Many self-help gurus will say it's not helpful to compare yourself to others but a new study released Thursday comparing the administrative costs of physicians' offices in the United States and Canada brings home the point that standardizing administrative operations reduces costs and lessens hassles.
A survey of physicians and physician office personnel in the United States and in Ontario, Canada, published in the August issue of Health Affairs found that the administrative costs of and time spent interacting with multiple payers in the United States far exceeded time spent and costs in Canada with its single-payer system.
Physician practices in the United States spent $82,975 per physician per year while Canadian practices spent $22,205 (financials were adjusted for purchasing power). Nursing staff at physician practices in the United States spent 20.6 hours per physician interacting with health plans while their Canadian counterparts spent 2.5. Clerical staff in the United States spent 53.1 hours compared to Canadian clerical staff's 15.9.
The journal's researchers noted that while the multiple payer system in the United States certainly generated more administrative costs than a single-payer system, "costs should be balanced against possible benefits generated by such a system--for example, benefits that may arise from competition, innovation and choice among insurance."
The survey was based on responses from 217 respondents in Ontario and 862 from the United States. Physicians working in academic and hospital practices, in salaried delivery models and whose revenues derived mostly from patient self-payment rather than from payers were excluded.
If the administrative costs of physician practices in the United States were similar to those in Ontario, savings in the United States would be about $27.6 billion per year, concluded the survey's researchers. The savings could be even larger, the researchers said, if physicians who are not office based are factored in.
Of the 37 interviews researchers conducted with health plan executives and with physician leaders and business managers of physician practices, the interviewees agreed that costs for both health plans and physicians could be reduced if interactions between health plans and physicians were more efficient. Standardized transactions completed electronically would reduce costs and hassles.
"We're really caught between two ideologies here," says Roland Goertz, MD, president of the American Academy of Family Physicians. "On the one hand, there's a strong sentiment . . . to keep private enterprise involved in healthcare as much as possible. . . . On the other hand . . . a single-payer system is the most efficient, but then it's more restrictive. So, in America, we constantly debate the middle area, where the line falls as to how things operate. But this to me is something (where) you could have both things occur. You could have both private enterprise continue to be involved and cheaper costs if you could simply get the insurance companies to agree to far more adjudication and common rules."
The Affordable Care Act mandates administrative efficiencies through operating rules for specific financial and administrative transactions. Many of these rules are still in the development phase but industry insiders – health plans and physicians alike – say they will definitely reduce costs and streamline administrative processes.
[See also: New rules on the horizon for electronic transactions.]
"Improving administrative efficiency helps make healthcare more affordable," says Kenny Deng, senior director for provider relations and operations at Blue Shield California. BSC has put into place a process in which hospitals and physician groups can reap the benefits of best practices addressing fast and accurate claims payments. "By sharing claims performance data, having open dialogue with providers about areas for improvement and enhancing business processes, we are removing unnecessary expenses that contribute to the cost of healthcare."