Breaking Down $935 Billion: How Your Practice Can Cut Down on Healthcare Waste

The healthcare industry in the United States faces a colossal problem—waste. Administrative waste and inefficiency consume staggering amounts of resources and time, leaving providers stretched thin and often frustrated by red tape. The Journal of the American Medical Association (JAMA) shows that the U.S. healthcare system wastes around $935 billion annually, an amount that’s almost impossible for most people to comprehend.

To put this enormous figure into perspective and understand its implications, we’ll break it down into more manageable terms. From there, we’ll explore how each practice can take meaningful steps to reduce waste, especially in the area of administrative complexity, which is the single largest contributor to waste. And finally, we’ll offer a path forward for those who are ready to tackle their own administrative burden with the support of professionals.

Understanding the Scale of $935 Billion

Numbers this large are challenging to process, but some comparisons can help:

• Traveling Back in Time: Imagine paying $1 every second to travel back in time. If you spent $935 billion, you’d end up over 29,662 years in the past—thousands of years before the earliest recorded civilizations.

• The Cheeseburger Comparison: Let’s say a cheeseburger costs $5. With $935 billion, you could buy 187 billion cheeseburgers. That’s enough to buy about 25 cheeseburgers for every person on Earth today.

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Even with these comparisons, $935 billion remains a mind-bogglingly large figure. The primary driver of waste is because of administrative complexity. In other words, inefficiencies in the healthcare system’s paperwork, billing, and other administrative tasks make up a significant part of the waste problem.

Administrative Complexity: The Main Culprit of Healthcare Waste

According to the JAMA study, administrative complexity alone costs the U.S. healthcare system approximately $265.6 billion annually. Administrative complexity encompasses all the red tape, bureaucracy, and inefficiencies tied to managing claims, billing insurance, processing paperwork, and tracking various regulations.

While tackling the entire $935 billion on a national scale might seem overwhelming, making changes at the practice level can have a cumulative, positive effect. Practices can reduce waste and inefficiency, contributing to a more streamlined, effective system overall.

Five Practical Steps to Reduce Administrative Waste in Your Practice

If administrative complexity is driving the bulk of the waste, then reducing it can lead to significant savings—not only in terms of money but also time and peace of mind for your team. Here’s how your practice can begin to tackle administrative waste effectively:

1. Document Every Administrative Process Thorough documentation of every administrative task within your practice is a key first step in reducing waste. When processes are documented in clear, step-by-step guides, you’ll notice where unnecessary steps may exist. This clarity can reveal redundancies, areas where tasks overlap, or places where time is wasted.For example, do you have multiple employees manually inputting patient data when an automated system could handle the task in a fraction of the time? Or do billing and coding practices overlap in ways that create more confusion than clarity? By documenting each  process, you create a foundation for streamlining tasks, making it easier to train staff and reduce inefficiencies.
   

2. Train Your Team Regularly A well-trained team is critical for reducing errors, eliminating redundancies, and maintaining consistency in day-to-day tasks. Regular training keeps everyone up-to-date on best practices and helps prevent time-consuming mistakes that can arise when people are left to “figure it out” on their own. When your team knows the ins and outs of each task, they’re able to work more efficiently. Plus, training staff members to use any new tools or technologies effectively is essential to avoid bottlenecks in workflows. Each investment in training can result in measurable time savings and fewer errors.
   

3. Automate Where Possible In recent years, healthcare technology has seen rapid advances, making automation more accessible and effective than ever before. Automation allows practices to handle repetitive tasks, like appointment reminders or simple billing processes, with ease and accuracy. For example, implementing a patient portal where clients can update their own contact information or schedule appointments reduces the need for administrative involvement in routine tasks. Automated systems can also streamline billing and claims submission, reducing errors and ensuring that claims are processed in a timely manner. Freeing up your team’s time by automating these repetitive tasks allows them to focus on the higher-level, patient-centered work that truly requires human attention.
   

4. Outsource Where It Makes Sense Not every task needs to be done in-house. For practices with limited resources or staff, outsourcing certain functions can be a highly efficient solution. Partnering with a vendor who specializes in a particular area—such as billing, credentialing, or even IT support—can help your team focus on patient care rather than administrative tasks that drain time and resources. Consider outsourcing your billing and claims submission to Practice Solutions. Our billers are trained to handle complex billing processes, keep up with changes in insurance requirements, and reduce the likelihood of errors. Our pricing model allows practices to scale these services based on their specific needs, so you’re not paying for full-time help unless it’s necessary.
   

5. Limit the Insurance Companies You Work With The more insurance companies your practice works with, the more complex and varied the billing and claims processes become. Each insurer has different rules, processes, and requirements, adding layers of administrative complexity to every interaction. By limiting the number of insurance companies your practice works with, you can simplify billing, reduce errors, and streamline staff training. Working with a select group of insurance providers can also build familiarity and expertise among your administrative team, enabling them to process claims faster and with greater confidence.

   
   

Why Reducing Administrative Waste Matters

Administrative tasks are a necessary part of healthcare, but excessive administrative complexity siphons off valuable resources—resources that could otherwise be directed toward patient care, practice development, and professional satisfaction for providers. With each practice that reduces its administrative waste, the healthcare system as a whole becomes a little less burdened by unnecessary tasks.

Reducing administrative waste not only makes financial sense;. Providers and staff can focus on meaningful work rather than being bogged down in paperwork, while patients experience faster, more responsive care.

Don’t Know Where to Start in Reducing Administrative Burden?

If you’re ready to tackle the administrative burden in your practice but aren’t sure where to start, Practice Solutions is here to help. We specialize in simplifying the insurance billing process, so you don’t have to. By partnering with us, your practice can reduce administrative complexity, improve claim processing times, and increase your revenue.

At Practice Solutions, our team understands the nuances of insurance billing and the unique challenges practices face when dealing with multiple insurers. We provide tailored solutions to ensure accurate, efficient billing, allowing your team to focus on patient care rather than administrative hurdles.

You can check out our book, Insurance Billing Basics: Steps for Therapists to Successfully Take Insurance as a starting point in evaluating where your practice can make improvements. 

If you’re ready to get started with outsourcing your billing, contact us to schedule your consultation today!

Ready to Reduce Waste in Your Practice?

Reducing administrative waste in healthcare may feel like a daunting task, but it doesn’t have to be. By implementing these strategies and making small, intentional changes in your practice’s workflows, you’ll be contributing to a larger solution that benefits the healthcare industry as a whole. And for the areas where you need additional support, we’re here to step in.

Let Practice Solutions handle your insurance billing, so you can focus on what matters most—caring for your patients. Reach out to our team today to learn more about how we can help streamline your billing processes and make your practice more efficient.

Practice by practice, we can all work together to chip away at the administrative burdens in healthcare. Start today by making one small change, and see the difference it can make.