The administrative costs that U.S. physicians—and those in small practices in particular—incur while dealing with payers are nearly four times the costs seen by their Canadian counterparts, according to a report published in Health Affairs.
Study: Docs' administrative costs four times as high in U.S. as in Canada
Citing previous studies they conducted, researchers from Cornell University, the Medical Group Management Association and the University of Toronto pegged payer-related administrative costs for U.S. doctors at $82,975. They compared this to an estimated $22,205 for the cost of time spent by Canadian physicians and medical staff interacting with provincial single-payer health plans. (The estimate is based on 216 surveys from physicians in Ontario completed in the second half of 2006.)
If the 454,000 office-based U.S. physicians had administrative costs comparable with those of their Ontario counterparts, the researchers said, the totals savings would be $27.6 billion a year. They noted that, for comparison, Canadian costs were converted into U.S. dollars using the 2006 “purchasing power parity” exchange rate of 1.21 rather than the 2006 market exchange rate of 1.13.
The totals calculated the time practice staff—including doctors, nurses, clerks and administrators—spent on payer interactions. For physicians alone, the researchers found, U.S. physicians spent 3.4 hours a week interacting with payers while Canadian doctors spent 2.2 hours—and they said most of the difference was in the hour physicians spend each week obtaining prior authorization for services.
The researchers cautioned, however, that U.S. healthcare business practices should not be automatically dismissed as without value.
“These costs should be balanced against possible benefits generated by such a system—for example, benefits that may arise from competition, innovation and choice among insurance products,” the authors wrote. “Prior-authorization requirements increase administrative costs for physicians and health plans but may reduce the amount of inappropriate care provided; savings and increased quality generated by reducing inappropriate care should be matched against the costs of prior authorization.”
They also noted several recommendations that have been developed to simplify administrative tasks in the U.S. healthcare system. These include: creating common standards for billing, claims payment, prior authorization and other physician-payer interactions; eliminating all standard telephone and mail interactions and making them all electronic; using a single quality measurement process; and using automated methods—such as swipe cards—to instantly verify patient insurance eligibility.
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