Research suggests that the burden of exorbitant administrative spending is costing your hospital $100,000 per year per provider. But that’s no surprise when studies show that the US spends twice as much as it should on administration.
With more hospitals going bankrupt today than ever before, cutting unnecessary costs is vital. And administrative costs should be at the very top of your list. If you’re tired of wasting money on heavy administrative spending, keep reading to find out how medical lending can help.
Administrative Spending in the US
In a study pitting 6 countries’ healthcare spending against each other, researchers found that the US spends the most on administration at 25.3% of total operating costs. The Netherlands was a far second with only 19.8% of costs spent on administration. Scotland came in with the lowest administrative spending at 11.6%.
In 1999 alone, administrative costs accounted for almost 30% of total healthcare spending. And with administrative costs far outpacing other spending categories, this percentage continues to grow.
But what exactly is causing the exorbitant administrative costs in the US?
According to The National Academy of Medicine, billing and insurance-related (BIR) spending is to blame. US providers spent 14.4% of their budget on BIR in 2009, a percentage that increased to 16.8% in 2012.
Experts suggest that 80% of administrative costs are due to the complexities of the US healthcare reimbursement structure. More specifically, the complexities of our private, multi-payer system.
Cutting Costs with Medical Lending
While we may know the reasons behind rising administrative costs in the US, a solution to this problem is more elusive.
Legislature addressing the complexities of our multi-payer system is promising. But it will take time, money, and trial and error to fully alleviate the burden of administrative costs. If you’re like most hospitals in the US, you need a solution now.
Luckily, there is something you can do.
Experts suggest that technology is currently the best buffer against rising administrative spending. In fact, some suggest automation can save providers up to $2 billion in the long-term by:
- Streamlining administrative tasks
- Improving the efficiency of communication, payment, and insurance-related matters
- Reducing workload through outsourcing
Are you looking to cut spending at your hospital with a revenue cycle management program? Learn more about Epic River’s medical lending program and get in touch to start reducing your administrative costs today.