Administrative Waste in U.S. Healthcare
Regardless of technological advancement, life-saving skills and abilities and first-world resources, the outlandish cost of healthcare in the United States far surpasses any other country in the world. From price gouging, to double billing, to overbilling, to inefficient and expensive operations, the United States wastes $750 billion every year through our healthcare system. According to the Institute of Medicine (IOM), $200 billion of that astronomical number is due to nothing more than administrative waste. It is estimated that 15 cents of every dollar spent on healthcare is wasted due to inefficient administrative practices.
Even though the majority of the negative focus largely surrounds the shortcomings
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Since the quality of healthcare would not suffer, the only thing to lose through maximizing efficiency is a bunch of waste. Through its administrative simplification advocacy, the American Medical Association (AMA) claims that up to 14% of a physician’s revenue is taken up by administrative waste. The goal of the administrative simplification is to inspire physician practices to use computerized, instantaneous health plan transactions, minimize manual procedures through the claims revenue cycle, while increasing transparency and reducing vagueness with the payment process involving the insurance company. It is the AMA’s hope to push this movement into high gear, getting more practices on board and to eventually see a decline in wasteful and inefficient administrative …show more content…
As you can see by the overlap in percentages, some physicians use both methods to request authorizations. The AMA also says that an electronic system of pre-authorization would save an estimated $1,700 every year per physician. Maybe the savings doesn’t seem all that impressive when looking at it from a per-physician standpoint; however, if that electronic system became the norm and was adopted by every single physician in the United States, the savings would be
Davidson, Stephen M. Still Broken: Understanding the U.S. Health Care System. Stanford, CA: Stanford Business, 2010. Print.
Since 1985, the rapid rise of healthcare costs has had a ripple effect on the healthcare industry. Most of the cost increases are associated with medicines rapid advancement. Like most technological advancements, the newest treatments and most advanced diagnostic machinery have a higher cost. Understandably, patients expect the most advanced and effective treatments to be utilized for their care. The effects of rising healthcare costs are illustrated in the diagram below (Intermountain Healthcare [IHC], n.d.).
In order to fully understand the uninsured and underinsured problem that hospital administrators face the cause must be examined. The health outcomes of uninsured individuals are generally worse than those who are insured. Uninsured persons are more likely to experience avoidable hospitalizations, diagnosed at later stages of disease, hospitalized on an emergency or urgent basis, and more seriously ill upon hospitalization (Simpson, 2002) Because the uninsured often lack an ongoing relationship with a health-care provider, they are less likely to receive preventive care and diagnostic tests (Kemper, 2002). Many corporations balance their budget through cost cuts and other moves, but have been slammed with an increasing load of uninsured patients, coupled with reduced payments from government and private insurance programs. In 2000, 564,476 uninsured patients came through Health and Hospitals Corporations health care centers, a 30 percent increase from 1996. In the same period, Congress reduced Medicare reimbursements to hospitals, while Medicaid reimbursements to primary care clinics remained basicall...
There are many challenges when it comes to our health care system that define the future strategic direction. The one chosen for this paper are reform and legislation, information technology advancements such as the electronic medical record (EMR)/ electronic health record (EHR), access to health care including the uninsured and those in the poverty levels, maintaining a skilled workforce and Pay for performance. These challenges pose threats to our health care system planning for the future.
With healthcare costs soaring in the United States, there is a continuous movement by hospitals and health systems towards reaching a number of patient and system oriented goals related to higher levels of quality, safety, and cost effectiveness. The Triple Aim captures the essential challenges and opportunities of this time within the U.S. Healthcare system. Formally introduce by the Institute for Healthcare Improvement (IHI) in October 2007, the Triple Aim is theoretical model for optimizing health system performance. The initiative has three components: improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita costs of health care (Berwick,
Like Porter suggested I do agree that many efforts to reduce the health care costs are ineffective because organizations don’t know how to measure the cost properly. The organizations confuse cost with how much they get paid, they add up the costs around departments, not around a patient. Like Porter said they allocate the costs improperly with all kinds of bias. The insurance companies and the governments reimburse for procedures performed but not based on the outcome achieved.
The United States’ healthcare system is often compared to health care systems in other industrialized countries. According to Davis, Stremikis, Schoen, and Squires (2014), “The
According to Harry A. Sultz and Kristina M. Young, the authors of our textbook Health Care USA, medical care in the United States is a $2.5 Trillion industry (xvii). This industry is so large that “the U.S. health care system is the world’s eighth
“My health care plan has three central tenets. First, all Americans should have access to the benefits of modern medicine. Second, we must eliminate the waste that plagues our medical system (duplicative tests and procedures that are performed because the right information is not readily available, and doctors providing unnecessary care for fear of being sued). Third, we need a public health infrastructure that works with our medical system to prevent disease and improve health,” says Mr. Obama ( N.E. Journal of Medicine, 2008).
Controlling the cost of medical care is an essential element of health care reform. Without adequate cost control measures, ensuring widespread access to care may become unsustainable. Cost containment approaches should not compromise value in health care; however, cost containment efforts should focus on reducing redundancy and waste, improved care management, and improved delivery of excellent value in health care. According to Jessup (2012), containing the costs of care can be useful to government, employer, and household budgets, but it may have a detrimental impact on innovation since health care costs are the main source of revenue for medical innovators. One of the health care treatment that is controversial and is costly is the patient
Harvard’s David Cutler says one of the main reasons the American healthcare system costs so much is because of administrative costs. Administrative costs account for about 10-15 percent of all healthcare costs. The Duke University
The United States should consider political barriers to adopting effective cost controls. Marmor, Oberlander, and White also suggest that “The United States still has not adopted system wide cost controls because the politics of health care make it extraordinarily difficult to control costs. The beginning state for comprehension, the politics of cost control is an axiom of medical economics.”
towards the quality and cost of health care in the United States in the general public. In
The United States health care system is one of the most expensive systems in the world yet it is known as being unorganized and chaotic in comparison to other countries (Barton, 2010). This factor is attributed to numerous characteristics that define what the U.S. system is comprised of. Two of the major indications are imperfect market conditions and the demand for new technology (Barton, 2010). The health care system has been described as a free market in
I heard a conversation at a seminar that was held by the Austin Forum. At that time, one of the officials in the Dell Medical School, Maninder Kahlon, PhD, was explaining the following example. One of the cancer drugs came in one-size-fits-all vials, so the whole body of the cancer patient, whether big or small, will get the same drug. The doctors can adjust the dosage, sometimes used one-third or one-fourth of these drugs and discarding the rest. This continues to happen every year and the waste is expected to reach a value of $1 billion dollars a year, but nobody is doing anything about it. The doctors weren’t concerned enough about the drugs. The patients never knew whether the drugs that they purchased were discarded. Even if they knew, they would not really care because their bills are paid by an insurance company and the government. The distributor, they never got complains and continues to receive a large profit. The result of all this is the increase of budget expenditures in health care. Surprisingly, the government initially saw this favorable because it has administered a good health to its citizens. However the facts said the opposite, according to data, American people are not getting healthier. This waste of money leads to inefficiency. This is where the health care reforms need to be renewed. We cannot fix only one side of the problem because it will not satisfy all parties. The