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Paperwork Costs Canadian Doctors Much Less

August 5, 2011
Written by: , Filed in: Practice Management
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Dealing with paperwork costs U.S. physician practices almost four times as much as it does Canadian practices, according a new study.

Specifically, time and labor spent interacting with payers, including insurance companies and government entities, costs $82,975 per U.S. physician per year, compared with $22,205 per physician per year in the Canadian province of Ontario. That’s according to a Cornell University study published online this month in Health Affairs.

Canada, of course, has a single-payer health care system. U.S. doctors must deal with many different payers who have many different rules.

It’s not the doctors who carry the burden. According to the study, the average U.S. doctor spent 3.4 hours per week interacting with payers, and the average Ontario doctor spent 2.2 hours.

On the other hand, the nurses and medical practice staff spent 20.6 hours per physician per week on administrative duties in the United States, compared with 2.5 hours in Ontario.

Study coauthor Sean Nicholson, PhD, professor of policy analysis and management in Cornell’s College of Human Ecology, noted:

The magnitude of the difference is what is interesting. It’s the nurse time and the clerical time, rather than physician time, that’s different. That’s driving the increased costs.

Dr. Nicholson was quoted in a Cornell news release.

The study estimates that if U.S. physician practices had administrative costs similar to those of their Ontario counterparts, the total annual saving would be $27.6 billion. However, Dr. Nicholson said:

We’re not saying that these extra $27 billion are wasted.

Oh yeah? “Health insurance companies put these rules in place to keep health care costs down,” Dr. Nicholson explained. “The $27 billion of ‘extra’ cost to the physician practice have to be balanced against the benefits that come from following these rules. If the benefits are $100 billion in savings, this would be time well spent. Or it could be that there are zero benefits.”

But do the rules have benefits, and if so, how much money’s worth of benefits? That was beyond the scope of this study. As usual, more research is needed.

The Cornell study did suggests ways to reduce administrative costs. Standardize transactions, the researchers said, and conduct them electronically. Physical mail, faxes, and telephone calls slow things down.

“That’s what we hope will come out of this,” Dr. Nicholson said, “that informed decisions can be made by private and public health care insurers about what really works and what is not worth the money.”

I think that’s what we all hope for. Let’s hope we don’t hope in vain.

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Related seminar: The Business of Radiology


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