Why Data Analytics Can Manage Healthcare Administrative Waste

If you’re an American, you’re probably worried about the affordability of healthcare. In fact, 80% of Americans surveyed in a recent Gallup poll admit to worrying at least a fair amount, with 55% saying they worry a “great deal.”[1] While it’s not wrong to worry about healthcare’s affordability, the issue isn’t completely out of our hands. While the high cost of care is driven by a variety of factors, one of the most significant is healthcare administrative waste. The good news, however, is that the problem isn’t anything data analytics can’t address.

 

Administrative expenses (i.e., those not directly associated with providing goods and services to people in need of care), amount to anywhere from 15 to 30 percent of medical spending, according to Harvard economist, David M. Cutler, PhD.[2] The bulk of those expenses is spent in connection with billing and payment by providers.

 

While some of that expense can be attributed to provider efforts to collect payment from insurance companies, much is attributable to efforts to collect accounts receivable from patients, observes Exela’s president, Suresh Yannamani (you can learn more about Exela’s leadership team here.). During 2016, more than two-thirds of patients defaulted on hospital bills of $500 or less, and by the year 2020, that number could increase to 95%.[3]

 

While one might argue if healthcare weren’t so expensive, consumers wouldn’t have so much trouble paying for it, one reason healthcare providers charge as much as they do is to cover the cost of treating patients who can’t pay for services rendered. After all, if a provider has no way to cover the cost of treating patients who can’t pay, they risk going out of business (i.e., unable to care for any patients at all).  In other words, we’re looking at a vicious circle, where consumers can’t afford to pay for their healthcare, which further drives up the cost of healthcare, thus making it harder for consumers to pay, and so on.

 

What many providers might not realize, however, is the “massive potential to collect, organize, and apply payment and patient data to accounts receivable in order to keep operations running smoothly,” Yannamani points out. Some of that data, such as patient payment history, is already right there in the provider’s possession. Once in digitized format, it’s ready for the application of programmed analytics that can help the provider determine best billing practices. For example, if data analytics reveal certain patients are more likely to wait three months before paying, the provider can decide to focus their collection efforts beginning in “month two.”

 

Data analytics can be applied to better utilize administrative time and effort in collecting from insurance payers as well. For example, if a provider sees one payer takes months to submit payments for appendectomies while another takes only a few weeks, the provider can focus immediate efforts on the latter and gear up later for collecting on the former.

 

“Too many health systems waste significant time and money burying themselves in paperwork and chasing after payments,” notes Yannamani. To eliminate the waste, “health systems must use the rich payment data they collect on every transaction to inform the billing department. With a better collections strategy, systems can streamline their accounts receivable and realign valuable resources to where they are more valuable.”

 

You can read all of Yannamani’s observations and recommendations on this topic here. You can learn more about Exela’s health information management solutions here, and Exela’s revenue integrity solutions here. In all cases, our mission is to help you identify and recover all sums due.

 

For Exela’s in-depth look at the inefficiencies that drive the Journal of the American Medical Association to estimate waste in the healthcare system to be as high as $935 billion (approximately 25% of total healthcare spending), please check out Exela’s Q4 edition of PluggedIN, Exela’s quarterly thought leadership publication: Tell Us Where It Hurts: How Tech Can Heal Healthcare.

 

[1] https://news.gallup.com/poll/248159/healthcare-once-again-tops-list-americans-worries.aspx

[2] https://www.help.senate.gov/imo/media/doc/Cutler.pdf