Sep 21st 2020

Combating Healthcare Waste

As the cost of healthcare continues to sharply increase, effective solutions to limit waste are more important than ever. eviCore is working to reduce clinical waste through utilization management while also improving the critical administrative burdens that providers face every day.

 

What Is Healthcare Waste?

 

There is no question that the cost of healthcare is growing at an unsustainable rate, and with such growth comes concern for waste.  According to Health Affairs, waste in healthcare can include spending on services that lack evidence of producing better health outcomes compared to less-expensive alternatives; inefficiencies in the provision of health care goods and services; and costs incurred while treating avoidable medical injuries.

 

According to data published in a recent Health Affairs blog post, 20-25% of total healthcare waste ($700B) is administrative or operational, while 14-15% ($445B) is clinical.

 

Figure 1. Causes of Waste in the U.S. Healthcare System

Source: https://www.healthaffairs.org/do/10.1377/hblog20180530.245587/full/

 

 

Clinical waste accounts for $445 billion a year in healthcare spending in the United States. Most clinical waste stems from poor-quality execution in delivery, inefficient care coordination, and overspending on unnecessary tests, treatments, and procedures.

 

Administrative waste accounts for $700 billion a year in spending. A good deal of this can be traced to inefficiency and excess bureaucracy involved in hospital administration, billing procedures, and interactions with insurance companies.

 

The prior authorization process is also a contributing factor when it comes to administrative waste. Time waiting for decisions and rescheduling due to pending approvals can sometimes cause wasteful expenditure of resources.

 

Rate of Medical Knowledge Generation

 

As healthcare continues to evolve we’re seeing innovative medical advances at an unprecedented rate. While this is enormously promising for the future of medicine and treatment options for patients, it can be argued that no professional anywhere in the healthcare system can keep up with all of the changes. The reality of 2020 is that medical knowledge is doubling every 73 days.

 

Figure 2. The Rate at Which Medical Knowledge Doubles

Source: Densen P, Trans Am Clin Climatol Assoc 2011.

 

If medical knowledge is doubling every 73 days, that means that the medical knowledge needed for practices is also doubling at that rate, and blind spots are increasing regardless of how much hard work a practice puts into staying up-to-date. For perspective, consider that based on the chart above, 50% of the medical knowledge available to a person graduating from medical school in 2014 didn’t exist when they started in 2010. So maintaining the ability to always best comply with evidence adherence is becoming increasingly difficult.

 

Discrepancy in cost and care due to the rapid pace of medical knowledge generation and the need for evidence adherence are some of the reasons that prior authorization was developed to begin with. However, the fact that there is a need for prior authorization doesn’t mean that we should not worry about the administrative burden it creates. In fact, a recent study showed that the top three payer pressures in 2017 were tied to utilization management.

 

Figure 3. Top Practice Pressures from 2016 - 2017

 

How eviCore is Combating Waste

 

As a company offering high-quality prior authorization solutions, eviCore is sympathetic to the pain points caused by prior authorization. That is why we are committed to building and deploying technologies designed to streamline and expedite prior authorization processing.

 

More can be learned about the need for evolving prior authorization, and how eviCore is committed to improving the process for our physicians’ offices, by watching our recent webinar “Prior Authorization Needs to Evolve,” hosted by eviCore’s Eric J. Gratias, MD, FAAP, Chief Medical Officer, and Jonathan Murray, SVP Growth and Innovation for Seamless UM Solutions.