What I Would Like to See in Healthcare Reform (Part 1)

I often tell people that if all I had to do was take care of patients, life would be grand. It is the countless hours of dealing with the administrative aspects of healthcare that have practically ruined the practice of medicine for many physicians. You should care; it takes away from our time with you.

TheHill.com, noted that physicians and their staff spent over 15 hours per week complying with quality reporting requirements and that for every hour a physician spends with patients, an additional two hours are consumed completing administrative tasks related to the visit. This meaningless (to physicians, anyway) work has costs in both time and money, leads to burnout, and is increasingly mentioned as the reason for early retirement. I, for one, found myself daydreaming in a committee meeting the other day and I calculated that it was 3361 days until my 65th birthday. That's 9 years, 2 months, and 15 days. No, am not planning to retire early, but sometimes I sure wish I could. Healthcare needs reform.

The average person thought Obamacare WAS healthcare reform. In reality, Obamacare did nothing to actually improve the healthcare system; it simply added more people to the rolls. Don't get me wrong. Having more people insured is not a bad thing. But we need more than just additional enrollees in a broken system.

After Trump was elected, there was an initial, overly optimistic assumption that Obamacare was on its last leg. Recent infighting among policy makers suggests Obamacare may be more like the proverbial cat with nine lives. I only hope true reform is part of whatever "replacement" or "repair" Congress and the President come up with.

In particular, let's hope some of that reform will significantly scale back a bloated, paranoid bureaucracy that sucks hundreds of billions of dollars out of healthcare that could go to those who actually care for patients. And, perhaps, some could go back into the taxpayers' pockets.

Back in 2012, Berkshire Hathaway CEO Warren Buffett called healthcare "the tapeworm of the American economy". To be more accurate, the federal government is healthcare's tapeworm. In an online article in Medical Economics last year, Ryan Gamlin, who studies what drives inefficiency, waste, and harm in U.S. healthcare, found that "as countries spend a larger percentage of their healthcare dollars on administration (as opposed to public health, or providing patient care, for example), things get worse for patients and healthcare providers. High administrative expenditures seem to be associated with negative experiences of providing and receiving healthcare." That is a nice way of saying there's a ton of money wasted going to paper pushers.

Helen Adamopoulos, writing in Becker's Hospital Review in 2014, noted that US hospital administrative costs account for more than 25% of hospital spending, more than double that of Canada, for example, where hospitals receive global, lump-sum budgets. In contrast, US hospitals must bill per patient or DRG (diagnosis-related group), requiring additional clerical and management workers and specialized IT systems. They also have to negotiate payment rates with multiple payers with differing billing procedures and documentation requirements, driving up administrative spending. Not to mention all the personnel, time, and IT required to satisfy CMS’s (the Centers for Medicare & Medicaid Services) monstrous appetite for "quality" and "safety" data, with the ever-present threat of fraud and abuse hanging over every unintentional misstep.

What should be a simple process of billing for services provided is a minefield. And anyone who has ever tried to understand a hospital bill knows it is an impossible task. Aliya Jiwani, writing in BMC Health Services Research, notes that billing and insurance-related (BIR) administrative costs in 2012 were estimated to be $471 billion and that fully 80% of this spending, which provides little to no added value to the healthcare system, could be saved with a simplified financing system. Jiwani predicted that greater use of deductibles under Obamacare will likely further increase administrative costs, stating, "Empirical evidence from similar reform in Massachusetts is not encouraging: exchanges added 4% to health plan costs, and the reform sharply increased administrative staffing compared with other states."

A CNBC report of a Health Affairs study tagged the extra administrative costs of Obamacare at more than a quarter of a trillion dollars, an average of $1,375 per newly insured person, per year, from 2012 through 2022. The Health Affairs blog authors reported, " The overhead cost equals a whopping 22.5 percent of the total estimated $2.76 trillion in all federal government spending for the Affordable Care Act programs during that time."

What do I wish we could be different in our healthcare system? In March, I will discuss some specific changes that would reduce the administrative burden on healthcare providers and, in many ways, return us to a simpler, more direct, and frankly better transaction of healthcare.