with underlying health conditions that have left them particularly vulnerable to COVID-19. Only 3% of Total Health Expenditure is spent on illness prevention and health promotion. Even when people do have chronic conditions in Europe, the conditions are often not managed well.  Greater patient involvement in their own health and health care – in the jargon, ‘people-centred health’ – is a must.
  2. The need for greater anticipation and reactivity: many countries struggled to implement Testing, Tracking and Tracing, and even now that tests are available, many struggle with getting results back quickly enough, with implementing effective and timely tracking and tracing, with getting people to use digital tracking apps, etc. This points to the need for capacity to expand services quickly – for example, though having reserve health workers, and improving the flow of data to decision-makers (which has been a real barrier to good decision making in too many countries).
  3. The need for building greater trust in health decision-makers. This has to do with communication – need to be clearer and more open, less confusing in messaging e.g. the issue with face masks. But it has to do also with building better channels of trust, so that populations can trust governments to act in their health and wellbeing interests and not in their self-interest (the issue with vaccine nationalism, trust in vaccine).

Last but not least, many say the pandemic has proved the need for a more centralised approach to health. Is there fertile ground to launch a discussion over Europe’s future role in the health sector?

Nationally, some aspects of pandemic response work best when done centrally, and some better when done by localities.  Some centralised systems have struggled with quick decision-making and implementation, but equally some decentralised systems have not managed to provide comparable information on things like PPE, infection rates, even deaths, quickly enough.  Different local rules have sometimes caused confusion about social distancing rules, and (perhaps) reduced compliance.

One area where decentralised management does seem to be necessary is in contact tracing; the stronger the local community health sector, the better have countries been able to trace new chains of infections.

On a European level, looking back, and it is clear that some things that were discussed but not implemented would probably have helped. Supply chain management, PPE, pooling of funds to support R&D, coordination of measures beyond health (eg border closures, travel, etc) are examples. This was a missed opportunity.

[Edited by Zoran Radosavljevic]

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