Moving money from payers to providers costs more than $500 Billion!
The United States spent a leading $3.3 trillion in 2016 on healthcare ($10,348 per person) with administrative costs accounting for 20%-30% of every dollar paid on a medical bill.
In order to determine the provider’s cost of carrying out each step of a single bill, (the substantial cost to insurers of processing and paying these bills was excluded), researchers from Duke University and Harvard Business School reconstructed the entire life cycle of a medical bill…from the time a patient makes an appointment until the time the health system is paid.
The entire billing process was mapped out and the following information was included in the cost calculation:
Salaries of every position involved in the claim life cycle
The cost of negotiating prices with insurance companies
The cost of training professionals to handle billing-related tasks
The cost of ensuring that every potentially reimbursable service is added to the bill
Overhead costs such as office equipment and utility bills were also considered
Typical average billing costs and processing time for various health services were found to be:
ER visit ------------------------- $61.54 ---------- 32 minutes
Inpatient Medical ----------- $124.26 ---------- 73 minutes
Outpatient surgery --------- $170.40 ---------- 75 minutes
Inpatient surgery ----------- $215.10 ---------- 100 minutes
Outside the healthcare industry, it can take roughly 100 full-time employees to collect $1 billion worth of bills. But when healthcare is involved, it takes 770 full-time equivalents to collect the same amount of money. As a result, the process of sending money from payer to healthcare providers consumes an estimated $500 billion per year.
The single, most significant way for hospitals to reduce their cost to collect, reduce days in A/R, and see revenues increase is to outsource some or all Revenue Cycle operations. Benefits to the hospitals include access to a deep knowledge base, streamlined workflows, reduced denial rates and optimized account resolution.
For more information, contact Medical Recovery Services
Medical Recovery Services is a full-service revenue cycle company assisting
hospitals and surgical centers in achieving their full earning potential since 2004.