EHRs do not lower administrative billing costs, study finds

On March 3rd, 2018, posted in: Industry News by

Electronic health records were supposed to lower administrative costs, but they may not be getting the job done, according to a new study published this week in JAMA.

Administrative costs made up as much as a quarter of professional revenue for some patient encounters, according to the study, which focused on a single academic medical center. Researchers attribute much of the high cost to varying contracts between the hospital and health plans and payer as well as varying price schedules.

“After investing more than $30 billion in health IT, we haven’t improved the administrative efficiency,” said Dr. Kevin Schulman, one of the study authors and the associate director of the Duke Clinical Research Institute. “That was one of the big promises of digitizing records.”

For the study, researchers estimated the time each billing step took for a 1,500-bed academic healthcare system in North Carolina. Based on the calculated time and salary information, they estimated personnel costs and also added in overhead costs.

As visit complexity increased, so did the time and costs associated with billing and insurance activities. The estimated total time to process a bill for the least expensive type of encounter, a primary-care visit, was 13 minutes, at a cost of $20.49. The average time for the most expensive type of visit, an inpatient surgical procedure, was 100 minutes, at a cost of $215.10.

Costs associated with billing were even higher when researchers took the cost of the EHR software into account, rising to $32.52 for a primary-care visit and $319.80 for an inpatient surgical procedure.

Across the types of patient encounters, billing costs made up between 3.1% (inpatient surgery) and 25.2% (emergency department visit) of professional revenue.

“These findings suggest that significant investments in certified health information technology have not reduced high billing costs in the United States,” the researchers wrote.

The researchers could not attribute the high costs to “any significantly wasteful or inefficient efforts” in billing, something they speculate could be due to the fact that the health system uses a single billing organization.

Instead, they attribute the costs to differing contracts with payers and price schedules that remain unstandardized.

“We think the costs are due to the complexity of the market itself,” Schulman said. “Part of that complexity comes from the fact that every insurance company has their own way of doing things,” he said. “This is a cost that’s passed onto the provider organizations.”

Any time there’s complexity associated with a system, there are costs associated too, said John Kelly, principal business adviser for software firm Edifecs.

“Payers and providers haven’t really agreed to exchange a lot of information,” he said. “By automating the exchange of information, you can make that complexity easy.”

But the EHR alone won’t solve everything.

“Adoption of certified EHR systems by hospitals appears to have been unable to cope with the complexity of multiple payer contracts,” the study authors wrote.

Nor has it brought about great change in administrative processes.

“We hope this will be a wake-up call that it’s time to focus on administrative simplification,” Schulman said.

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