Many headlines have rightly focused on the 38.6 million unemployed as a result of the coronavirus pandemic. But many stories are overlooking how those unemployment numbers and the loss of healthcare jobs will affect the healthcare system.
Due to a sharp drop in patient volumes, near-total cancellation of elective surgeries, and many patients’ loss of work and the ability to pay for care, 1.4 million healthcare workers were laid off or furloughed in April alone.
The majority of these workers are administrative staff, who handle the complex billing and insurance processing system required by most hospitals and medical practices. Administrative staff spend, on average, 36 hours per work week just on billing matters. The administrative costs associated with healthcare in the United States are the highest in the world because of how complicated and time-consuming they are.
These administrative costs, of course, are passed along directly to consumers through inflated prices for medical care and ever-increasing insurance premiums. Most patients spend more time on the phone, waiting on hold to figure out if a clinician takes their insurance, than they spend face-to-face with the actual doctor. U.S. payers and providers spent $496 billion on healthcare administrative costs last year. Those of us with private insurance take on 17% of these unnecessary costs.
Why is medical billing so incredibly complicated that it requires massive administrative staff and hours of wasted time for doctors and patients?
One reason is that the U.S. medical system lacks pricing transparency. If you have insurance, you are typically in the dark about the cost of the care you are seeking whether it is a routine elective procedure or the mending of a broken arm. There is no menu of prices. There is no warning or a chance to look for value.
For example, one of the most common tests in medicine is the metabolic blood panel. Despite how common this test is, hospitals and insurers negotiate the prices behind closed doors. It could cost anywhere between $11 and $1,000, and you, the true payer, won’t find out until you receive your bill in the mail. Such examples abound, affecting not only patients but physicians as well.
Meanwhile, small physician practices are currently struggling even to get paid, with the majority saying that less than half of their visits are reimbursable by insurance companies thanks to the varying guidelines associated with the COVID-19-driven shift toward telehealth services.
This system isn’t just inherently opaque. It’s also wasteful. Every bill requires the manpower of a robust administrative staff to act as a liaison among institution, doctor, patient, and insurance company. Now that that staff is being furloughed or laid off, more doctors are having to take on those administrative burdens themselves, leaving them with even less time to see and to provide the care that patients need.
It’s never been more painfully clear that we need other options to finance our medical care. We need to create a free-market healthcare ecosystem that allows people to pick and choose the type of care that is best for them without all the middle layers of inefficiency.
A particularly good solution in this unprecedented moment is direct primary care. Direct primary care groups allow patients unlimited access to a physician, without insurance, in exchange for payment of a subscription. By cutting out the middleman, direct primary care physicians retain their ability to focus on treating patients without the heavy administrative burdens of our broken healthcare system.
A recent study by the Direct Primary Care Coalition suggests many medical professionals prefer this model as well. A whopping 99% of the physicians reported having better or much better “overall satisfaction” working in a DPC group. Ninety-six percent said there is “potential to provide better primary care under a DPC model.”
Other options exist as well, such as medical cost-sharing organizations. When executed correctly, this type of organization requires consumers to take control of their healthcare to become savvy health consumers. It promotes transparency and enables freedom and autonomy in health decisions. Members of medical cost-sharing organizations are also cash-pay, which can help decrease the administrative burden on physicians.
We need to think now, more than ever, about removing these unnecessary barriers to care. How we pay for healthcare can be vastly simplified, and it’s happening. More and more, doctors and patients are making the shift to more ‘unconventional’ payment methods when, in reality, they’re just moving back toward the commonsense approaches that happen to be used in almost every other sector of our economy, one that emphasizes the patient, affordability, and quality time and care.
Jamie Lagarde is the CEO of Sedera Health, a medical cost-sharing community focused on solving the healthcare cost problem.
