New Study: Streamlining Administration in Health Care Would Save Billions

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Excessive administrative complexity costs physicians nearly 12 percent of their net revenue derived from patient care, according to a <a href="/publications/journal-article/2010/apr/saving-billions-dollars-and-physicians-time-streamlining">new study</a> published today by <em>Health Affairs</em>. Streamlining the administrative processes associated with the billing and payment of medical providers, researchers estimate, could save $7 billion annually and save four hours per week of physicians' time and five hours of support staffs' time. <br /><br />The administrative costs involved in paying health care providers are a well-known contributor to rising health care costs overall. Moreover, the high degree of complexity associated with certain administrative controls and processes adds additional work hours for physicians and their staff, often without adding any benefit. <br /><br />In this study supported by The Commonwealth Fund and the Robert Wood Johnson Foundation, researchers led by Bonnie B. Blanchfield, C.P.A., Sc.D., of Massachusetts General Hospital analyzed the administrative costs of a large multidisciplinary physician organization that works with multiple payers, each with different requirements and rules. For the organization studied, the cost of excessive administrative complexity, including both labor costs and revenue lost when claims are inappropriately rejected, delayed, and reprocessed, was nearly $45 million in 2006, or 12 percent of net patient revenue. Three-quarters of the administrative complexity burden was attributed to time spent by physicians and their office staff in preparing paperwork and contacting payers about prescriptions, diagnoses, treatment plans, and referrals. <br /><br />The authors recommend streamlining administrative services by developing a single, transparent set of payment rules for multiple payers, a single claim form, and standard rules of submission. Such innovations, they note, would not necessarily decrease the diversity of insurance product offerings or reduce choice. <br />