U.S. healthcare spending grew 3.9 percent in 2011, reaching $2.7 trillion and representing three consecutive years of slow growth. Healthcare spending as a percent of Gross Domestic Product (GDP) remained stable at 17.9. If we peel back the onion to look at how U.S. healthcare dollars are spent, we might be surprised.

Hospital patient care represents only 31 percent of the cost. The remaining 69 percent includes physician and clinic services, nursing home care, home health care, residential care, retail drugs and administrative services. If we dive deeper into the numbers, we find three categories driving national healthcare expenditures – information technology, administrative/billing costs and chronic disease treatment.

Information technology, including electronic health records, is required for state-of-the-art treatment more than ever before. Such technology generates costly though crucial expense, according to the Congressional Budget Office.

Administrative and insurance billing costs account for 7 percent of the national healthcare expenditures, per the Centers for Medicare and Medicaid Services.

 The continued rise in chronic disease treatment accounts for 75 percent of national health expenditures, according to the Centers for Disease Control and Prevention. As a society, we must address chronic conditions such as heart disease, stroke, diabetes, lung disorders and Alzheimer’s disease. Half of all Americans, with contributing factors such as obesity and smoking, suffer from chronic disease. Hospitals continue to refocus on patient awareness of these issues. They are also participating in coordination of care through accountable care organizations and medical homes.

According to the American Diabetes Association, 1-in-3 babies will develop diabetes in their lifetime. Many patients with chronic disease are uninsured and will delay prevention and treatment. These patients will seek medical attention in emergency departments, which is not the most effective setting for chronic illness.

It’s easier said than done, but if we focus on chronic disease and administrative costs, we can impact 82 percent of spending dollars. Working collaboratively on these drivers, we can all be a part of reducing our national healthcare spending.