Monday, July 17, 2006

Physicians Looking for Relief from Administrative Overhead

Providing more evidence that administrative costs are helping to cripple the nation’s health care system, a recent survey of primary care physicians around the country showed that the vast majority spend well over 40% of their practice’s revenue on administrative overhead alone.

What’s more, the physicians report that billing and regulatory operations are slowly overtaking their ability to run a viable practice. 22.5% of survey respondents felt “doubtful” that they could continue to sustain their rising administrative costs in five years, while 7% said they would not be able to sustain the overhead costs.

The results of this survey aren’t exactly surprising considering reports that administrative costs gobble up 1/3 of our total health care costs in the US (compared to half that figure in consolidated-payer countries that also provide universal coverage to citizens).

But what the survey does that other reports don’t is illustrate how these administrative costs directly impact health care providers and, subsequently, their patients.

And the impact goes beyond just financial cost. As the journal Physicians Practice explains in an article about the survey results: “This trend is forcing physicians to pay strict attention to the amount they are bringing in to counterbalance the weight of their overhead costs. This causes them to focus on enhancing productivity — seeing more patients each day — and strengthening their patient collections operations. The result? Steeply declining career satisfaction levels.”

I wrote in April about a Wall Street Journal column by Dr. Benjamin Brewer, who runs a private medical practice in Illinois. Currently, Brewer employs four administrative assistants just to handle the over 300 different insurance plans patients bring to his practice.

Brewer writes: “Plus, there's $9,000 in computer expenses yearly to handle the insurance information and billing follow up. I suspect I could go from four people in the paper chase to one with a single-payer system.”

And this comes from a columnist who appears regularly on one of the most conservative editorial pages in the country. Indeed, Brewer's belief in the need for a consolidated payer system didn’t come easily. At first, he was quite skeptical of such a system.

“But,” as he explains, “increasingly I've come to believe that if done right, health care in America could be dramatically better with true single-payer coverage; not just another layer -- a part D on top of a part B on top of a part A, but a simplified, single payer that would cover all Americans, including those who could afford the best right now.”

Brewer describes his vision of how that simplicity could work:

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It would be simpler and better for the patient, and for me, if the patient could choose a doctor, bring their ID card with them, swipe it in a card reader at the time of service and have the doctor get paid on the spot with electronic funds transfer.

Instead, patients have to negotiate a maze of deductibles, provider networks, out-of-network costs, exclusions, policy riders, ER surcharges, etc. Wouldn't a card swipe be simpler? No preexisting conditions to worry about. No indecipherable hospital bills. One formulary to deal with and one set of administrative rules to learn instead of 300.

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I think so – and considering the hurt administrative costs are enacting on primary care physicians across the country, I imagine there’s a growing number of docs out there who share Dr. Brewer's vision.

2 Comments:

Anonymous Anonymous said...

Me again - this all fits perfectly into an HSA where a debit card can be swiped - even today.

I know, you feel the purchasing power is reduced, but at least you have to admit that an HSA has this advantage.

July 17, 2006  
Blogger Seth Zlotocha said...

How exactly do HSAs reduce administrative overhead?

The fact is that under the current system (which includes HSAs) people are coming in with hundreds of different cards. The goal is to reduce the number of payers in the system and get everyone using the same card -- that's what reduces administrative overhead, not simply the fact that electronic cards could be used.

Each insurance company has its own rules and regulations concerning coverage. As long as that wide variation remains in the system, so will administrative inefficiencies and overhead. HSAs don't stop that at all.

July 17, 2006  

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