Billing for medical services costs hospitals huge amounts of time and money, study finds

Healthcare costs cause sticker shock for many Americans. But so should the amount of money that hospitals spend just for processing an insurance claim. 

Indeed, a new study in Journal of the American Medical Association traced the administrative costs of an academic medical center  as a bill went through the entire revenue cycle management process for different patient encounters, including primary care and emergency department visits. Researchers found that the cost of billing and insurance-related activities for a single primary-care doctor is $99,000 a year and represents roughly $1 in $7 collected. For emergency room billings, the proportion goes even higher—to 25% of all dollars collected.

Researchers at Duke University School of Medicine derived the data by interviewing 34 physicians and 27 administrators at the system who are involved in billing to chart the path of an insurance claim through the revenue cycle management process. 

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Despite the widespread use of computerized billing, the study concluded that it took 13 minutes of time and $20.49 to process the bill for a primary care visit, and 32 minutes and $61.54 for an emergency room visit and discharge. If the care becomes more complex, so does the cost of the billing. For a patient undergoing an inpatient surgical procedure, it takes 100 minutes to process their bill and $215.10 in costs.

The North Carolina academic health center that was examined for the study devoted so many resources to the process of revenue cycle management it started a separate company that employs 1,500 to handle all the billing. And the study didn’t even take into account the time and cost on the end part of commercial payers to process the bills they receive from the providers.

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An opinion piece published in JAMA that accompanied the study concluded that the use of electronic health records may in some way actually be expanding the amount of labor required to complete the billing process.

“This study suggests that, if anything, administrative time needed for billing has increased for physicians and other staff as EHRs have become more widespread,” write Vivian S. Lee, M.D., Ph.D., of the University of Utah and the Institute for Healthcare Improvement, and Bonnie B. Blanchfield, Division of General Internal Medicine, Brigham and Women’s Hospital in Boston. 

They noted that the study did not even take into account the expense of amortizing the installation of EHRs into the billing process, which would likely drive up costs another 44% to 68%.