Most everyone knows that we are over-tested, over- treated and been over-charged. We know that costs a lot of money. There is another major hemorrhage of health dollars that’s not apparent to most. I am talking about the massive expense that our complex duplicative and jerry-rigged system requires.
We pay for an army of workers who market and sell, who determine the appropriate service code, bill and re-bill and then appeal and re-re-appeal denied claims, who manage information technology, and who must be vigilant to assure compliance with a morass of regulations. The cost to maintain these functions are collectively called “administrative “and they are not insignificant.
We spend twice as much on administrating our healthcare system as we do on heart disease and three times more than we spend in cancer. All in all, they amounts to 8% of our healthcare expenditures. Other advanced countries have administrative costs that are a third of ours. Where is all this money….close to $400 billion every year…going?
Before 1960, only 3% percent of our workforce was employed in healthcare. That number is now 12%. That one person in eight isn’t working to make or keep you healthy. He is pushing paper, mostly to ensure that the provider receives the maximum allowable compensation.
Seven full-time billers are needed for every ten doctors. It takes time and personel to provide documentation to convince insurers that they can only correctly deny one claim in forty, not one claim in eight. Other sectors need a staff of 100 to collect $1 billion; physician practices require a staff level of 810 to collect that amount.
It’s not hard to see the source of this mayhem. We have more than 1,500 private commercial insurers offering HMOs, POS products and PPO plans in the medical market. There are 757 different health insurance products being offered in Seattle alone. Providers must learn the specific benefits and reimbursement rules for each.
Consider these facts:
- There used to be one hospital administrator for every three patients. Now there’s 1.4 for every single patient.
- The average-sized community hospital needs 67 full-time employees and spends $9 billion per year on administrative activities. That’s $12,000 per admission. One fourth of hospital costs are administrative.
- The average doctor spends nine hours per week on administration. That costs $68,000 annually.
Top insurance companies pay their CEOs more than $25 thousand per day, two thousand times more than the average earner.
There’s a way out of this 70 year old Stockholm Syndrome. Big Pharma, the American Hospital Association and all the insurance companies won’t like it. It will be very hard to overcome them since their political influence gets stronger every day.
It may surprise you to know that most physicians support it. It’s called universal government run healthcare