Spending up $18B on healthcare's ordinary administrative work

The U.S. healthcare system spent $60 billion on nine common administrative tasks in 2022, an increase of roughly $18 billion over the previous year.

The finding comes from the Council for Affordable Quality Healthcare's 10th annual index report, which measures payers' and providers' progress in automating electronic business processes. 

The $18 billion increase in spending is driven by two contributing factors: higher utilization as people obtained medical care that they deferred throughout the COVID-19 pandemic and higher labor costs as medical facilities paid more to attract and retain workers and were forced to hire inexperienced, less efficient staff to fill vacancies. Provider time to conduct medical transactions increased by 15 percent on average, which accounted for more than half of the increase in total spend for most transactions.

Of the $60 billion annual spend recorded in 2022, the industry can save nearly $25 billion — 41 percent — by transitioning to fully electronic transactions, CAQH maintains.

The nine ordinary administrative tasks measured are: 

1. Eligibility and benefit verification
2. Prior authorization 
3. Claim submission 
4. Attachments 
5. Acknowledgements 
6. Coordination of benefits 
7. Claim status inquiry 
8. Claim payment 
9. Remittance advice

Of the nine transactions analyzed, automation is highest among acknowledgements and claims submissions, while attachments has the lowest electronic adoption in the medical industry.