The troubling way we pay hospitals in Maine and throughout the US
A study published in the current issue of Health Affairs found that hospitals in the U.S. spend about twice as much per capita on administration as the seven other countries studied. If spending on administrative costs were reduced to the average level of spending in the other countries, we could reduce by about $150 billion the $750 billion a year we waste in health care.
These findings reminded me of my recent trip to Nova Scotia. While there, I visited a small hospital on Cape Breton. I asked the hospital’s director what they charge for a CT scan. “We don’t charge for every test,” she replied, “but simply bill the provincial health fund for each day in the hospital. The cost of the CT scan is bundled in. The only time we charge individually for CT scans is if we treat a visiting American and think it is worth the trouble to bill their insurance company.”
“May I speak to somebody in your billing department about CT scan prices?” I asked.
“Sure, but you’ll have to come back another day,” the hospital’s director replied. “She (meaning the billing ‘department’) only works part-time.”
Compare that to the gargantuan billing departments in U.S. hospitals.
In talking to the long-serving doctors at that Canadian hospital about their experience practicing medicine, I was struck by how much their focus is on patient care, not money. Money is almost all I hear about when I talk to American doctors and hospital directors.
In Canada there is only one insurance company: the provincial government. A bill for each patient is sent to the province and is paid (no questions asked) within several weeks.
Like most other wealthy countries, they have simplified a lot of costs out of their health care system. In contrast, U.S. hospitals must deal with scores of insurance plans (each playing by their own rules); submit detailed bills for every test, procedure, drug or other supply; and then be prepared to justify them as hospitals try to maximize their revenues and insurance companies try to minimize their “medical losses.” Unfortunately, the Affordable Care Act is complicating things even more.
All of this fighting about money costs plenty of it and contributes to the unconscionable amount of waste documented by the Health Affairs study while actually interfering with patient care. The effects of this money-driven system on the quality of care may be even more damaging than the financial costs.
In the U.S., hospital managers spend huge amounts of time, effort and money chasing and maximizing profitable revenue. They do this in two ways. The most obvious is fighting directly with insurance companies over payment — when and whether to pay and if so, how much.
But less well-known and understood are the powerful ways our insurance-based system affects the types of services hospitals offer and promote, and the ways doctors practice. Caregivers are strongly encouraged by hospital managers to promote services that are profitable and discouraged from recommending those that are not, often without much regard to the actual needs of patients.
A physician employed by a large Maine hospital recently complained to me about her resentment at being pressured by hospital management to order completely unnecessary tests and procedures in order to meet the hospital’s revenue goals. Doctors throughout Maine, and the U.S., can relate to that.
That’s why we have hospitals with too many scanners and other fancy and expensive gadgets and too few primary care physicians. That’s why physicians are forced to see too many patients and spend too little time with each of them. That’s why more and more physicians are burning out and retiring. This will not change until we change the ways we pay hospitals and our “healthcare is a business” culture.
Canada and most other wealthy countries have shown that there are better ways to do things. Hospitals there are on a lump-sum budget or something very similar. The pursuit of revenue that is so consuming in U.S. hospitals is mostly eliminated.
If we were to adopt a similar system here, doctors and hospital managers in the U.S. would be able to focus on how to best provide care to their communities. Most would likely jump at the chance if they believed the corporate interests and their political enablers who are blocking real reform would allow it to happen.
That would save money and improve the quality of care at the same time. What’s not to like about that?
End-of-Life Care Needs Sweeping Overhaul, Panel Says
A study published in the current issue of Health Affairs found that hospitals in the U.S. spend about twice as much per capita on administration as the seven other countries studied. If spending on administrative costs were reduced to the average level of spending in the other countries, we could reduce by about $150 billion the $750 billion a year we waste in health care.
These findings reminded me of my recent trip to Nova Scotia. While there, I visited a small hospital on Cape Breton. I asked the hospital’s director what they charge for a CT scan. “We don’t charge for every test,” she replied, “but simply bill the provincial health fund for each day in the hospital. The cost of the CT scan is bundled in. The only time we charge individually for CT scans is if we treat a visiting American and think it is worth the trouble to bill their insurance company.”
“May I speak to somebody in your billing department about CT scan prices?” I asked.
