US Physicians’ Administration Costs Four Times Higher Than Single-payer Healthcare Providers

Going by a recent survey by the researchers with Cornell University and University of Toronto – which has unearthed alarming fact about relatively higher administrative costs in the United States: physician practices incurring nearly $83,000 in administrative costs per physician each year, nearly four times the amount spent by their Canadian counterparts – it is quite imaginable the extent of its implication on physicians’ fees, and patients’ medicals bills ultimately. The fact that the survey has treated Canadian medical quality on par with that of United States, ranked highest globally, further endorses the need for immediate insurance-related administrative reforms that can drastically:

• Bring down the per-capita physician administrative cost to as low as $22,205
• Reduce time spent by nurses and medical assistants on administrative tasks related to health plans to as low as 2.5 hours per physician per week, which is what prevailing in Canada, and
• Achieve an annual savings of $27.6 billion on insurance related administrative costs

Easier said than done, the reform measures should effectively address multiple issues that have been responsible for this undesirable scenario. While running a thorough analysis on reasons responsible, the researchers have identified the following areas that require reformatory action:

• Multiple-payer health care system: The prevalence of multiple-payer health care system has been both complex with different sets of regulations, procedures and forms mandated by each health insurance plan or payer, as well resource-consuming. Ideally, multiple-payer health care system needs to be simplified into either two-payer system – one each for private and Federal insurance plans – or, if possible, single-payer system that Canadian physicians follow.
• Failed Experimentation with in-house medical billing: Experimentation with in-house medical billing practice has not been encouraging either – either in-house staff reporting it to be detrimental to their core function of supportive medical care, or underperforming despite heavy investment on training and system-implementation. Consequently, physicians – with no avail but to practice medical billing somehow – have to bear the brunt of excessive operational costs.
• Unscrupulous Medical Billing companies: There have been instances where in solution-seeking physicians/hospitals have run into some unscrupulous medical billing company or medical billing agency, who contrary to ensuring cost optimization and revenue maximization, have further compounded their clients’ woes by sending out wrong bills in an incorrect format.

Amidst such complex problems, the ensuing Affordable Care Organization (ACO) floated by Patient Protection and Affordable Care Act of 2010 (PPACA), scheduled to be officially launched in January 2012, promises to bring down spiraling health expenditure through

• Incentive linked payment system, initially for Medicare physicians, and subsequently for private practitioners also.
• Controlling premium and incidental charges of insurance carriers

While these reformatory measures are greatly welcome, physicians/hospitals should inevitably carry on seeking professional help of expert medical billing specialists that are competent enough to tackle spiraling administration costs, and ensure operational efficiency and revenue maximization.
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