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    Five ways to reduce healthcare administrative costs


    Strategy #3: Use digital engagement solutions


    Jean Drouin, MD, MBA, CEO, and cofounder of the healthcare analytics firm Clarify Health Solutions, says payers and providers are facing the question: How do we create more effective and efficient care models that deliver the same or better outcomes at lower costs?

    “The private physician will now make more if he or she steps the patient down as fast as possible,” Drouin says. “Longer stays means higher costs, and if costs are higher than allowed in that period, the physician will be penalized. In order to change the behavior, we need to be providing far more patient and physician level data so clinicians are able to make better choices and reward them for making those choices.”

    A huge aspect of success in the transition to value, of course, is getting patients to engage in their own care. Digital solutions can help, says Drouin, noting that retailers have learned that roughly 50% to 60% of customers engage over the phone or web. The same percentage would likely do so with their physician or clinical team, making for a more timely, effective, and flexible communication channel, he says.

    Digital solutions can also extend the reach of the clinical team and improve outcomes on a larger scale. For example, data surveillance methods (such as remote health monitoring) can trigger alerts when a diabetic patient’s sugar is out of range. A member of the clinical team can then coach the patient over the phone or ask them to come to come in for a visit.

    “Just in the way there is air traffic control to help route a plane to go around a storm, we need the same sort of concept around care traffic control. There is more than enough data out there that, if we were able to stitch it together and take it out of its silos, could create algorithms,” says Drouin.

    Strategy #4: Open communication to let data flow


    Mark Martin, director of payer and vendor services at Availity, says interactions between plans and providers have gone from bad to worse during the transition to value-based reimbursements. “The communication between health plans and providers is archaic, and for the most part that just leads to just bad communication back and forth,” he says.

    Many providers and payers still communicate by letters and fax. In situations where a payer might have cost-saving data that could help drive costs down in a high-risk patient, this is not an efficient process. 

    Often, a health plan has useful information about high risk, high cost patients and the care they should be given, but they can’t get it into the hands of the care provider before or during the patient visit. Instead, they deal with the historic 60- to 90-day gap after the claim comes in, Martin says. “The existing model creates so much more additional work and bogs down the system. If you moved that communication to right before the patient came in, you eliminate a tremendous amount of overhead and you drive toward quality results.”

    Martin says that even when there is a seamless process for data sharing between payer and provider, there needs to be a better way to prepare providers to accept the data.

    “It’s not easy, and technology wise we’re getting to the point where data can be shared, and now we’re just dealing with humans,” Martin says. “We’re aligning around quality measurement that will force the issue, and we’re getting newer people in healthcare that are more tech savvy and communication-aware than historical folks. It’s not uncommon to have physician, PA, or care coordinator be far more tech savvy,” he says. He adds that knowing what form of communication is preferred by providers can help them operate more effectively.   

    Strategy #5: Outsource with purpose


    Anand Natampalli, vice president of global business development for the business process management firm HGS, says outsourcing allows certain processes to be completed by outside experts—leaving health systems to focus on patient care.

    Health systems have been hesitant to let this happen, but healthcare leadership is bringing in more executives from outside healthcare to meet the changing needs of the industry, he says. “What has happened is that the industry is full of legacy systems and grandfathered processes, and has been a closed environment that has not been open to change or flexible. Now, it’s rapidly evolving as a function of consumerism,” Natampalli says. “The key driver is that medical costs are going through the roof and everyone is trying to figure out how to bend the cost curve.”

    By outsourcing various administrative tasks and processes, health systems can improve processes and save 25% to 30% on administrative costs, he adds.


    Jay Deady, CEO at health IT company Recondo Technology, says many health systems should combine outsourcing with improved internal automation processes. For example, internal systems should be able to review a claim status early on and flag it if it is not being processed appropriately. This can reduce the cost to outsource these claims for further processing and help health systems and payers move claims through in a more streamlined manner.

    “It reduces outsourcing fees or manual touches on claims touch ups by over 89% and allows more efficiency and increases yield,” Deady says. “We’re grabbing information about all claims early on and removing the need to write an outsourcing check for that. The ones that are not processing are put into work queues, and we cut the need for outsourcing related to claim status and reduce the claims that require human intervention by 80%.”

    Reducing the number of claims that need human intervention also allows back-end workers more time to work on the more difficult claims, he adds. “While the claims submittal process has been automated for a long time, the follow-up and acceleration of claims that need work has been a very manual process and we are automating it.”


    Rachael Zimlich is a writer in Columbia Station, Ohio.

    Rachael Zimlich, RN
    Rachael Zimlich is a freelance writer in Cleveland, Ohio. She writes regularly for Contemporary Pediatrics, Managed Healthcare ...


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