“Sure, but you’ll have to come back another day,” the hospital’s director replied. “She (meaning the billing ‘department’) only works part-time.”
Compare that to the gargantuan billing departments in U.S. hospitals.
In talking to the long-serving doctors at that Canadian hospital about their experience practicing medicine, I was struck by how much their focus is on patient care, not money. Money is almost all I hear about when I talk to American doctors and hospital directors.
In Canada there is only one insurance company: the provincial government. A bill for each patient is sent to the province and is paid (no questions asked) within several weeks.
Like most other wealthy countries, they have simplified a lot of costs out of their health care system. In contrast, U.S. hospitals must deal with scores of insurance plans (each playing by their own rules); submit detailed bills for every test, procedure, drug or other supply; and then be prepared to justify them as hospitals try to maximize their revenues and insurance companies try to minimize their “medical losses.” Unfortunately, the Affordable Care Act is complicating things even more.
All of this fighting about money costs plenty of it and contributes to the unconscionable amount of waste documented by the Health Affairs study while actually interfering with patient care. The effects of this money-driven system on the quality of care may be even more damaging than the financial costs.
In the U.S., hospital managers spend huge amounts of time, effort and money chasing and maximizing profitable revenue. They do this in two ways. The most obvious is fighting directly with insurance companies over payment — when and whether to pay and if so, how much.
But less well-known and understood are the powerful ways our insurance-based system affects the types of services hospitals offer and promote, and the ways doctors practice. Caregivers are strongly encouraged by hospital managers to promote services that are profitable and discouraged from recommending those that are not, often without much regard to the actual needs of patients.
A physician employed by a large Maine hospital recently complained to me about her resentment at being pressured by hospital management to order completely unnecessary tests and procedures in order to meet the hospital’s revenue goals. Doctors throughout Maine, and the U.S., can relate to that.
That’s why we have hospitals with too many scanners and other fancy and expensive gadgets and too few primary care physicians. That’s why physicians are forced to see too many patients and spend too little time with each of them. That’s why more and more physicians are burning out and retiring. This will not change until we change the ways we pay hospitals and our “healthcare is a business” culture.
Canada and most other wealthy countries have shown that there are better ways to do things. Hospitals there are on a lump-sum budget or something very similar. The pursuit of revenue that is so consuming in U.S. hospitals is mostly eliminated.
If we were to adopt a similar system here, doctors and hospital managers in the U.S. would be able to focus on how to best provide care to their communities. Most would likely jump at the chance if they believed the corporate interests and their political enablers who are blocking real reform would allow it to happen.
That would save money and improve the quality of care at the same time. What’s not to like about that?
End-of-Life Care Needs Sweeping Overhaul, Panel Says
The country’s system for handling end-of-life care is largely broken and should be overhauled at almost every level, a national panel concluded in a report released on Wednesday.
The 21-member nonpartisan committee, appointed by the Institute of Medicine, the independent research arm of the National Academy of Sciences, calls for sweeping change.
“The bottom line is the health care system is poorly designed to meet the needs of patients near the end of life,” said David M. Walker, a Republican and a former United States comptroller general, who was a co-chairman of the panel. “The current system is geared towards doing more, more, more, and that system by definition is not necessarily consistent with what patients want, and is also more costly.”
Many of the recommendations could be accomplished without legislation. For example, the panel urged insurers to reimburse health care providers for conversations with patients on advance care planning. Medicare, which covers 50 million Americans and whose members account for about 80 percent of deaths each year, is considering doing just that, prompted by a recent request from the American Medical Association. Some private insurers are already covering such conversations, and many more would if Medicare does.
With New Health Law, Shopping Around Can Be Crucial
If you bought health insurance at an Affordable Care Act marketplace this year, it really pays to look around before renewing your coverage for next year.
The system is set up to encourage people to renew the policies that they bought last year — and there are clear advantages to doing so, such as being able to keep your current doctors. But an Upshot analysis of data from the McKinsey Center for U.S. Health System Reform shows that in many places premiums are going up by double-digit percentages within many of the most popular plans. But other plans, hoping to attract customers, are increasing their prices substantially less. In some markets, plans are even cutting prices.
