Administrative costs in the U.S. healthcare system represent roughly $361 billion per year, or 14 percent of all national healthcare expenditures, but tackling those costs through integration, coordination and leadership could save an estimated $40 billion per year, according to a recent report from the Center for American Progress (pdf).
The report looked at how much payors and healthcare providers such as hospitals pay in administrative costs, how HIPAA has played a role in the burden of those costs and how savings can actually be achieved.
The authors suggested total savings of $35.7 billion to $45.8 billion per year could be realized through several reforms. These include the adoption of electronic transactions (which are part of the healthcare reform law), integrating administrative and clinical health systems, creating a national provider enrollment and credentialing program, standardizing reporting requirements and stabilizing enrollment across all public programs.
The savings figures, which were also based on estimates from the Institute of Medicine, could also allot more time for physicians to focus on their patients.
"By another metric, the $40 billion number is about 3.5 percent of projected spending on Medicare, Medicaid and other mandatory federal health programs in 2015," according to the report. "Thus, an aggressive agenda tackling administrative inefficiency would not only reduce unnecessary complexity but could also reduce the cost of medical care overall and could allow physicians more time with patients."
The report looked at how much payors and healthcare providers such as hospitals pay in administrative costs, how HIPAA has played a role in the burden of those costs and how savings can actually be achieved.
The authors suggested total savings of $35.7 billion to $45.8 billion per year could be realized through several reforms. These include the adoption of electronic transactions (which are part of the healthcare reform law), integrating administrative and clinical health systems, creating a national provider enrollment and credentialing program, standardizing reporting requirements and stabilizing enrollment across all public programs.
The savings figures, which were also based on estimates from the Institute of Medicine, could also allot more time for physicians to focus on their patients.
"By another metric, the $40 billion number is about 3.5 percent of projected spending on Medicare, Medicaid and other mandatory federal health programs in 2015," according to the report. "Thus, an aggressive agenda tackling administrative inefficiency would not only reduce unnecessary complexity but could also reduce the cost of medical care overall and could allow physicians more time with patients."
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