There is currently a nationwide discussion on the cost of health care. The United States spends far more on health care than many other countries, but conversations about improvement should not be limited to discussions about models of care. The United States has to deal with over-spending issues in our health care system – especially administration, billing, and other overheads. It is a topic that we are in the Health Council for Health Spending and Valueto which I have the privilege Co-chair.
When we look at the data, we find that our spending seems to far outweigh any other country’s spending on health care administration. in the a calculationU.S. healthcare administrative spending was $ 937 per capita, above 14 other nations in the Organization for Economic Co-operation and Development. Our closest neighbor on this list is Germany, which spends $ 293 per capita.
Unfortunately, “administrative costs” are not a proper budget item that we can cut. All businesses have the necessary overheads, and successful, customer-centric businesses incur costs for customer service and the selection of their offerings. However, when looking at these costs, which include everything from billing, insurance, human resources, legal, electronic medical records, and other software updates to hardware, facility costs, and taxes, it is clear that there is either waste or surplus in managing our healthcare system . In fact, experts estimate that the 15 to 30 percent of total U.S. healthcare spending used in administration about half is wasteful– about 7.5 to 15.0 percent of total national health expenditure.
Where’s the trash?
ON Read the literature carefully reveals some culprits. Medical billing costs usually vary greatly depending on the type of care. For example, visits to the emergency room were found Generate billing costs that represent a much higher percentage of total sales than inpatient surgeries or inpatient stays. in the another studyResearchers found that billing and insurance costs were much higher for private insurers than for public programs.
It is probably impossible to completely eliminate waste, excess, or even fraud in healthcare administrative spending, but I believe this is an opportunity for private sector innovation. Many of our current management systems are too manual and the exchange of information is disrupted. Both attributes result in costly, bespoke, practical solutions that are prone to fraud and waste.
New, innovative systems could automate processes better and introduce safety functions. I find three approaches appealing: a central clearing house for claims, optimized prior authorization and improved quality reporting.
Centralized Claims Clearinghouse
A concept that my friend strongly supports Harvard health economist David M. Cutler, PhDA centralized claims processing center could standardize the electronic transmission of billing information in order to reduce the costs of operating different systems between providers and payers. The banking industry has paved the way here; The automatic clearinghouse system moves money around the world while ensuring security. In the healthcare sector, the billing information would have to be standardized, then a claims settlement agency would forward payment claims and point out any fraud. Japan and Germany have already had success with this approach. And the private sector has been active here, and several health information technology companies have set up clearing houses. But have these separate groups created more separation as lightness. Consolidation is required so claims from any vendor or payer can be handled seamlessly.
Streamlining and restricting the use of prior authorizations
This concept is likely to get the most support from vendors. Some researchers have found that prior authorization is the most expensive and time consuming administrative transaction – perhaps why Medicare rarely uses it. Manual prior authorization can cost average $ 11 per transaction For vendors, an automated solution can cost $ 1.88 per transaction. These savings will grow rapidly.
The Centers for Medicare and Medicaid Services published a proposed rule for pre-approval standards in December. The proposed rule requires public payers to create programming interfaces that streamline documentation and communication for prior approvals using existing electronic health records. There is an opportunity here for technical innovations.
Reducing the frequency of prior approval is an equally attractive goal and an excellent opportunity for advanced technologies such as natural language processing in conjunction with electronic health records.
Improved quality reporting
Finally, a careful review of quality reporting should strike a balance between providing high quality care and not paying exorbitantly for the data required for quality assurance. We all know the maxim: if you can’t measure it, you can’t improve it. However, there is so much noise in our current metrics that the actual measurement of quality will depend on the work and cost of generating the data. Here, too, the healthcare sector would be well suited to use insights gained in other industries about automated data acquisition, harmonized quality metrics, and automated reporting and labeling of data outside of the norm. We need transparency about the costs associated with recording quality indicators and the return on this investment. Using data science tools is likely to optimize the metrics we collect while maximizing the insights we get from that data.
Harvest the low hanging fruit
While our country’s health care model offers room for improvement in many areas, the targeted control of waste and excess in the management of the system is a really low-hanging fruit. Here, private-sector technological solutions in combination with effective public sector guide rails can achieve significant cost savings and urgently needed increases in efficiency.
This piece was inspired and informed by our recent Council discussion on Health Spending and Value Added in January 2021, as well as extensive research by Council staff, although the views expressed are my own.