US doctors spend an average USD 82,000 each year on administrative expenses
US doctors spend almost four times as much as their Canadian peers on administrative expenses related to health insurance, found a study by Cornell University and the University of Toronto. Costs per physician averaged USD 82,975 in the US, only USD 22,205 in Canada. Researchers concluded that Canada’s simpler, single-payer system was responsible for the discrepancy.
While Canadian doctors have a single, standard set of rules to follow, US doctors must navigate a labyrinth of regulations, procedures and forms varying across payers. US nurses and medical practice staff spend 20.6 hours per physician per week on administrative duties; their Canadian counterparts only 2.5 hours.
“The magnitude of that difference is what is interesting,” said co-author Sean Nicholson, Cornell Professor of Policy Analysis and Management in the College of Human Ecology. “It’s the nurse time and the clerical time, rather than physician time, that’s different. That’s driving the increased costs.”
The authors suggested health insurers and government policy-makers could reduce cost inefficiencies by standardizing transactions across the health sector and switching to an electronic payment system. Physical mail, faxes and phone calls all slow down the process, which drives the USD 27 billion gap between US and Canadian doctors’ expenses.
Concluded Nicholson:
We’re not saying that these extra $27 billion are wasted. Health insurance companies put some of these rules in place to keep healthcare costs down. The $27 billion of ‘extra’ cost to physicians have to be balanced against some of the benefits that come from following these rules.
That’s what we hope will come out of this. That informed decisions can be made by private and public health care insurers about what really works and what is not worth the money.