U.S. Doctors' Administrative Costs Quadruple Canadians'


Major Finding: Medical practices in the United States spend nearly $83,000 per year per physician to deal with health insurance plans; practices in Ontario spend about $22,200 per physician per year to interact with Canada's single-payer health care system.

Data Source: Surveys of physician practices in Ontario and in the United States, as well as 37 interviews with physicians, health plan executives, and practice administrators.

Disclosures: The authors reported no financial conflicts of interest for the study, which was funded by the Robert Wood Johnson Foundation and the Commonwealth Fund.

Physician practices in the United States spend four times as much money as do those in Ontario, Canada, to cope with paperwork and communications involving health insurers and payers, according to a study.

The investigators found that medical practices in the United States spend nearly $83,000 per year per physician to deal with health plans. In contrast, physician practices in Ontario spend about $22,200 to interact with Canada's single-payer health care system. The report adjusted the figures slightly to account for exchange rates and specialty mix.

“If U.S. physicians had similar administrative costs to Ontario physicians, the total savings would be approximately $27.6 billion per year,” wrote Dr. Dante Morra, assistant professor of medicine at the University of Toronto, and his colleagues (Health Aff. August 2011 [doi:10.1377/hlthaff.2010.0893].

Most of the problems U.S. physicians face relate to the fact that they're trying to cope with multiple payers, while Canadian physicians must deal with only one, said Dr. Morra and his colleagues, who added that U.S. insurers could help by taking steps to improve the efficiency of transactions, such as implementing electronic transactions.

“The price of inefficiencies is not only the cost measured in this study,” according to the authors. “When these inefficiencies result in frequent interruptions in the work of physicians and their staff, they are likely to interfere with patient care. Everyone – health plans, physicians and their staff, and patients – will be better off if inefficiencies in transactions between physicians and health plans can be reduced,” they wrote.

The differences in staff time spent on insurance issues started with the physicians themselves. U.S. physicians spent an average of 3.4 hours per week interacting with multiple insurers, while Canadian physicians spent an average of 2.2 hours per week dealing with that country's single payer. The main difference in time is the 1 hour per week that U.S. physicians spent obtaining prior authorizations, which accounted for most of the difference in the results, the study said.

In addition, practice staff members in the United States spent far more time on insurance issues than did their Canadian peers, according to the study, which called the differences “striking.” U.S. nursing staff, including medical assistants, spent 20.6 hours per physician in the practice per week interacting with payers, nearly 10 times the 2.5 hours per week spent by Ontario nursing staff.

The study found that the U.S. nursing staff members spent more time in every possible category, including prior authorizations, which cost them 13.1 hours per physician in the practice per week. In Canada, nursing staff members spent no time on prior authorizations.

Clerical staff members were found to work 53.1 hours per physician per week in the United States, mainly on billing issues and obtaining prior authorizations, the study said. Meanwhile, clerical staff members in Canada worked only 15.9 hours per week, and only on claims and billing issues.

“The major difference between the United States and Ontario is that nonphysician staff members in the United States spend large amounts of time obtaining prior authorizations and on billing,” Dr. Morra said in a statement.

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