The combination will create a dilemma for many people and highlights both a benefit and drawback of the new insurance marketplaces created by the health law. As the law’s designers intended, plans are competing for customers, which often holds cost down. But all the jostling around in the market means that consumers are stuck with tough choices — swallow a big premium increase or switch to a cheaper plan that may cover different doctors and hospitals.
“It’s a nuanced story,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a health research group that is also tracking premium changes. “You can still be protected, but it means you have to change plans.”
The McKinsey data is based on preliminary information about rates in 18 states and the District of Columbia.
Many of the cheapest marketplace plans provide access to a limited groups of doctors and hospitals. That means that, in a lot of places, switching plans will also mean switching doctors. Plans also differ in their benefit designs, meaning they may have different deductibles or co-payment structures.
The subsidies the federal government pays to low- and moderate-income households will decrease, on average, in 2015. But because of the way the Obama administration is processing renewals, many customers who don’t shop may end up paying the wrong amount each month and getting a big bill (or refund) for the difference when they pay their federal income taxes.
You may have read what’s happening with average premiums. But individual consumers don’t buy the average plan. And the federal government doesn’t pay for the average plan. Instead of looking at averages, we looked at three sets of numbers to give a clearer picture of what’s happening in the marketplaces where data is currently available.
All of our numbers come from a category of plan called “silver.” To qualify as silver, a plan has to cover 70 percent of the average patient’s medical costs. The marketplaces contain richer and skimpier categories, but silver plans were the most popular this year.
First we looked at the cheapest silver plan in each geographical market, to give a sense of the best price an insurance shopper could get. Since last year, the price of the cheapest silver plans has barely risen; it’s actually going down in seven states. The average increase was just 1 percent. That’s pretty remarkable considering that health insurance premiums nearly always go up. If you’re the kind of customer who cares only about premiums, it pays in almost every market to go back to the marketplace this year and switch to the cheapest plan.
New Anthem Blue Cross plan takes on Kaiser
Taking aim at HMO giant Kaiser Permanente, insurer Anthem Blue Cross is joining forces with several big-name hospitals and their doctors to create an unusual health plan option for employers in Southern California.
The joint venture being announced Wednesday brings together seven rival hospital groups in Los Angeles and Orange counties, including well-known institutions Cedars-Sinai Medical Center and the UCLA Health System. The deal reflects the pressure insurers and hospitals alike are facing to hold down healthcare costs for employers and their workers.
The California Public Employees' Retirement System, the giant pension fund and the nation's second-largest healthcare buyer, has already signed on as the first major customer in the Southland starting Jan. 1.
The new Vivity health plan also includes MemorialCare Health System, Good Samaritan Hospital, Huntington Memorial Hospital, Torrance Memorial Medical Center and PIH Health. In addition to their hospitals, this Anthem HMO includes all of their affiliated physicians offices, surgery centers, clinics and other outpatient facilities.
"We will have a price point similar to Kaiser or better," said Barry Arbuckle, chief executive of MemorialCare, which runs Long Beach Memorial and five other area hospitals. "This is the next major step for managed care."
The seven hospital partners and Anthem, the state's largest for-profit health insurer and a unit of WellPoint Inc., will share in any profits and losses from this joint venture.
The agreement marks a major departure from industry practice, in which insurers usually bear the financial risk and try to squeeze hospitals for lower prices — or exclude them altogether — from their insurance networks over cost.
The federal Affordable Care Act has pushed insurers and medical providers to collaborate in a variety of new ways in hopes of improving the quality of care at a lower cost.
In this case, Anthem and its allied hospitals are coming together to fight a common nemesis in Kaiser.
Premiums for Obamacare plans in Maine dip or remain flat for 2015 - Maine news, sports, obituaries, weather - Bangor Daily News
By Jackie Farwell, BDN
Mainers who buy insurance through Healthcare.gov can expect to pay less or the same amount on average each month for benefits taking effect next year, according to filings with the Maine Bureau of Insurance.
Health advocates applauded the news but urged consumers to reassess their options in the second year of the health insurance marketplace. Most people who bought insurance through healthcare.gov for 2014 will be automatically re-enrolled in the same plan in 2015. Consumers could miss out on lower costs or more attractive benefits, or get stuck with a lower government subsidy based on outdated information, health advocates warned.
