U.S. healthcare system could save $16.3B through workflow automation

The U.S. healthcare industry is missing out on billions of dollars in potential annual savings by manually completing common business transactions, according to the Council for Affordable Quality Healthcare’s 2020 Index.

Of the $372 billion spent on administrative complexity with the U.S. healthcare system, an additional $16.3 billion could be saved through workflow automation, according to the report. This is on top of the $122 billion the industry already saved through automation.

The CAQH’s report used data from health plans and providers from 2019 to calculate savings opportunities related to verifying patient insurance coverage and cost-sharing, obtaining prior authorization, submitting claims and supplemental information, and sending and receiving payments.

WHAT’S THE IMPACT?

The potential savings opportunity is growing for the medical industry due to rising costs for most manual and partially electronic transactions, combined with falling costs for electronically-powered transactions, the report said.

In fact, the potential savings opportunity increased 35% from the year prior, up from $9.9 billion to $13.3 billion.

Across the board for medical plans, the adoption of fully automated workflows increased, except for claim submission and eligibility and benefit verification, which both remained stable. Prior authorization continues to be the area with the lowest adoption rate, with only 21% of medical plans having fully electronic transactions for this task.

The area with the greatest cost savings opportunity is through eligibility and benefit verification automation, which saved the medical industry $85.6 billion in 2019.

If the medical industry automated all of the processes tracked by the CAQH, it could save $43.39 on each patient encounter ($29.84 for providers and $13.55 for plans), according to the report.

“Considering the millions of times these transactions occur every day, the savings potential across the healthcare economy is significant,” the CAQH said in a statement.

THE LARGER TREND

One area that has proven ripe for automation is revenue cycle management.

In a HIMSS20 digital presentation last year, Mark Morsch, vice president of technology at Optum360, cited data indicating that there can be as much as $200 billion in administrative waste in the healthcare system due to inefficient revenue cycle practices

As such, a top priority of the healthcare industry in recent history has been to reduce costly and time-consuming workflows.

More than 90% of CFOs and revenue cycle managers feel it’s important for automated tools to be used in their revenue cycle.

Revenue cycle directors interviewed said that ROI is realized through fewer, full-time equivalent positions.

Especially now, healthcare leaders are turning to technology and automation to financially recover from the pandemic. Eighty-one percent of CFOs and senior leaders say there is an absolute and immediate need for digital transformations for the long-term survival of their organizations.

ON THE RECORD

“This year’s report found that adoption of electronic processes generally increased across the medical and dental industries,” said Kristine Burnaska, director of Research and Measurement at CAQH. “The data also indicates that future efforts to automate could yield even greater returns.”

Twitter: @HackettMallory
Email the writer: mhackett@himss.org

 

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