Friction occurs when an object moving through space encounters resistance, slows down and has its forward energy diverted. In the world of health care, friction is a term that has become synonymous with paperwork.Today, the U.S. spends $2.3 trillion on health care, and the U.S. Health Care Efficiency Index estimates that we could reduce this cost by $30 billion if we could eliminate the friction of phone-based and paper-based systems.1 This is a significant savings, and the American Recovery and Reinvestment Act is an attempt to realize that savings with a very targeted focus on Electronic Medical Records (EMRs). If all of the physicians in the country used EMRs, the argument goes, we would dramatically improve the efficiency of our health care system. The only problem is that only 17 percent of physicians are using EMRs today, so we’re talking about converting 83 percent of physicians to a computerized system for maintaining patient records, and while we absolutely must move in that direction, it is going to be a long and time-consuming process.2
“Low-hanging Fruit” Meanwhile, there’s a much quicker fix that is not getting much attention in the current debate, and that is the savings that could be realized by full conversion to electronic health care claims. Unlike EMRs, electronic claims aren’t slowed down by privacy issues and other barriers that arise with business-to-human transactions. They offer billions of dollars of savings. According to the Center for Health Transformation, 90 percent of claim payments are still made in the form of a paper check. By eliminating these paper-based checks, the U.S. could reduce the overall cost of health care by $11 billion.3 Every paper check that is eliminated and replaced with a wire transfer saves the payer $.78, according to a study by Yoo and Harner.4 And given the fact that a few large payers – United, Aetna, Cigna and BlueCross BlueShield – are responsible for a majority of claims checks written in this country, making the switch to electronic health care claims may be easier than you think.
How we make the switch It would require a standardized process that all participants would agree to follow, that would include several basic elements:
- It would start with shared and enforced electronic standards for eligibility, authorization and claims processing for all payers and providers.
- These eligibility standards would need to be clearly communicated to providers.
- The next step would be establishing agreements between payers and providers on “approved” processes for complex, high-costs cases.
- And finally, there would need to be a system of third-party monitoring for adherence to the standards.
Frictionless health care is about removing cost from the system. If we start by eliminating paper-based claims, we could achieve a significant savings success story that could actually make it easier to achieve ultimate success in the ultimate goal of health care reform. And saving $11 billion in the process wouldn’t be a bad way to get started.
1 $30 billion number, 1 National Automated Clearing House Association, ACH 2007 Volumes, May 19, 20082 17 percent figure comes from DesRoches CM, Campbell EG, Rao SR, et al. Electronic health records in ambulatory care — a national survey of physicians. N Engl J Med 2008;359:50-603 Center for Health Transformation4 Hannah Yoo and Karen Harner, “An Updated Survey of Health Care Claims Receipt and Processing Times,” AHIP Center for Policy and Research, May 2006.
Fletcher Lance is the national health care leader of The North Highland Company.