One Third (1/3) Healthcare Spending on Bureaucracy

[FullGlass, BSN, MSN, NP]

From the Dent newsletter:

One-Third of Healthcare Dollars Spent on Bureaucracy… A new study shows that more than $800 billion of healthcare spending in 2017 was on administration or roughly $2,500 per person.

What it means – We all know the system is wasteful, now we know by how much. The study found per-capita insurance overhead payments were $844, hospitals were $933, home care and hospice administration were $255, and physician’s insurance-related costs were $465. Overhead on Medicare Advantage plans ran 12.3%, versus regular Medicare at 2.%.

A chunk of the higher costs come from “upcoding,” where healthcare providers scour charts and the medical procedure code manual (CMS) to look for more things to tack on, which increases reimbursements. The movement in the medical industry has created pushback from insurers, who then require more tests to verify conditions. All of it raises costs, which consumers pay.

[NRSKarenRN, BSN, RN]

1/6/2020 Reuters link to article:

https://www.reuters.com/article/us-health-costs-administration-idUSKBN1Z5261

Thanks for posting.... bureaucracy would be decreased under single payer system ---no need preauth, prior approval, post procedure review, in/out network coverage, copay, deductibles --all eliminated, along with advertising costs, multiple CEO's + senior management at individual plans.

Example from my 2018 experience:

ALL 911/private ambulance service under PA's Independence Blue Cross (IBC) considered out -of-network. DH post respiratory arrest at home, resuscitated + hospitalized. Local hospital paramedics billed ~$8,000; local 911 ambulance transported DH & billed $2,600. IBC pays not-in network costs directly to subscriber: total payment received $560.00. Local ambulance billing company called my home for full payment prior to us getting payment from IBC --- told them awaiting payment.

Checked IBC online saw $560,00 payment pending-called IBC, check was cut that day and being mailed. Call #2 to ambulance billing that IBC only paying $560. Billing company directed me to call back to IBC (call #3), requesting 2nd review and that IBC will usually pay full amount-- second check issued for $2,040.00. Sent 2nd check to ambulance company upon receipt--- after they called AGAIN (call #4 ) prior to my receiving payment.

Call#5 to hospital EMS billing department that I was NOT paying $8000 as insurance already payed local ambulance for transport ---"OK, they will cancel bill as has reciprocal agreement with local ambulance as only one can bill".

We had prior donated to local ambulance, Call #6, asked for new subscription --- they requested $50.00 membership donation: "members will only have to pay maximum of $500.00 per ambulance transport if insurance doesn't pay".

[KatieMI, BSN, MSN, RN]

A small critical care access hospital with total 25 beds and daily census of 7.7. Middle of nowhere serving critically impoverished population (90+% Medicaid, 78% below poverty level, at least 70% adults abuse at least one sibstance including tobacco, 50%+ children have malnutrition, mental health issues or both). Third World USA 2019-20.

One RN and one LPN per shift.

One doc or mid-level on premices.

No preventive services, no classes, no support, nearest pharmacy 25 miles, social worker comes for half a day twice a week.

10 (ten) people sitting their pants through Mon-Fri for $75000+/year. ID control, "compliance control", "rep of compliance hotline", "quality control", "patient satisfaction ambassador", etc....

[subee, MSN, CRNA]

On 1/16/2020 at 12:05 PM, KatieMI said:

A small critical care access hospital with total 25 beds and daily census of 7.7. Middle of nowhere serving critically impoverished population (90+% Medicaid, 78% below poverty level, at least 70% adults abuse at least one sibstance including tobacco, 50%+ children have malnutrition, mental health issues or both). Third World USA 2019-20.

One RN and one LPN per shift.

One doc or mid-level on premices.

No preventive services, no classes, no support, nearest pharmacy 25 miles, social worker comes for half a day twice a week.

10 (ten) people sitting their pants through Mon-Fri for $75000+/year. ID control, "compliance control", "rep of compliance hotline", "quality control", "patient satisfaction ambassador", etc....

I have in a state with a lot of rural poverty and feel your pain. However, can't come up with any solution except to round everyone up and force them to move to town:) What is the alternative?

[KatieMI, BSN, MSN, RN]

20 hours ago, subee said:

I have in a state with a lot of rural poverty and feel your pain. However, can't come up with any solution except to round everyone up and force them to move to town:) What is the alternative?

How about starting from single-payer federal level health insurance and totally eliminating JACHO and all the like organizations, which "requirements" justify existence of aforementioned bureaucratic jobs? ?

I mean, the hospital in question, which provides a holy lifeline for population it serves, had unannounced "inspection" a few weeks ago and now about to lose "accreditation" for multiple citations. The events which represented "danger for patients' safety" included an unlocked drug cart and a broken door stopper which "could impend evacuation" from a single floor that is there. Now they frantically trying to find some more warm bodies with MSN to sit there and patch the holes, or let people already living in Third World conditions somehow travel 50+ miles one way for any medical help beyond what a small private clinic (BTW, led by an absolutely selfless and dedicated NP) can provide. To save the money, the daytime RN positions will be eliminated, and the people with MSN will be responsible for "helping" LPNs and MAs as needed.

[adventure_rn, MSN, NP]

44 minutes ago, KatieMI said:

How about starting from single-payer federal level health insurance and totally eliminating JACHO and all the like organizations, which "requirements" justify existence of aforementioned bureaucratic jobs? ?

Maybe I'm mistaken, but I don't think that a single-payer system would remove the need for the oversight bodies which accredit hospitals. Rather, it would effectively replace insurance companies. Joint Commission just exists to determine whether or not hospitals should receive reimbursement from federally-funded entities like Medicare/Medicaid; even if all people were covered by a single payer (the government), I'd imagine the government would still want to ensure that hospitals met their standards (as enforced by Joint Commission).

It seems like a single payer system might cut down on insurance overhead costs (including hospital admin jobs which interface with insurance), but it won't necessarily cut out the crazy-high admin costs that you need to run a hospital.

In the case of a critical access hospital described by @KatieMI I doubt that moving to a single-payer system would get rid of the mandate for compliance officers, quality control, etc.

[babyNP., APRN]

100,000 people die every year due to preventable medical errors. I’m not saying that the Joint Commission or DOH is perfect but not having any oversight will harm more people, not help people...

[subee, MSN, CRNA]

If we were single-payor, wouldn't the government WANT to keep complications low? Can't imagine that wouldn't require conditions for staying open. I recently read (Medscape?) that the Canadian government spends 17% of the healthcare administrative costs, while we spend almost 34%.

[KatieMI, BSN, MSN, RN]

36 minutes ago, subee said:

If we were single-payor, wouldn't the government WANT to keep complications low? Can't imagine that wouldn't require conditions for staying open. I recently read (Medscape?) that the Canadian government spends 17% of the healthcare administrative costs, while we spend almost 34%.

Goverments usually have less money to spent. I am kind of familiar with Canadian and GB systems of health care. In both countries, there are plenty of regulations and my many friends who work there are constantly complaining about endless paperwork, deadlines, silly questions, government sometimes pretty much dictating minute details, etc. But they cannot imagine suddenly finding on premices a bunch of officials who come unannounced and now roam around getting into drug carts and opening doors in search of broken door knobs. Much less of it for officials from some sort of "non-profit" organization (JACHO is, in theory, "non-profit") and disrupting their work and ability to care for patients due to aforementioned "very serious" omissions and citations in form of broken door knobs and such while being paid a good deal of tax-payers money to do that, and even less of employing a separate person for every area which can be "cited" while firing personnel providing direct patient care.