A Medical Device Daily

Administration associated with healthcare claims and billing accounts for nearly one out of every three dollars that patients spend on healthcare, according to a nationwide survey of executives from hospitals and insurance companies.

In contrast, more than three-quarters — 76% — of the U.S. consumers surveyed said they think that healthcare administration should account for just 10% or less of total healthcare costs, with a large majority indicating they would be "highly upset" if those administrative costs were as high as 30%. About eight in 10 consumers — 79% — said they would like to see an itemization of the portion of their healthcare bills that goes to administration vs. clinical care.

The recent healthcare industry survey of 200 hospital and insurance company executives and 1,000 U.S. consumers was commissioned by PNC Financial Services Group (Pittsburgh) and conducted by the independent research firm Chadwick Martin Bailey (Boston).

"While it is possible that consumers do not fully appreciate the cost and complexity of healthcare administration, hospital and health plan executives identified significant inefficiencies in the business office, describing a medical claims, billing and payment process that is error prone, redundant and costly," said Paula Fryland, executive VP and manager of PNC's national healthcare group.

Also according to the survey, hospital executives reported that one in five claims submitted, on average, is delayed or denied and 96% of all claims must be submitted more than once. Also, nearly a quarter of consumers reported having had a legitimate claim denied by their health plan and one in five ultimately paid the claim out of their own pocket.

Nearly three-quarters of executives from hospitals and two-thirds of executives from insurance companies indicated that making the claims, billing and payment process more efficient throughout the healthcare system would help slow the rising cost of healthcare in the U.S. Similarly, nearly three-quarters of consumers — 72% — agreed.

"Healthcare consumerism is an emerging trend that transfers more decisions regarding healthcare choices, as well as responsibility for payments, back to the patient," Fryland said. "The survey supports that this growing trend will result in consumers seeking more information about their healthcare costs. And, both hospital and insurance executives agreed that the demand for transparency will focus on administrative overhead costs that will ultimately root out inefficiencies."

The survey also found that more than half — 58% — of consumers said that knowing what hospitals and doctors charge for treatment and what insurers are paying for their services would influence where they seek care. And 60% of consumers, 77% of hospitals, and 60% of insurance executives responded that insurance companies should disclose what they reimburse for medical services.

The study, completed in February, was based on telephone interviews conducted with 150 executives from U.S. hospitals or health systems, 50 executives from insurance organizations and an online survey of 1,000 U.S. consumers.