EP363: How to Cut the Healthcare Administrative Burden in Half, With David Scheinker, PhD Relentless Health Value™

Administrative costs in the United States have a bad rap. You don’t have to look too far to find an article about how there’s now, like, 10 administrators for every 1 physician in this country. Or 3 to 4 billing people for every physician. Or find someone complaining about arduous prior auth processes and how long specialists sit on phones trying to get a prior auth approved while having a frustrating “peer consult” with a “peer” whose career has nothing to do with that specialty and, in fact, knows very little about it.
Also consider the time that specialists’ admin teams have to spend—or really any doctor’s admin teams have to spend—when they are required to send documentation validating some prior auth request or appeal. They, in many cases, have to send this documentation via old-school, drop-it-in-a-mailbox mail … literally. This documentation can and often does amount to a sizable box full of paper patient records. They have to drag a box into their office and fill it up with paper to send to the insurance company to validate whatever appeal. Think about who prints out all that paper. Who does all this stuff? And who on the insurance side is unboxing it all and, I don’t know, are they highlighting the good parts? Are they rekeying anything? What goes on there?
Or here’s another administrative cost: collecting and tabulating all the data needed to participate in some quality incentive program. Considering that each carrier has their own flavor of metrics … yeah again. Administrative burden, administrative costs.
Or consider what Dan O’Neill was talking about in EP359 the other day. He was talking about IPAs (independent physician associations) and other managed care entities. These entities hold the contracts with payers on behalf of smaller provider organizations or solo practitioners. So, these smaller (usually) individual practices contract with the IPAs—you know, for leverage and all that. And then it’s the IPA who then holds the contract with the payer. As Dan mentions, contracting with some of these IPAs is like an “I love 1990” flashback. The contracting process, again, transpires via mail. Not email, mind you. Mail. Like, stick-a-stamp-on-the-envelope mail. 
So, in sum, there’s a lot of pretty well-founded complaining about administrative costs in this country. A lot of this administrative stuff is truly inefficient and a fantastical waste of time—valuable clinician time. So, here we are freaking out about staffing shortages, overlooking that doctors at the heights of their careers are spending some percentage of their time not counseling, treating, or diagnosing patients but twiddling their thumbs on hold with one insurance company or another slowly burning out by the inefficiency of it all. Or doing pajama time, and we all know that too much pajama time means also burnout on a silver platter.
Now consider this: Reducing admin costs are frequently cited as a fine way to reduce overall healthcare spending in this country. So then, let’s get granular here. If we’re trying to quantify admin costs, how you’d do that is to quantify how much each transaction costs. How much does it cost to send a bill and get paid for it? How much does it cost to file an appeal and a denial of a prior auth? Add all those transactions together and you get the full cost of the administrative burden.
In this healthcare podcast, we’re digging into a paper about admin costs written by David Scheinker, PhD (my guest today); Barak Richman, JD, PhD; Arnold Milstein, MD, MPH; and Kevin Schulman, MD, MBA.  
I have the pleasure of speaking with David Scheinker, PhD (as I mentioned), who is the lead author on this paper. Dr. Scheinker is an associate professor of pediatrics and executive director of systems design and collaborative research at the Stanford Lucile Packard Children’s Hospital. He is the founder and director of SURF Stanford Medicine at Stanford. David Scheinker’s work