U.S. Physician Administrative Costs Top Canadian Totals

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Administrative costs incurred by U.S. physicians far exceed those incurred by physicians in Canada, reveals a survey published in the August issue of Health Affairs.

Based on responses received from 862 physicians and physician office personnel working in the U.S. and 217 of their Canadian counterparts, the survey compares the administrative costs of and time spent interacting with payors. It indicates that practices in the U.S. , which deal with multiple payors, spent $82,975 per physician per year on these tasks, while Canadian practices, which operate under a single-payor system, spent $22,205. (Financial figures were adjusted for purchasing power).

Nursing staff in physicians’ offices in the U.S. devoted 20.6 hours per physician to interactions with health plans; those in Canada, 2.5 hours, the survey shows. Clerical staff in the U.S. invested 53.1 hours in health plan interaction, versus 15.9 hours for Canadian clerical staff.According to the researchers who conducted the survey, the multiple payor system in use in the U.S. “certainly” generates more administrative costs than a single-payor system. However, they note, “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.”

Additionally, the researchers point out that were the administrative expenditures incurred by physician practices in the U.S. similar to those incurred in Ontario, U.S. physicians would reap a savings of $27.6 billion per year. The savings could be even greater, they say, if non-office-based physicians were removed from the equation.

Moreover, of 37 health plan executives, physician leaders, and business managers of physician practices interviewed in conjunction with the survey, a majority said costs for both health plans and physicians could be reduced if interactions between the two entities were more efficient. Standardized transactions completed electronically would reduce costs and hassles, they suggest.

The Affordable Care Act mandates administrative efficiencies via operating rules that govern specific financial and administrative transactions. Many such rules are still in the development phase. However, health plans and physicians participating in the survey say they will definitely reduce costs and streamline administrative processes.

To read the abstract, click here: http://content.healthaffairs.org/content/30/8/1443.abstract.