On Sept. 5, the state insurance bureau approved monthly premium costs and plans for health insurers that will sell policies in Maine through the federal insurance marketplace in 2015. The federal government is expected to issue final approval.
The plans will be available during an open enrollment period kicking off on Nov. 15 and ending Feb. 15, 2015.
The marketplace, a key component of President Barack Obama’s landmark health reform law, allows consumers to shop for private health plans and, depending on income, qualify for federal financial assistance to offset their premiums and out-of-pocket costs. That financial help means many consumers will pay less than the costs the state has approved.
Healthcare.gov serves people who buy their own health coverage in the “individual market” — such as the self-employed and part-time workers — rather than get health insurance through work or government programs such as Medicare and Medicaid.
Maine Community Health Options, a member-run health insurer based in Lewiston, sold more than 80 percent of the plans Maine consumers bought for coverage in 2014, the first year of Healthcare.gov. After a troubled rollout of the site, about 44,000 Mainers signed up for coverage.
Next year, premium costs for Maine Community Health Options plans will hold steady on average.
“Our rates demonstrate our commitment to returning value to our members and doing our part to make affordable coverage available to Maine people,” Kevin Lewis, CEO of Maine Community Health Options, said in a news release. “With our competitive premiums and health-focused benefits, we are well positioned as Maine’s only member-led insurance solution to help transform and improve the health of individuals and positively affect the local economy.”
While the rates will remain the same on average, some customers could see premium drops or increases.
Maine Community Health Options will raise rates on a single plan, with relatively low membership, by just under 1 percent, according to Lewis. The monthly premium for the startup insurer’s best-selling plan will fall by about half a percentage point, he said.
The other insurer that sold plans through Healthcare.gov in the state this year, Anthem Health Plans of Maine, will reduce premium costs by 1.1 percent on average.
“We have been committed to the exchange since the beginning and thank those who purchased Anthem plans,” the company said in a statement. “We will again be offering a number of ACA-compliant products on and off the exchange in 2015 and are pleased to have filed for an average rate decrease of 1.1 percent. We look forward to welcoming new exchange members when open enrollment starts in November.”
The Fight for Single-Payer Health Insurance, 2014
By Paul Song, M.D.
Labor Campaign for Single Payer Healthcare, Sept. 15, 2014
The Labor Campaign for Single Payer held its largest ever strategy conference August 22-24 in Oakland, CA. Over 300 attendees packed the joint session at the historic ILWU Local 6 Hall, which was co-sponsored by Healthcare-NOW! and One-Payer States. Dr. Paul Song gave the keynote address for the workshop on "One-Payer States." The following are his notes from his talk.
I am so honored to be here and speak to you, both as the head of the Courage Campaign and also as a co-chair of the Campaign for a Healthy California and a board member of Physicians for a National Health Program - California.
I believe that we as a society are judged by how we care for the least amongst us. And I love everyone in this room because you all get this!
When I hear people on the right say that America is under attack and heading in the wrong direction, I absolutely agree. I find our nation's declining care and concern for the least among us and the overall waning progressive influence in our country as well as the declining overall share of America's workforce that is unionized to be no coincidence.
It is labor organizations and progressives working together who stick up for the middle class, our sick, our elderly, and our uninsured. No one else does!
When times are hard, it is always our most vulnerable who bare the biggest brunt, but when times are good, it is always corporations who reap all the benefits.
It is corporations who use huge profits at the expense of laying off workers, cutting healthcare benefits for their employees, or actually denying care for patients to buy and elect their corporatist legislators who then give them more corporate tax breaks and more deregulation. It is corporations who bought off our elected corporate whores like Max Baucus, who in turn wrote the ACA and continue to stand in the way of real progress and Medicare for all.
Because the inconvenient truth is that while the ACA is a good start:
Health care costs as a proportion of GDP will continue to rise while tens of millions remain uninsured. Family premiums are currently $15,000 per year and rising, with employees having to contribute more every year. Premiums, copays, and out-of-pocket costs will continue to increase as insurance companies continue to maximize their profits under the ACA. Provider networks will continue to be very limited and patients enrolled in Medicaid will have an even tougher time finding a provider who will see them, Our undocumented brothers and sisters are left out and over 30 million people will still be uninsured by 2025.
