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Red Tape Snarls Billions of Healthcare Dollars

John Commins, for HealthLeaders Media, July 20, 2009

Reducing administrative red tape by just 10% could remove as much as $500 billion over 10 years from the nation's healthcare costs, a Healthcare Administrative Simplification Coalition report released today estimates.

The report, Bringing Better Value: Recommendations to Address the Costs and Causes of Administrative Complexity in the Nation's Healthcare System, issued by the Healthcare Administrative Simplification Coalition, found that about 25% of healthcare spending in the United States goes toward administrative functions. Much of that paperwork is duplicative and little of it has been standardized. While conceding that some administration is needed to manage a healthcare system, the report found that current levels of complexity divert too much time and money from clinical care to administrative processes.

"Every dollar spent on a convoluted, redundant or unnecessary administrative process is a dollar poorly spent," says William F. Jessee, MD, president/CEO of the Medical Group Management Association, an HASC member. "We spend more on healthcare than any nation in the world, but we're getting far less than full value for our investment, partly because of unnecessarily complex administrative processes."

HASC, which includes physician and hospital organizations, health and benefits plans, employers, government agencies, and other groups, has called for voluntary and nationally coordinated changes to reduce red tape in healthcare billing and payment processes.

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