Ancillary Costs that Drive up the Bill for Healthcare

And how to avoid paying them

Introduction

There are many healthcare costs, some insurance induced, some regulatory, that drive up the price of healthcare that have nothing to do with the patient.  Today we will look at what some of these costs are and how to at least partially mitigate them.

The Problem

Many of the costs incurred in practicing and consuming medicine could be completely automated or eliminated altogether.  Below we will detail some costs.  It is fairly dry, but bear with me.  Be warned, in some cases we compare 2023 and 2022 statistics.  For our purposes this is close enough, as we are interested in the general argument, billions instead of dollars and cents.

Electronic Medical Records

According to Grand View Research, the electronic medical record market size in 2023 was $32.23 billion.  With compound annual growth rate (CAGR) of 4.43%.  The number of practitioners in the US is about 900,000 (897,151).  The number of insured patients in the US is about 304 million.  The average number of patient encounters or visits per year in the US is about 1.0 billion.  Thusly we can calculate

• The average practitioner spends $35,925 annually on electronic medical records

• The average patient spends $106 annually on electronic medical records

• The average patient encounter or visit cost for electronic medical records alone is $32

These are huge and largely unnecessary numbers.  More on this in the solutions section. These are all based on 2023 numbers as well, by 2030 the average spend on EMR is predicted to be $43.65 billion, a 35% increase.

Medical Coding

Medical Coding is the craft of translating what the practitioner did into ‘codes’ the insurance industry can understand.  Our friends at Grand View Research tell us that Medical Coding cost the industry about $18.2 billion with a CAGR of 9.85%. Using the consumption numbers from above, we can calculate

• The average practitioner spends $20,286 annually on medical coding

• The average patient spends $60 annually on medical coding

• The average patient encounter or visit cost for medical coding alone is $18

This also is wholly unnecessary and a waste.  The only entity who benefits from coding is the big, wasteful, antiquated insurance company. By 2030 we can expect to spend $38.5 billion on medical coding alone.

Compliance and Efficacy Reporting

HealthAffairs Journal found in 2016 (the latest numbers we could dig up) that the practitioners in the US spend $15.4 billion on efficacy and compliance reporting.   Let’s assume that number did not rise between 2016 and 2024 (it did) and that a 2016 dollar is equivalent to a 2024 dollar (It isn’t). Completely ignoring the CAGR, and we estimate about 6.5%, we can calculate

• The average practitioner spends $17,165 annually on compliance and efficacy reporting

• The average patient spends $51 annually on compliance and efficacy reporting

• The average patient encounter or visit cost for compliance and efficacy reporting alone is $15

If we could figure out a way to automate this reporting, the cost would go to basically zero.  Worse, by 2030 we should expect to spend $37.19 billion if this doesn’t happen.

Conclusions

We chose these three cost centers because we believe they are wholly unnecessary.  In the 70s the big push was tort reform to bring down the costs of malpractice insurance and consequently the cost of medicine.  We don’t examine that here, because that is not our area of expertise.  The total wasted resources per year are $65,830,000,000

• The average practitioner spends $73,376 annually on completely avoidable costs

• The average patient spends $217 annually on completely avoidable costs

• The average patient encounter or visit cost for completely avoidable costs alone is $66

Yes, you read that correctly $66 per visit.  There MUST be a better way.

Mitigating the Costs of Healthcare that Aren’t Healthcare

Sentia has produced an Electronic Medical Records System.  This system is integrated with our own insurance company.  This system is provided free of charge to your doctor’s practice.  We make our money exactly like Netflix does, except we don’t have to buy the movies and shows.  We charge a flat $10 per month to the insured to manage his or her data, plus the true cost of the incurred risk.  When we say incurred risk, we mean the calculated average consumption of resources, in this case insurance benefits, divided among the constituents of the insured group.  According to the Insurance Information Institute Insurance companies return 53% of your premiums as benefits.  Using large, round numbers that means that if your insurance bill is $1000 per month, you only see $530 worth of benefits.  We conclude that this is the actual cost of the risk and everything else is wasted by legacy insurance companies.  Further, that means we should be able to provide you with exactly the same coverage for $540 ($530 plus the $10 management fee).
That is NOT what we are talking about here though.  If the Sentia Health Insurance company provides the medical records system, and it has built in reporting, and it does, then we have eliminated all of the associated costs detailed above.  This is in addition to the 47% they, your insurance company, wads up and puts in their pockets or simply wastes.  Let’s break this down a little.

Medical Records System

If we provide the records system, the practice and practitioners don’t have to pay for it.  $32.23 billion in savings.

Medical Coding

Assuming the doctors do their own documentation, and most do, with us they don’t need that documentation translated to ‘codes the insurance company understands.  Our records system takes the documentation in American English, British English, Spanish, Danish and Swedish, with other translations underway or nearly completed in French and Dutch, and pays for procedures performed in real time.  You don’t need coders.  If the practice wants to pay us to take their dictation and put it in the records system, we can do that too. $18.2 billion in savings.

Compliance and Efficacy Reporting

If we have all the data, and we do, and a reporting engine, and we do, we can create any report with one button click. It may take us a couple of days to get up to speed in a new state with its compliance reporting, but those reports are generally easy to write.  $15.4 billion in savings.

Conclusion

In previous articles, we have shown a way to save the average consumer 40%+ on his or her health insurance through automation.  If that is the case and the health consumption expenditures (HCE) in the US are $4.2 trillion, then we can save the population $1.68 trillion.  Today we have shown a way to eke out another $66 billion in direct savings.  That translates to about $66 for each and every doctor visit.  This is not an insignificant amount.  This is also exactly what the Affordable Care Act of 2010 was trying to accomplish and completely failed at.  Eventually, we will move to a pay-for-health model instead of a pay-for-procedure model incentivizing practitioners to keep people healthy, further driving down costs.  This also moves us to the single payer model, not because of government intervention, but because we have built a better mousetrap.  That model will allow the patient to take control of her or his own health and health records and further drive down costs by avoiding duplicate work.  A new doctor will have the complete medical history in a format she or he is already familiar with.  If we add in

• Integrated health and wellness – We provide patients with a portal that scientifically analyzes the annual (semiannual, quarterly) checkup and prescribes patient education on how to live healthier, better, and longer.

• Integrated Email – We give the patient the ability to contact the doctor via SECURE email.

• Self-scheduling – log in and see when your favorite practitioner is available and schedule a time to meet.

• Questionnaires – Practices have the ability to design, assign and read questionnaires online.  This means you as the patient don’t sit in the waiting room with sick people filling out reams of paperwork.

• Reporting – Individual and Population Health Analysis: the individual gets a printable report of his or her health as it was recorded on the date of the health assessment.  Population Health reporting gives the practice the ability to see how they are doing.

• Compliance – as this product matures, we will be able to differentiate between people who live a healthier lifestyle and those do not by comparing the individual’s metrics against themselves over time.  Those who make demonstrably better decisions will pay lower premiums than those who do not, based on personal metrics. No longer will you be asked to pay for the risk of a “Bunny” who sits on the sofa and eats bon bons and watches soap operas all day and weighs 600 pounds.

• Telemedicine – Coming soon, you will be able to meet with your doctor via web conference.

We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living.  Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives.  We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.

Take a look at the video version of this article here.