Now, we all know the facts about single payer and why it is the only solution, but unfortunately most of our general public remains ignorant as to its benefits and instead continues to believe that private insurance is the best.
So we need to be careful not to bash the ACA too much. It is very fair game to point out the limitations of the ACA, but if we spend too much time tearing it down, between this and the VA debacle, the American public will begin to believe that the government is incapable of healthcare.
What we need to do is take back the overall narrative. We need to make the moral argument for single payer or rather point out how immoral our current healthcare system is and we need to make the economic argument by sharing Gerald Friedman's great economic research on the benefits of single payer.
At the same time, it is very important that we point out the facts about our current single-payer system (Medicare) and how despite it constantly being trashed and financially undermined by Congress, the fact is that it is run far more efficiently and with greater patient satisfaction than the private sector.
Remember that Medicare was established when 44 percent of adults over 65 years of age were uninsured and one-third of all seniors were living in poverty. Sadly in 2012, close to 50 million people were living in poverty in the U.S., the largest number since the great depression and 50 million were uninsured.
In the run up to the vote on Medicare, the AMA hired an actor by the name of Ronald Reagan to record an album to disparage it. He said "If you don't stop Medicare and I don't do it, one of These Days, you and I are going to spend our sunset years telling our children, and our children's children what it once was like In America when men were free." Despite his pleas and what many conservatives still say, Medicare has been a huge success and clearly demonstrates that a single-payer system is indeed superior and possible.
Seniors and practicing physicians have much more freedom than patients in the private insurance system. Patients have greater choice and do not need pre-authorizations. The government does not tell doctors how to practice, what tests to order, which hospitals to go to, or what medications to prescribe.
A study by the Commonwealth Fund reveals that Medicare patients continue to have much greater satisfaction, better access to care, and fewer billing problems than those with employer sponsored plans.
A Kaiser Family Foundation study showed greater overall satisfaction and much more cost efficiency than private insurance companies.
But in spite of how successful Medicare has been, it does face significant future challenges. Each year it takes up more and more of the federal budget, patients in Medicare tend to be older and have more chronic conditions, and this population is only expected to get larger and larger in the coming years.
While many worried that Medicare would lead to a government takeover of healthcare, it is the private healthcare industry that has been quietly increasing its influence and control over government. In fact, while Congress continues to publicly criticize growth of Medicare costs it privately restrains it from getting a better deal for Medicare patients and U.S. taxpayers, through corporate welfare disguised as privatization.
http://www.pnhp.org/print/news/2014/september/the-fight-for-single-payer-health-insurance-2014
Labor Campaign for Single Payer Healthcare, Sept. 15, 2014
The Labor Campaign for Single Payer held its largest ever strategy conference August 22-24 in Oakland, CA. Over 300 attendees packed the joint session at the historic ILWU Local 6 Hall, which was co-sponsored by Healthcare-NOW! and One-Payer States. Dr. Paul Song gave the keynote address for the workshop on "One-Payer States." The following are his notes from his talk.
I am so honored to be here and speak to you, both as the head of the Courage Campaign and also as a co-chair of the Campaign for a Healthy California and a board member of Physicians for a National Health Program - California.
I believe that we as a society are judged by how we care for the least amongst us. And I love everyone in this room because you all get this!
When I hear people on the right say that America is under attack and heading in the wrong direction, I absolutely agree. I find our nation's declining care and concern for the least among us and the overall waning progressive influence in our country as well as the declining overall share of America's workforce that is unionized to be no coincidence.
It is labor organizations and progressives working together who stick up for the middle class, our sick, our elderly, and our uninsured. No one else does!
When times are hard, it is always our most vulnerable who bare the biggest brunt, but when times are good, it is always corporations who reap all the benefits.
It is corporations who use huge profits at the expense of laying off workers, cutting healthcare benefits for their employees, or actually denying care for patients to buy and elect their corporatist legislators who then give them more corporate tax breaks and more deregulation. It is corporations who bought off our elected corporate whores like Max Baucus, who in turn wrote the ACA and continue to stand in the way of real progress and Medicare for all.
