Five Strategies to Successfully Manage Healthcare Administrative Costs
- Signature Performance
- 5 days ago
- 2 min read
The challenge of ballooning administrative costs is complex and multifaceted. While no single solution exists, there are ways to curb the high rate of spending in this area. At Signature Performance, we specialize in designing strategic solutions to transform healthcare from costly and burdensome to accessible and efficient. Five key strategies we employ to reduce administrative costs include process redesign, enhanced automation, artificial intelligence (AI), big data management, and interoperability. Collectively, these improvements can contribute to a more balanced rate of administrative spending in the healthcare industry and can create a healthier healthcare system for both providers and patients.
Process Redesign to Maximize Efficiencies
Process redesign involves carefully evaluating administrative procedures to identify those that contribute to costs without producing a correlative return on investment. A thorough process redesign can identify opportunities to streamline administrative inefficiencies, resulting in fewer complexities and lower costs. Process redesign should occur before implementing other solutions, including automation and technology, to optimize workflows for maximum value.
Enhanced Automation
Automation offers an effective solution for reducing administrative overhead. Healthcare organizations can cut administrative costs by automating routine tasks, such as billing and claims processing. Beyond its financial impacts, automation can also relieve providers of many administrative burdens, allowing them to spend more time on clinical care.
Artificial Intelligence and Machine Learning
Innovative tools using AI and machine learning algorithms have the potential to reduce administrative costs significantly. One estimate suggests AI could result in savings totaling 5% to 10% of U.S. healthcare spending (1). When applied to administrative tasks, such as patient access, medical coding, and billing, these tools can minimize errors, improve efficiencies, accurately capture care provided and optimize resources, leading to decreases in administrative costs.
Big Data Management
Healthcare organizations have extensive data, but it’s often handled inefficiently, spread across multiple systems or servers. Big data management can improve how institutions leverage this information. For example, organizations can use big data to identify areas of wasteful spending, allowing administrative staff to divert critical resources elsewhere. While big data management will require an upfront investment, it has the potential to reduce administrative overhead in the long-term.
Interoperability
Advances in interoperability between payers and providers will be an essential part of lowering healthcare administrative costs. Rather than operating in silos, healthcare enterprises can share data through interoperable systems for improved efficiencies. Additionally, interoperability can reduce redundancies, minimize data entry, and enable quicker reimbursements to providers.
Signature Solutions for Healthcare Transformation
The cost of administering healthcare in the United States has become unsustainable, presenting serious challenges for patients, providers, and communities. Solving this challenge is both a critical responsibility and a remarkable opportunity. Consider a healthcare system where administrative costs no longer overshadow the mission of healing. This vision is within reach, but it requires bold action and a collective effort. Signature Performance, which has the unique perspective of representing payers and providers in both the public and private sectors, aims to be a catalyst for change in the healthcare industry.
Sahni, N., Stein, G., Zemmel, R., & Cutler, D. (2023, October). The potential impact of artificial intelligence on healthcare spending. The Economics of Artificial Intelligence: Health Care Challenges. https://www.nber.org/papers/w30857
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