With all of the talk recently about the modifications to the ACA, and the implications to healthcare of the AHCA it is amazing that nobody ever talks about the administrative cost of healthcare. As an individual who has been in the healthcare environment for 30 years I can tell you that we are neglecting an area that is significantly contributing to the overall cost and inefficiency of the US healthcare system. Throughout my time as a registered nurse, and then as a physician and surgeon, I have heard repeatedly admonitions about delivering a more, “cost effective care”, “evidence-based care”, and “value-based healthcare”.
Unfortunately, I have not seen much made of the massive administrative costs of healthcare in any admonitions towards a better healthcare delivery system. Administrative costs in the United States consumed an estimated $156 billion and 2007, it is projected to reach $315 billion by 2018. Admittedly these activities are complex. Activities such as processing claims, credentialing providers, and verifying insurance coverage are necessary but not complex. In many cases they are automated.
However, some studies estimate that is much as $200 billion per year are spent in an inefficient administrative healthcare system. I for one can tell you dealing firsthand with large insurers that it is a healthcare system designed to frustrate, delay, and stall payments. If that’s what it was designed to do, it is amazing. At some level however, I don’t believe that it should be designed to do this. It should be an effective way to be able to administrate the healthcare system. Unfortunately, the system is grown out of control and is now adding further weight to the already massive budgetary burden of healthcare.
A recent Harvard Business Review article (below) looked at the numbers in healthcare employment and found a startling fact. From 1990 to 2012 the US healthcare workforce grew by 75%, the ratio of doctors to healthcare workers is 1:16. For every 16 workers, only six are involved for caring for patients. The other 10 have purely administrative roles. Think about this, carefully! We have more people administrating healthcare (10) then we do taking care of patients (6). Why is nobody talking about this? Imagine a company like GM making a car with 6 people and another 10 sitting in the office.
If you need any more evidence that the administrative cost of healthcare is getting out of hand and costing us too much you need to look no further than where the jobs are. Individuals who are not taking care of patients, who are not making medical decisions, who are not making a difference to people’s lives are now outnumbering the number of people who do.