Because the inconvenient truth is that while the ACA is a good start:
Health care costs as a proportion of GDP will continue to rise while tens of millions remain uninsured. Family premiums are currently $15,000 per year and rising, with employees having to contribute more every year. Premiums, copays, and out-of-pocket costs will continue to increase as insurance companies continue to maximize their profits under the ACA. Provider networks will continue to be very limited and patients enrolled in Medicaid will have an even tougher time finding a provider who will see them, Our undocumented brothers and sisters are left out and over 30 million people will still be uninsured by 2025.
Now, we all know the facts about single payer and why it is the only solution, but unfortunately most of our general public remains ignorant as to its benefits and instead continues to believe that private insurance is the best.
So we need to be careful not to bash the ACA too much. It is very fair game to point out the limitations of the ACA, but if we spend too much time tearing it down, between this and the VA debacle, the American public will begin to believe that the government is incapable of healthcare.
What we need to do is take back the overall narrative. We need to make the moral argument for single payer or rather point out how immoral our current healthcare system is and we need to make the economic argument by sharing Gerald Friedman's great economic research on the benefits of single payer.
At the same time, it is very important that we point out the facts about our current single-payer system (Medicare) and how despite it constantly being trashed and financially undermined by Congress, the fact is that it is run far more efficiently and with greater patient satisfaction than the private sector.
Remember that Medicare was established when 44 percent of adults over 65 years of age were uninsured and one-third of all seniors were living in poverty. Sadly in 2012, close to 50 million people were living in poverty in the U.S., the largest number since the great depression and 50 million were uninsured.
In the run up to the vote on Medicare, the AMA hired an actor by the name of Ronald Reagan to record an album to disparage it. He said "If you don't stop Medicare and I don't do it, one of These Days, you and I are going to spend our sunset years telling our children, and our children's children what it once was like In America when men were free." Despite his pleas and what many conservatives still say, Medicare has been a huge success and clearly demonstrates that a single-payer system is indeed superior and possible.
Seniors and practicing physicians have much more freedom than patients in the private insurance system. Patients have greater choice and do not need pre-authorizations. The government does not tell doctors how to practice, what tests to order, which hospitals to go to, or what medications to prescribe.
A study by the Commonwealth Fund reveals that Medicare patients continue to have much greater satisfaction, better access to care, and fewer billing problems than those with employer sponsored plans.
A Kaiser Family Foundation study showed greater overall satisfaction and much more cost efficiency than private insurance companies.
But in spite of how successful Medicare has been, it does face significant future challenges. Each year it takes up more and more of the federal budget, patients in Medicare tend to be older and have more chronic conditions, and this population is only expected to get larger and larger in the coming years.
While many worried that Medicare would lead to a government takeover of healthcare, it is the private healthcare industry that has been quietly increasing its influence and control over government. In fact, while Congress continues to publicly criticize growth of Medicare costs it privately restrains it from getting a better deal for Medicare patients and U.S. taxpayers, through corporate welfare disguised as privatization.
http://www.pnhp.org/print/news/2014/september/the-fight-for-single-payer-health-insurance-2014
Health care overhead is costing us big bucks
By Jim Landers
Dallas Morning News, Sept. 16, 2014
Dallas Morning News, Sept. 16, 2014
WASHINGTON — Americans spend more than $9,000 apiece on health care every year. Ouch, you say. But how does it feel to know that more than $1,000 of that sum goes to administrative costs? Or that Americans spend more than $210 billion a year on the health insurance claims system?
Needless back-office spending is one of the biggest sources of waste in health care, according to health insurers, providers and academics alike.
In a recent Health Affairs article, the authors estimated that administrative expenditures account for 25.3 percent of the average American hospital’s annual spending. No other developed nation comes close. The next highest, the Netherlands, spends 19.8 percent on administration.
“It’s getting worse,” said Dr. David Himmelstein, an internist who teaches at Hunter College in New York and Harvard Medical School. Himmelstein was the lead author of the article.
“It’s because we’re running health care more and more like a business. What that means is, if you think you can make $101, it’s worth spending $100 to do it. Hospitals are saying, gee, if we hired another financial person here they might help us bring in just a little more than their salary. There’s a whole variety of games you can play.”
