By Madeline Armstrong
The US healthcare industry could save about $20 billion annually by transitioning to fully automated transactions, according to the Council for Affordable Quality Healthcare (CAQH) 2021 Index. The index tracked that $42 billion of the administrative costs is spent conducting administrative transactions and that the industry could save almost half that amount – $20 billion – by transitioning to fully electronic transactions. That’s up from an estimated $16.3 billion in potential savings CAQH reported just two years ago.
Labor-intensive manual transactions are typically more expensive than automated transactions.
“The cost savings opportunity for the medical industry increased 32% due to higher costs for manual transactions and lower costs for electronic transactions,” reads the index. “The gap between electronic costs and manual costs per transaction continues to increase.” As of 2021, the medical industry cost savings opportunity increased to $17.6 billion.
A fully automated claims status inquiry costs $11.71 less than the same transaction conducted manually for the medical industry and almost $11 less for the dental industry, according to the CAQH Index. Each eligibility and benefit verification that is converted from manual to automated saves the medical industry $8.64 and the dental industry $8.75. Knowing the millions of times these transactions occur daily, the savings potential across the healthcare economy becomes apparent.
So why does so much of the healthcare industry lag behind in transitioning to automated transactions? Part of the answer involves how these transactions are defined. Transactions conducted through web portals are considered fully electronic for healthcare plans, but manual for providers.
The Covid-19 pandemic had a large impact on the healthcare industry, particularly the workforce. During this time most providers switched to online platforms in order to ensure the safety of their staff and patients. “And while manual volume dropped, manual transactions became more expensive, increasing overall spend and the cost savings opportunity,” reads the index.
There is another challenge. The CAQH Index report says industry participants must also support provider access to “robust” electronic data interchange systems. The key word here is interoperability – systems must be able to efficiently and reliably communicate with each other.
The global healthcare EDI market is expected to grow from $3.64 billion in 2021 to $4.03 billion this year at a compound annual growth rate (CAGR) of 10.7%, according to new research from ReportLinker. The healthcare EDI market is expected to grow to $5.70 billion in 2026 at a CAGR of 9.1%.
The main types of transactions in healthcare EDI are claim management and healthcare supply chain. Claim management is the organization, billing, filing, updating, and procedure of healthcare claims connected to patient diagnoses, medication, and treatment.
Rick Rubin, CEO of OneHealthPort, an organization that solves information exchange and workflow problems in the healthcare industry, believes that it is just a matter of time before all hospitals and healthcare organizations switch to automated transactions. “The question used to be ‘if,’” Rubin said. “I don’t think it’s an ‘if’ question anymore, I think it’s more of a ‘when’ and ‘how.’”
Rubin said that, overall, automating transactions will make operations run smoother. However, he does not believe that it will be able to save the healthcare industry a significant amount of money while the industry is still recovering from the pandemic. “I think it’s going to be challenging right now, post pandemic, to significantly reduce healthcare costs without impacting the workforce,” he said.
According to the American Hospital Association, hospitals nationwide were projected to lose $52 billion in net income during 2021and that more than third of U.S. hospitals will maintain negative operating margins through the end of the year.
While Rubin does not think that automating patient transactions will save the healthcare industry significant money short term, he does believe that if the time staff would have previously spent on administrative tasks is repurposed in a fiscally-minded way, there is the opportunity to realize savings. “[If] they are delivering additional services, they are going to make more money,” he said. “It really depends on how that extra capacity is used in order to determine if you are going to save money and who is going to benefit from that.”
Cybernet, a company that designs and manufactures all-in-one computers, box PCs and tablets, did a case study, assessing the result of their product in a healthcare setting. This was done with Covenant Community Care, a community health center in Detroit. Operated out of a van, Covenant Community Care targeted low income people and assisted them in signing up for health insurance and addressing their medical needs. However, they were overwhelmed with paperwork that they would then have to take back to their headquarters and process.
Cybernet stepped in and provided them with a medical computer and an Rx tablet. “Covenant is able to get more patients signed up for Medicare, thusly allowing them to process more billable time for their doctors,” reads the study, “Which has resulted in them being able to add the mobile clinic as an officially recognized Federally Qualified Health Center (FQHC).”
