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The power of technology to streamline and reduce hospital administrative costs

It doesn’t take more than opening a hospital bill to see the complexity behind healthcare and its financing. Much of which comes from administrative costs and processes that are largely obscured from view. U.S. administrative healthcare costs reflect the inefficiencies of our current system – driven by its multi-payer structure and private insurance – and reflect providers incorporating hidden fees to cover their costly administrative burdens.

In fact, more than 30 percent of hospital and healthcare costs are due to administrative tasks – which is three times what the United States spends on cancer care every year. The U.S. also spends double the amount per capita on healthcare as compared to other high-income countries. As a nation, we have reached a breaking point by relying too heavily on administrators, billing schemes, and insurance companies to guide patient care.

Through the appropriate technologies, however, we can reduce administrative overhead to streamline care, achieve positive outcomes, and reprioritize the doctor-patient relationship.

How Technology Can Reduce Hospital Overhead
In 2017, the U.S. spent $ 2,497 per person on healthcare administrative costs, compared to $ 551 per person in Canada – perfectly demonstrating our country’s excessive administrative expenditures. We have come to rely on a myriad of hospital system processes that require an overabundance of administrators; in fact, the ratio of doctors to other healthcare workers is now 1:16 in the US. Though the increase in administrator staffing was initially rationalized by the need to keep pace with changes in healthcare technology, there is now a dire need for administrative simplification.

While hospitals currently direct more than a quarter of their spending toward administrative tasks, there is also a massive opportunity for technology to simplify a patient’s care and reduce administrative costs. However, not all technology is created equally.

Automation and electronic medical records have not necessarily led to workload reduction. Healthcare technologies should exist to streamline processes, not create additional work. When leveraged properly, technology can decrease administrative overhead and processes both before and after care through scheduling appointments, managing patient communications, billing patients, and collecting payments.

 Focus on the Patient to Improve Both Satisfaction and Outcomes
Despite positive strides made toward value-based care and patient-centered care in recent years, some change within the healthcare industry has moved in the wrong direction – including increased complexity, reduced cost transparency, and decreased time spent between doctors and patients. If hospitals’ administrative “bloat” was truly improving patient outcomes and reducing costs, it might be worth the additional expense. Unfortunately, this is not the case. The increasing administrative burden decreases patient sovereignty and comes while the total number of patients has actually decreased. From 2002 to 2012, the number of days Americans spent in the hospital decreased by 12%, despite hospital staffs growing by 11 percent.

Instead of and adding to existing layers of staff to improve care, hospitals must put a greater emphasis and investment into technology that improves patient choice and access to care. Their focus should be on removing barriers to healthcare appointments and providing immediate, transparent pricing for every aspect of a patient’s care. As healthcare has increased in complexity, we have lost the human interaction – and most critically, the doctor-patient relationship. If we free hospitals from their administrative burdens through more effective use of the technology, it may be easier than we think to achieve value-based, and patient-centered, care.

Photo: mikkelwilliam, Getty Images

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