Any business with 25 percent of its spending going to administration should be trying to cut, not add, to that burden. Hospitals, physicians and insurers all say that’s what they’re doing.
“We’re continuously looking at administrative costs and looking for ways to reduce the costs,” Wendell Watson, director of public relations with Texas Health Resources, wrote in an email.
“Over the last 10 years, we’ve consolidated many administrative functions to gain efficiencies and economies of scale and improved our processes to reduce costs where we can.”
Texas Health Resources owns 25 hospitals in North Texas. In the 12 months ending May 31, 2013, Texas Health Presbyterian Hospital of Dallas spent $119.8 million on administrative costs, or 20.3 percent of its expenditures that year. The figures come from Medicare reports sifted by American Hospital Directory, which compiles statistics on more than 6,000 hospitals.
Much of the administrative expense in American health care is due to the complexity of billing. There are many insurance companies and hundreds of thousands more companies that self-insure their employees with their own nuanced health plans. A hospital or physician’s office has to find the policy that matches the patient and send in a bill.
Insurers, meanwhile, collect those bills and promptly slash them. Whether it is BlueCross BlueShield of Texas, Aetna, Cigna or government insurance plans like Medicare and Medicaid, the billed price usually isn’t even close to the reimbursement. There are formulas that work through negotiated discounts that determine reimbursements. Then there are the co-payments and deductibles that the patient pays.
The American Medical Association says 10 percent of these reimbursements have errors. It put out a report card last year on various insurers, working out the average cost to handle each claim. Cigna did the best. Only 5.45 percent of their claims had to be reworked, and the average cost of a reworked Cigna claim for a physician’s office was pegged at $1.25.
Chicago-based Health Care Services Corp., whose divisions include BlueCross BlueShield of Texas, scored the worst. The AMA said 14.85 percent of its claims had to be reworked, and the average cost to process them through HCSC was $3.32.
Insurers say it would help if physicians and hospitals did a better job of filing claims. Some still come on paper. And even with electronic medical records, there are problems getting providers to send in the right information.
Taxpayers have paid $27 billion to help providers get with it. Physicians, meanwhile, are complaining that these electronic records have slowed care delivery. The average doctor now spends an extra 48 minutes a day struggling with electronic health records, says the American College of Physicians.
http://www.pnhp.org/print/news/2014/september/health-care-overhead-is-costing-us-big-bucks
Needless back-office spending is one of the biggest sources of waste in health care, according to health insurers, providers and academics alike.
In a recent Health Affairs article, the authors estimated that administrative expenditures account for 25.3 percent of the average American hospital’s annual spending. No other developed nation comes close. The next highest, the Netherlands, spends 19.8 percent on administration.
“It’s getting worse,” said Dr. David Himmelstein, an internist who teaches at Hunter College in New York and Harvard Medical School. Himmelstein was the lead author of the article.
“It’s because we’re running health care more and more like a business. What that means is, if you think you can make $101, it’s worth spending $100 to do it. Hospitals are saying, gee, if we hired another financial person here they might help us bring in just a little more than their salary. There’s a whole variety of games you can play.”
Any business with 25 percent of its spending going to administration should be trying to cut, not add, to that burden. Hospitals, physicians and insurers all say that’s what they’re doing.
“We’re continuously looking at administrative costs and looking for ways to reduce the costs,” Wendell Watson, director of public relations with Texas Health Resources, wrote in an email.
“Over the last 10 years, we’ve consolidated many administrative functions to gain efficiencies and economies of scale and improved our processes to reduce costs where we can.”
Texas Health Resources owns 25 hospitals in North Texas. In the 12 months ending May 31, 2013, Texas Health Presbyterian Hospital of Dallas spent $119.8 million on administrative costs, or 20.3 percent of its expenditures that year. The figures come from Medicare reports sifted by American Hospital Directory, which compiles statistics on more than 6,000 hospitals.
Much of the administrative expense in American health care is due to the complexity of billing. There are many insurance companies and hundreds of thousands more companies that self-insure their employees with their own nuanced health plans. A hospital or physician’s office has to find the policy that matches the patient and send in a bill.
