Administrative Burdens: The Reason US Healthcare Is Broken

According to the National Institute of Health, the US “leads the world in new drug and medical device approvals, holds the distinction of having the highest number of Nobel laureates in chemistry and medicine, and produces the second-highest impact of scientific works in the world”?¹ If we are a leader in medical science, why are we ranked 11th in FREOPP’s 2022 index of healthcare innovation? 

While our advancements in medical technology and specialized care are vast, one of the biggest drags on our Healthcare System is the administrative burden imposed on healthcare workers. The NIH estimates that “approximately 30% of all healthcare expenditures in the United States go toward an element that has zero effect on the health of its citizens -- administrative expenses.” The US spends five times more than Canada, eight times more than the EU, and almost 13 times more than Japan.²

I’ve always found that statistics and data only tell half the story. If you really want to understand business challenges and generate ideas to address them, you have to talk to the people who live these challenges every day. I have interviewed hundreds of healthcare workers over decades of developing digital health products. The one thing repeated the most is some form of, “I need more time to care for my patients.” I haven’t been keeping an official count, but I hear it more often than not. From the Chief of Medicine through any of the millions of people who dedicate their career to helping people: administrative work provides minimal value to patients while pulling medical professionals and healthcare workers from their true vocation.

While every other industry has learned to embrace automation and efficient business systems, we have largely fallen flat when it comes to delivering healthcare. We can pave the way for a more efficient, patient-centered, and cost-effective healthcare system if we apply principles of operational excellence to the transmission, consumption, and storage of healthcare information.

Consider the ubiquity of outdated communication technologies in healthcare. While you may have noticed the aisles of file folders disappearing from your primary care office, would you be surprised to hear that they still receive information from other healthcare providers via fax and snail mail? In a day where you can take out a mortgage without a single paper document, you are unlikely to transfer your lab results or medical records between providers without at least one fax, more often several faxes.

While electronic health records have become the standard, it’s the interaction between each providers’ systems that is the challenge. If the two systems cannot communicate directly with each other, providers are left with few alternatives to transfer patient information to another provider: fax, mail, encrypted email, secure messaging, or hand delivery being some of the most common forms. Regardless of the format, moving documents from one practice to another causes serious administrative burdens for both medical practices involved: the senders have to prepare and send the materials, and the receivers have to accurately interpret, store, and react to the materials. Let’s look at some of the ways this administrative burden impacts patients, healthcare workers, and our economy.

The Impact on Patients

Healthcare workers and administrators have to review incoming documents, route them to the appropriate people, and manually store them in the patient record. In recent interviews with healthcare administrators, I asked about the impact of these delays. Among their concerns they mentioned:

• Delayed Diagnoses and Treatments: Crucial medical records, consultation requests, or lab results getting lost in transmission can cause delays in diagnosis and the initiation of treatment. This can have serious implications for patients with time-sensitive conditions. 
• Misdirected Information: A common request from healthcare organizations is to reduce the number of documents they receive for patients that are not in their care. Faxes sent to the wrong recipient are a significant HIPAA violation that require documentation and follow up. Resolving and reporting HIPAA violations redirects healthcare workers’ attention to activities that do not improve patient care. Additionally, the original patient’s treatment can be delayed as the original recipient could still be waiting for information.
• Inaccurate Information: Anyone who has manually transcribed a document into a digital format knows that the process is error-prone. Any time a healthcare worker is transcribing data from a document into an electronic format introduces the potential for error. Mistakes in transcription may result in missed diagnoses, delayed treatments, or worse.

The impact on healthcare workers

While our healthcare system struggles to keep up with these administrative burdens, the pressure falls squarely on medical professionals and administrators responsible for keeping us healthy and safe. They spend an inordinate amount of time assessing, routing, and storing incoming documents from payers, labs, pharmacies, and other providers. As this burden grows, healthcare workers suffer, lose motivation, and even move on.

• Healthcare worker burnout is real: Even prior to the pandemic, US Health and Human Services warned that healthcare worker burnout is reaching crisis levels with 35-54% of nurses and physicians reporting reaching burnout levels.³ A leading cause of that burnout is the lack of quality time with patients. The surgeon general recommended reducing administrative burdens on healthcare workers by 75% to improve quality time with patients.
• This is not what they signed up for: Ask anyone in healthcare why they chose this career and the most common response you’ll hear is, “I want to help people.” While the administration of healthcare is important and the protection of patient privacy is paramount, healthcare workers stress that the systems they’re using are not focused on efficiency and simplicity.

The Economic Impact

It would be very challenging to find agreement on the unnecessary portion of administrative costs on the healthcare system. There will always be necessary administrative costs - records need to be kept, schedules need to be managed, and patient privacy needs to be maintained. The Centers for Medicare and Medicaid Services estimated the total US healthcare budget to be $4.2 Trillion in 2021. Based on the NIH’s estimate of 30% going to administrative expenses, we’re spending $1.26 Tril per year to administer that system. If we could reduce that by only 25%, that’s over $315 Bil that can be invested in making space for healthcare workers to focus on patients and improving health outcomes for everyone.

What can we do about it?

Over the past few decades, the promise of a fully digital, paperless office bled into our vision for a highly efficient healthcare system. While most industries have found secure and effective methods to transmit, store, and manage highly sensitive data, healthcare seems to have stalled. Meanwhile, the cost of the administrative burden of healthcare has grown at a faster pace than most other healthcare-related costs. US healthcare is one of the most expensive, inefficient systems among industrialized nations. Interoperability represents one of the many puzzle pieces to improve that situation. 

The promise of reducing the flow of unstructured documents in the healthcare system is enticing, but it’s a long road. Most of today’s energy focuses on data interoperability, pushing data cleanly and securely across systems. While that’s great for the massive systems that can afford the investment, most of the medical records landscape consists of smaller systems that will be required to partner with the larger organizations that only hope to replace them.

To prepare, healthcare technology leaders should do a few things:

• Learn more about human workflows in your organization - the pain caused by unstructured documents is spread throughout your organization. Because of this, there may not be a single department or initiative focused on improving the situation.
• Quantify the impact of administrative burdens - if it’s not measured, it is often ignored. Calculate how much better your population health outcomes will be if your doctors, nurses, pharmacists, therapists, and medical assistants didn’t have to wait for faxes and documents to be found, interpreted, and routed to their inboxes.
• Evaluate new technologies to automate repetitive human processes - Help your workers process documents faster: Ask, “how does this system help my employees classify/ extract/attach/inject unstructured data into our systems?
• Prioritize document interoperability efforts and technologies - EHR-to-EHR interoperability is only part of the solution when the majority of your incoming and outgoing medical information is in some form of unstructured document. Don’t forget systems that automate the interpretation and routing of healthcare documents into EHRs and practice management systems.

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Don’t make it a goal to completely replace the human element for this process. Healthcare workers should be the last line of defense against error and privacy violations, but they don’t have to be the ONLY line of defense. We estimate that 75% of a healthcare worker’s daily effort shuffling documents can be eliminated - relying on them for what they’ve actually been trained to do - facilitate medical decisions.

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Author: Phil Charron