Health plans, providers can save nearly $25B annually by automating transactions, study finds

Although automated workflows implemented during the pandemic increased efficiency, staffing challenges and greater health care use contributed to overall higher year-over-year administrative spending.

“Over the past 10 years, despite a rapidly changing health care landscape, payers and providers have made dramatic gains automating transactions and reducing the cost of business processes,” says April Todd, chief policy and research officer for CAQH. “Our latest report shows that this trend toward greater efficiency continued last year, even though post-pandemic factors increased total spending.”

The latest report found that the U.S. health care system spent $60 billion conducting nine common administrative transactions — an increase of roughly $18 billion over the previous year. Of this amount, the industry can save nearly $25 billion (or 41%) by transitioning to fully electronic transactions. This would be in addition to the $187 billion that health plans and providers are saving annually today because of previous automation efforts.

The increase in spending was driven by at least two factors — higher utilization as people obtained medical care that they deferred during the pandemic and higher staffing costs as medical facilities paid more to attract and retain workers and were forced to hire inexperienced, less-efficient staff to fill vacancies. Among the other findings:

• Adoption of electronic processes increased, on average, by 5% across the medical and dental industries.
• Of the transactions studied, automation is highest among acknowledgements and claims submissions for both industries. Attachments (24%) has the lowest electronic adoption for the medical industry, while claim payments (17%) has the lowest electronic adoption in the dental industry.
• The volume of transactions increased by 28% in the medical industry and 9% in the dental industry.
• During the second year of the pandemic, spending on administrative transactions increased by more than $17 billion in the medical industry and $1 billion in the dental industry compared to the first year of the pandemic.
• The opportunity for savings from further automation increased to $22.3 billion for the medical industry and remained stable at $2.6 billion for the dental industry.

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“During an exceptionally challenging time in health care, these results are encouraging,” Todd says. “Health care business processes continue to become more automated and efficient, the opportunity for continued progress is great and the areas where further investment is needed are clear.”