At a Glance:
- Healthcare providers frequently discover that they are not alone in facing systemic inefficiencies in the U.S. healthcare system when they talk with their colleagues about administrative hurdles.
- Many independent practices still rely on manual processes, despite contending with staffing difficulties and reimbursement policies that are progressively reducing the compensation for their services.
- Insights from discussions with healthcare leaders who have a strong grasp of independent practices indicate that focusing on reimbursements and automation can lead to substantial improvement in collections.
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The American healthcare system, often touted as one of the most clinically advanced in the world, is paradoxically plagued by deep-rooted administrative complexities. These complexities, ranging from long insurance verification processing times to deprecating provider reimbursements, contribute significantly to the soaring costs of healthcare in the United States. A staggering $812 billion is spent annually on administrative costs within the U.S. healthcare system, a figure that dwarfs the administrative expenditures of comparable nations.
A study which examined published research, grey literature, and Organization for Economic Co-operation and Development (OECD) data for the U.S. reveals that higher administrative costs associated with health insurance — for example, those related to eligibility, coding, submission, and rework — represent approximately 15 percent of excess U.S. health spending. Higher administrative burden on providers, for example, general administration, human resources, and quality reporting and accreditation — represents an additional 15 percent of the excess. This makes administrative complexity the single biggest component of excess U.S. spending on healthcare.
Independent healthcare practices are disproportionately affected by these systemic issues compared to larger healthcare groups, which often have more resources and bargaining power to adequately navigate these challenges. This burden on small-scale medical practices stems from tasks like insurance verification, coding, billing, and negotiating with payers, and diverts valuable time and resources from patient care and strains their financial viability. Additionally, keeping up with the ever-evolving regulatory landscape can be a significant challenge for these smaller practices.
Based on my conversation with healthcare leaders from the 'The Efficient Care Podcast', a promising approach for improving collections in independent practices lies in reimbursement optimization and automation. These strategies can significantly reduce the administrative burden associated with revenue cycle management, allowing practices to focus on providing quality patient care.
The Need for Flexibility & Adaptability
Nio Queiro, CEO of the Queiro Group and guest on the podcast, points out some significant trends, one being the increasing use of artificial intelligence (AI) by insurance companies to automate claim denials. Insurance companies have been leveraging AI for several years to automate claims processing and denial. Recent lawsuits against UnitedHealthcare and Humana allege that both companies disciplined and fired employees who approved services found to be ineligible for coverage by the AI-based algorithm, highlighting the tendency of payors to prefer fast and stringent AI-based decisions over human (or humane) ones. In the face of giants, independent practices find themselves navigating complex algorithms and rules to ensure accurate and timely reimbursement.
Another trend noted was that large EHR companies like Epic and Cerner favor closed eco-systems and are reluctant to integrate with more flexible layover systems and APIs. This creates significant data silos for practice administrators. These silos hinder innovation and limit the ability of practices to adopt new technologies that could improve efficiency and patient care.
Healthcare organizations, then, need to be adaptive, nimble and flexible in their adoption of new technologies to deal with those external variables. Mike Ball, VP of a neurology practice explains how willingness to collaborate and experiment allows independent practices to explore new technologies and find innovative solutions to their challenges. Mike shares, 'Working with young companies and startup groups has been valuable for us and then working with technology in general to find new ways to make things more efficient. It's a priority for us. I love the concept of startups because they're so flexible and nimble, and so at NCD, we started looking into working more with startups because we think outside the box a little bit more than others. Startups are open to feedback and are open to adapting to our needs. For example, on top of covering sleep related services, Aarogram was able to step in and help us out with EEGs, infusions, botox injections and several additional services. It was a scalable solution for our practice."
Mike's organization is one of many practices that are beginning to adapt to the changes in the healthcare operations landscape and the reasons for doing so are multifaceted, as discussed below.
A Rapid Response to Administrative Burdens on Healthcare Practices
Independent practices are increasingly seeing commercial payors delay verifications and prior authorization processes along with a long list of barriers erected to delay the execution of essential care for patients. Healthcare providers report spending an average of 14 business hours – nearly two days – each week completing administrative tasks according to a survey by AMA. A lot of this effort is spent hours on the phone to get correct insurance information upstream and putting in appeals and challenging flawed insurer analysis downstream. All these factors interfere with the time practioners want to spend caring for patients. Most practices are often stuck with dealing with outstanding claims from previous years and before.
Jason Tierney, Founder of Transform Dental Sleep talked to me about financial pressures faced by healthcare practices and how they are exacerbated by inflation, increased cost of supplies and staffing. He shares that it's become increasingly challenging for practices to acquire and retain key staff members ever since COVID. The biggest difference between the practices that struggle with staffing issues and those that do not is that the latter run a place that is staff centric. He suggests the four E's- educate, equip, empower, and encourage. Now more than ever, it is imperative for healthcare practices to leverage technology to streamline operations to be able to support the staff they hire.
According to Leonor, CEO of Sleep and CPAP Center there is much power to be found in delegating tasks to external tools and teams to be able to extract the most efficiency from a healthcare team. Talking about how important patient communication is she says 'I think workflow management is very important in delegating pre-service tasks, so that your employees can focus more on quality communication not just patients but the physicians. Especially for smaller healthcare practices, I see a lot of them around who don't keep their patients updated on critical information.'
Bringing the Focus Back to Timely Reimbursements
In the face of complex health plan policies, administrative and financial pressures, securing timely and accurate reimbursements is crucial for the survival of independent practices.
Reimbursement issues persist as one of the top pain points for healthcare providers, especially those running independent practices as their financial strategies are mostly geared towards rewarding productivity, often at the expense of care management and innovation. Yet, according to most guests on the podcast, financial health and billing practices deserve equal attention to ensure the overall health and sustainability of the practice. 'Not communicating deductibles and the amount of patient responsibility to patients upfront is a big reason for practices losing out on reimbursements. A patient may not appreciate a surprise bill, or worse- if they are told about their out of pocket the day of the visit, they may cancel the appointment at the last minute.' points out Dr. Shamiya of the Las Vegas Sleep Center.
As the landscape of healthcare reimbursements continues to evolve, it is crucial for independent practices to constantly evaluate and refine their billing and collections practices to ensure financial sustainability and the ability to provide quality care to patients. To stay competitive in today's rapidly changing healthcare landscape, independent practices must embrace technological advancements. Integrating automation and AI into their operations can streamline administrative tasks, improve billing accuracy, and enhance patient engagement. By leveraging these tools, practices can reduce overhead costs, optimize revenue cycles, and focus on delivering high-quality care. Ultimately, the successful adoption of automation and AI will enable independent practices to thrive and continue providing essential healthcare services to their communities.
Want to learn more about how automation and AI can benefit your practice? Talk to Aarogram's experts today.
