Trying to understand the ever-changing complexities of the healthcare system in the United States can become an overwhelming task. Learning the differences between the payer and provider healthcare sectors and even knowing exactly what you are being charged for after seeing a physician can quickly become confusing, especially if a medical bill you have received takes your breath away.
Administrative costs are a component of the healthcare system in the United States that many know exists, but only few really understand just how much of those administrative services you are paying for once a medical bill is received. So, what exactly have we been paying for every time we see a physician? Healthcare administration includes all activities related to coordinating health and medical services, such as scheduling, billing, and claims processing.
How Much of My Bill is Healthcare Administrative Costs?
According to the Center for American Progress, U.S. payers and providers will spend $496 billion on billing and insurance-related administrative costs in 2019. In the United States, healthcare administrative costs make up roughly 30% of all medical bills received. From a monetary perspective, if you receive a $500 medical bill, $150 of that total will likely be from a variety of healthcare administrative tasks.
With the current rate of administrative costs, especially when compared to even just five or ten years ago, patients who are in need of care could easily be discouraged from receiving the expertise or medication they require based on that current percentage.
“According to the research, which combined Earnin-user data with data from a Harris Poll survey of more than 2,000 adults, 54 percent of Americans say they’ve delayed care for themselves in the past year because of cost, and another 23 percent delayed care for more than a year for the same reason. Overall, about half of Americans, or 49 percent, say their health tends to take a back seat to other financial obligations.”
The longer administrative costs remain high, the longer some families will have to find a way to balance medical bills and the cost of daily necessities, ultimately negotiating the worth of their overall health. According to the 2019 Gallup and West Health study, The U.S. Healthcare Cost Crisis, nearly one quarter of adults in the U.S. have cut back on household spending in the last 12 months to pay for healthcare or medication.
“This includes an estimated 15.6% of U.S. adults who have cut back on spending on groceries to pay for healthcare or medicine, a percentage that represents 39.4 million people over a 12-month period who have done so at least once. Another 42.9 million are estimated to have cut back on clothing purchases, and 21 million have had to reduce spending on utilities such as gas or electricity.”
What is Possible if Costs Were Lower?
If healthcare administrative costs were reduced in the United States, patients and their families could not only receive the care they needed without hesitation, they could shift their energy and focus to their recovery and long-term health goals. They also would not have to worry about an unexpected health event bankrupting their family. Defining moments in a family’s life happen within our healthcare system. When families can focus on feeling better, celebrate a new addition or grieve the loss of a loved one without the worry of how they are going to cope with the cost of the occasion, a better overall experience within our healthcare system could be achieved.
Besides improving the overall healthcare experience, lowering administrative healthcare costs would provide the opportunity for additional funds to be put toward life altering research and technology in the medical field. With new medical innovation and IT advancements, the quality of care that patients receive would greatly increase. Improved patient care can have a positive effect not only on the mental well-being of a patient, but also on their diagnosis, treatment and preventative care plan.
How Signature Performance is Impacting Healthcare Administrative Costs
There’s a reason we have performance in our name. We believe the healthcare industry deserves only the best. And that sentiment is what motivates our dedicated team to do our very best each and every day. It’s our calling to bend the cost of healthcare administration by improving quality and minimizing resources. Our unmatched experience on both the payer and provider side of the business allows our team the opportunity to evaluate industry issues from a variety of perspectives and create custom solutions that get to the core of the problem.
Lori Hoffart is the Vice President of Provider Operations at Signature Performance Inc., in Omaha, NE. Signature Performance is an industry leader in reducing healthcare administration costs for private and public healthcare sectors. Our unmatched experience in serving both the payer and provider side of healthcare financial management allows us to implement innovative solutions for every administrative demand.