Insurers, meanwhile, collect those bills and promptly slash them. Whether it is BlueCross BlueShield of Texas, Aetna, Cigna or government insurance plans like Medicare and Medicaid, the billed price usually isn’t even close to the reimbursement. There are formulas that work through negotiated discounts that determine reimbursements. Then there are the co-payments and deductibles that the patient pays.
The American Medical Association says 10 percent of these reimbursements have errors. It put out a report card last year on various insurers, working out the average cost to handle each claim. Cigna did the best. Only 5.45 percent of their claims had to be reworked, and the average cost of a reworked Cigna claim for a physician’s office was pegged at $1.25.
Chicago-based Health Care Services Corp., whose divisions include BlueCross BlueShield of Texas, scored the worst. The AMA said 14.85 percent of its claims had to be reworked, and the average cost to process them through HCSC was $3.32.
Insurers say it would help if physicians and hospitals did a better job of filing claims. Some still come on paper. And even with electronic medical records, there are problems getting providers to send in the right information.
Taxpayers have paid $27 billion to help providers get with it. Physicians, meanwhile, are complaining that these electronic records have slowed care delivery. The average doctor now spends an extra 48 minutes a day struggling with electronic health records, says the American College of Physicians.
http://www.pnhp.org/print/news/2014/september/health-care-overhead-is-costing-us-big-bucks
$1.43 of every $100 in America goes toward hospital administration
By Sarah Kliff
Vox, September 15, 2014
America spends a lot of money on the paperwork that makes hospitals run— $218 billion per year, to be exact. That works out to 1.43 percent of the entire American economy is spent on hospitals' administrative costs. Of every $100 spent in America, that means $1.43 is going toward the billing specialists and schedulers that make hospitals here work.
Hospital administration has grown as a percent of the economy over the past decade, from 0.9 percent in 2000 to 1.43 percent in 2012, a new paper in the journal Health Affairs shows.
To put this in a bit of context: America spends twice as much on hospital administration as it does on the entire food budget. For what we pay for hospital paperwork, we could pay for all professional American sports three times over (they had a budget of $61 billion this year, according to PriceWaterhouseCooper).
This makes the United States different from most other countries. In 11 countries that this Health Affairsarticle looked at, hospitals usually put about 12 percent of their budget toward administrative activities. But in the United States, hospitals spend a full quarter of their funds on filing the necessary paperwork to make sure that surgeries happen and patients get scheduled.
This reflects something particular about the American health care system — namely, it's a complex mess. Most other countries have some central agency that sets a national price for every procedure, from a heart transplant to an MRI. But that's not how the United States works. Here, we have thousands of health insurance companies that each negotiate their own prices. For a hospital contracting with a dozen health plans — each charging a different price for an MRI, and anything else — that necessitates a whole bunch of paperwork.
Vox, September 15, 2014
America spends a lot of money on the paperwork that makes hospitals run— $218 billion per year, to be exact. That works out to 1.43 percent of the entire American economy is spent on hospitals' administrative costs. Of every $100 spent in America, that means $1.43 is going toward the billing specialists and schedulers that make hospitals here work.
Hospital administration has grown as a percent of the economy over the past decade, from 0.9 percent in 2000 to 1.43 percent in 2012, a new paper in the journal Health Affairs shows.
To put this in a bit of context: America spends twice as much on hospital administration as it does on the entire food budget. For what we pay for hospital paperwork, we could pay for all professional American sports three times over (they had a budget of $61 billion this year, according to PriceWaterhouseCooper).
This makes the United States different from most other countries. In 11 countries that this Health Affairsarticle looked at, hospitals usually put about 12 percent of their budget toward administrative activities. But in the United States, hospitals spend a full quarter of their funds on filing the necessary paperwork to make sure that surgeries happen and patients get scheduled.
This reflects something particular about the American health care system — namely, it's a complex mess. Most other countries have some central agency that sets a national price for every procedure, from a heart transplant to an MRI. But that's not how the United States works. Here, we have thousands of health insurance companies that each negotiate their own prices. For a hospital contracting with a dozen health plans — each charging a different price for an MRI, and anything else — that necessitates a whole bunch of paperwork.
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