Reducing Administrative Costs in Healthcare

With so much of U.S. healthcare expense attributed to administrative tasks, admin is a good place to start checking skyrocketing healthcare costs.

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Every industry is struggling through tumultuous economic times, but the healthcare industry is among the hardest hit. As healthcare organizations look for opportunities to reduce expenses, administrative costs may be first in line for cuts. Admin accounts for all the nonclinical costs of running a medical facility.

Every healthcare facility has some administrative requirements, but the systems used to fulfill them are frequently outdated, redundant, in need of an overhaul, or less relevant over time. So, the purpose of cutting these costs is not eliminating spending so much as maximizing return on investment of administrative dollars without reducing the quality of patient care.

Healthcare administrative complexity

According to the Journal of the American Medical Association, in U.S. health care, there are twice as many administrative staff as physicians and nurses. In fact, of the estimated $3.8 trillion spent on U.S. healthcare in 2019, $950 billion was for nonclinical, administrative functions.

Much of that administrative expense is due to the complexity of the claims process. Every claim goes through several stages:

  • Payers determine medical necessity through prior authorization.
  • Providers and patients submit claims to payers.
  • Payers review and confer with providers about details.
  • Payments go through several touchpoints.
  • Payers deal with claim denials and provider appeals.
  • Payers and providers ensure compliance with HIPAA and Medicare regulations.

In today’s healthcare landscape, all the stages of claims processing remain necessary, but there are ways to cut and streamline some steps in each stage to make processing more efficient.

Streamlining administration

Among the main candidates for streamlining are:

  • Prior authorization. This is one of the biggest administrative burdens. By reducing prior authorization requirements and associated documentation, administrative costs could be substantially reduced.
  • Standardized billing and claims processing. A centralized claims clearinghouse would allow providers to submit all claims to a single entity. Costs for routine procedures should also be standardized.
  • Proper medical coding. Correct medical coding is an important part of the revenue cycle. If provider documentation is not properly coded, a lot of time, labor, and money is wasted identifying and correcting inaccuracies and claim denials. It’s important to have qualified, dedicated coders to perform this essential task.

Automation is key to cutting costs

Although revenue cycle management (RCM) has traditionally been a tedious, manual process, automation technology is proving critical to efficient revenue cycle tasks, claims management, and cash flow.

One vital function of RCM is tracking claims through each stage to their final resolution, but with so many elements involved, and hundreds of claims to handle, how do you prevent something from slipping through the cracks? The answer is automation.

It’s extremely difficult to manage your revenue cycle without automation technologies. You’ll likely have claims processing backlogs, documentation errors, and a slower cash flow. Automated RCM processes are more accurate, more efficient, and less time and labor intensive.

Contact TruBridge to learn more about the benefits of automating your healthcare revenue cycle.

Written by Kelly Ryan
TruBridge Sr. Director, Revenue Cycle Solutions