Healthcare News & Insights

Administrative costs climbing for hospitals

Administrative costs in health care continue to rise – especially in hospitals. 

178540077According to a recent study published in Health Affairs, over 25% of total hospital expenditures in the U.S. were for administrative costs alone.

Researchers said much of this cost can be attributed to the complexities of hospital billing.

Because hospitals have to deal with multiple payors and contracts, facilities need staff to navigate all the layers of bureaucracy that result, including negotiating multiple contracts, keeping up with coverage rules, and collecting multiple copays and deductibles from patients.

To illustrate their point, researchers pointed to the healthcare systems in other countries who only deal with a single payor for health insurance, such as Canada and England.

In those areas, billing is much simpler, so administrative costs are much lower.

One state’s success

Since the United States operates under a different healthcare system, replicating these results can’t happen without a major overhaul.

But there are other things hospitals can do to reduce their administrative costs in the meantime, including making moves to standardize certain processes. One group in Massachusetts is working to do just that, reported FierceHealthcare.

The Mass Collaborative, an organization made up of payors, providers and other stakeholders in the healthcare industry, is dedicated to streamlining healthcare processes.

A news release from the Mass Collaborative describes just what the organization’s done to standardize healthcare administration in Massachusetts, such as:

  • creating a universal form to submit a claim to payors for additional review
  • implementing a standardized search system to make it easier to locate providers when determining insurance eligibility
  • developing a streamlined process for health plan credentialing
  • creating an email distribution list for health plans and credentialed providers, and
  • establishing a standard process for credentialing application status inquiries and notifications for hospital roster updates.

Future initiatives the group is working on include:

  • eliminating gaps in the electronic insurance eligibility process
  • standardizing prior authorization forms for lab tests, prescriptions and other medical services
  • creating a standardized patient information form to estimate the costs of services for patients, and
  • addressing how hospitals and other healthcare providers can follow a new state law requiring doctors and hospitals to give patients cost information about services.

The group recently launched a website with resources for the state’s hospitals and healthcare providers, including links to some of the new forms.

Ideas for efficiency

If all states adopted similar criteria for healthcare administrative processes, it’s likely that it’ll save costs – and time. So this could be a model for other geographic areas to adopt down the line.

In the meantime, it’s essential to make sure your hospital’s doing what it can to streamline its own administrative processes. Start by double checking that your clerical staff is using standardized forms to collect patient information across all departments of your hospital – or in different buildings if your hospital is part of a larger healthcare system.

You may also want to review your billing procedures for any inefficiencies and take steps to remove them.

One area to look at: Your claims appeal process. It might be helpful to create a standardized internal form for your billing staff to fill out about each claim that’s being appealed. That way, all the details needed to contact payors and patients are available in one place, and staffers don’t have to root through files.

Subscribe Today

Get the latest and greatest healthcare news and insights delivered to your inbox.