Costs for administrative staff and technology now consume an estimated 25% to 35% of all healthcare spending in the U.S., according to a June 2 report from the American Hospital Association.
“Making Health Care More Affordable: A Blueprint to Lower Costs, Improve Access and Enhance Quality” traced administrative cost burden to 20 to 30 years of extensive compliance, reporting and documentation requirements, which were compounded by contracting and revenue cycle infrastructure hospitals needed to manage growing complexity around coverage, billing and prior authorization processes, along with advanced analytics, reporting and clinical integration.
The report identified reducing that waste as one of five core strategies, alongside improving population health, transforming care delivery, lowering drug and device costs, and accelerating innovation to improve care outcomes.
“Despite years of efforts to “bend the cost curve,” federal, state, employer and personal health expenditures continue to accelerate — a reflection of demographic pressures, technological advances, growing demand for care, and steep increases in input costs for labor, supplies and prescription drugs,” the report said. “Moreover, the goal of universal coverage has not been realized, with many Americans remaining uninsured or underinsured.”
To address administrative burden, AHA’s suggested actions include reducing regulatory friction. standardizing insurance information and claims adjudication, shifting patient cost-sharing collection to health plans, eliminating fraud and abuse, and streamlining physician licensing and credentialing.
To help transform care delivery, the report also urged modernizing the Stark law and anti-kickback statutes to eliminate legal barriers that prevent doctors and hospitals from working in integrated care teams. It called for tort reform, particularly to protect providers that follow evidence-based medicine.
“Hospitals and health systems are committed to doing their part to address today’s affordability challenges,” the report said. “This multifaceted issue involves several considerations, as efforts to enhance affordability for one segment, such as individuals, often result in the redistribution of costs to other stakeholders, such as employers or the government. Realizing genuine affordability gains at a systemic level will necessitate collaborative efforts among all stakeholders. Thus, we call on purchasers, policymakers, technology companies, drug and supply manufacturers, and individuals to collaborate with us on these efforts.”
The full report is available here.
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