Health Insurance Providers: An Unlikely Resource in the Drive for Cost-Effective, Quality Healthcare

Every year in the USA, it is estimated that approximately 250,000 people die annually from healthcare errors, according to a study published in 2016 in the BMJ by Martin Makary, MD, MPH. Health insurance providers of both HMO’s and commercial plans are uniquely posed to lead the way to solving this national crisis.

Health insurance providers have access to every single detail of a patient’s healthcare, because they have been billed for it all and kept claim details of all the healthcare people have received. A contributing factor in not being able to deliver quality healthcare is lack of access to complete and accurate health information across different delivery areas. Different delivery areas include outpatient and inpatient settings, emergency and clinic care, home health, and inpatient rehabs, along with others.

I am not the first person to recognize the potential role insurance companies can play in improving healthcare delivery. Access to records across the spectrum of healthcare delivery is one the reasons for the establishment of Medicare HMO’s. Additionally, accurate and accessible records from all care providers is one of the main reasons behind the establishment of EMR’s.

Then, why hasn’t healthcare improved dramatically since everything is more centralized than before?

The answer is complex. One factor is that there are multiple health insurance providers, including such publicly traded and recognizable names as Cigna-Healthsprings, Aetna, BCBS, and Humana. All of them offer Medicare HMO plans in the USA. All of them are required by CMS to follow strict documentation, communication and billing guidelines to manage patients. Each company has been granted the freedom to do so in the way that follows their own business model and existing claims management and communicate software.

Edwards Deming famously said “Variation is the killer of quality.” While I would argue that this in no way applies to every situation, I would argue that here it does. Theoretically, I suspect the premise behind this HMO experiment is similar to that of evolution. If you think of each HMO and provider as separate organism, and healthcare as a whole as the ecosystem, then “adaptative change over time that results in the most efficient system, as a result of changes in heritable physical or behavioral traits” could arguably be what we have attempted to create. The danger in this evolutionary “sink or swim” mentality to accurate communication among healthcare providers is that the consumers of healthcare suffer. Consumers of low quality healthcare suffer on a mortal level, compared to consumers of low quality goods such as shampoos or dishwashers.

So, what is the solution? I am suggesting a single, standardized EMR and claims management system across all healthcare providers and insurers. I realize that the infrastructure to support this would be enormous, the cost to implement astronomical, the challenges to maintain migraine-inducing, to say the least. Not to mention the anti-trust laws and legality surrounding the monopoly of whatever system was given the contract.

But when you analyze the long-term implications of not going down such a road, the upfront cost becomes more palatable. The cost of a lifetime delivery of poor healthcare, combined with the associated costs of billing and claims management is astronomical. Our country is already spending billions on software maintenance and network infrastructure; lets spend this on something to streamline healthcare delivery.

I acknowledge that such restructuring would have negative consequences, and I will address these negative consequences in a future post.  Please look for such a post over the next 4-6 weeks.

The Cost of Restructuring a Billing Department? Try $13 Million

A community based not-for-profit hospital, located in the southeast, has entered partnerships or taken over administrative duties in the region.  Many county hospitals were struggling to be financially viable in the rapidly shifting healthcare environment.  This not-for-profit, by partnering with those organizations, allowed them to survive in their regions and continue to be able to offer localized care.  How, then, did this organization incur a $13 million deficit in the course of this seemingly symbiotic relationship?

The answer lies in the centralization of the billing practices.  Patient accounting and finances had grown so much since the hospital opened its doors over 100 years ago, its offices are not even located in the hospital anymore.  There is simply no room anywhere for them on the main campus.  The Board of Directors made a decision to restructure billing practices at the hospital, and place them under a single director of patient accounting.  This director reported directly to the CFO.  This not-for-profit hospital was very conscientious while making this decision.  They did not want anyone to lose their jobs during this transition; a fear when the centralization of the billing department was announced.

The director of patient billing and accounting was tasked with integrating these employees into a single department.  A source, preferring to remain anonymous, disclosed that employees who had been billing BCBS for 20 years were suddenly in charge of Medicare claims.   Others who had been responsible for outpatient claims were suddenly responsible for acute care.  During the restructuring, employees were placed in positions to learn a whole new set of rules at an extremely rapid pace.

The unintended consequences of the restructuring were staggering once uncovered by the CFO.  13 million dollars lay uncollected in billable and payable claims due to billing mistakes.  The CFO fired the director and some of the managers.  It is said that the director and those under him had tried to cover up the deficit.

Of the total cost of healthcare, it is estimated that approximately 18% is spent on billing and insurance-related (BIR) activities. Non-BIR administrative activities represent an additional 9.4%, leaving less than 73% of spending for clinical care (Jiwani, Himmelstein, & al., 2014).

What happened at the billing department of this large regional hospital is a microcosm of a epidemic.  Per Jiwani, Himmelstein, & al., 2014: “Implementation of a simplified financing system offers the potential for substantial administrative savings, on the order of $375 billion annually, which could cover all of the uninsured and upgrade coverage for the tens of millions who are under-insured. ……..Data on BIR costs since implementation of the ACA is needed to further illuminate the administrative effects of recent health reforms and provide additional tangible information for policy decision-making.”  Simplifying the way healthcare is financed is one of the  most crucial elements in effective healthcare reform.


Mr. Frank

            The work night:  same as any other night.  The patient, “Frank” is remarkably similar to countless other patients I have cared for on the cardiac step-down unit.

            I had seen Frank before and hundreds like him, the only difference in the details.  84 and bed-bound.  Couldn’t roll for diaper changes.  Right arm swollen with bruises and reddened, shiny skin, his left arm the same.  Bottom was red , but no ulcers because he had a ken-air bed at home. On superficial glance Frank’s legs appeared only swollen.  My gloved fingers, however, left indentations where they had touched.  Press your finger down into your skin on your thigh.  See how it bounces right back?  His didn’t; it stayed indented.   This was just a visual assessment.  I could hear his lungs rattling entering the room,  no need for a stethoscope.  He was wearing oxygen, and his heart monitor showed a pacemaker with occasional ventricular tachycardia, which is lethal if it continues, but the pacemaker was correcting.  He had a cardiac IV infusion, milrinone, which is often used in end-stage congestive heart failure patients to support their damaged hearts that don’t circulate blood and fluids efficiently.  His blood pressure was low, in the 80s/40s.  The best thing was a bracelet on his arm reading “DNR”.  Do not Resuscitate.

            But Frank’s condition was not the worst, which I knew immediately during report.  The saddest and most frustrating thing about Frank was his family, the families of the infinite Frank’s.  There is an incredible emotional strain that end-of-life decision making puts upon family members of the chronically ill, and I have compassion for this.  The main reason I entered nursing is I want to practice hospice nursing.  What is sad about Frank is that Frank is already a hospice client, but you would not know from his hospital visits.   This hospital visit was at his wife’s insistence from a choking episode involving oatmeal.  The hospice nurse did not treat the incident as an emergency, the wife did and called the ambulance.  This was another stressful transport to the hospital, another ER room that had to be cleaned and disinfected, equipment that had more wear, an expensive cardiac drug as well as the trained staff to monitor and support the patient on this drug.  This drug ended up being stopped because his heart could not tolerate it.  He received probably about 5ml of a 250ml bag, and the IV tubing which was thrown away. Also, a Ken-air bed for his visit, linens that had be laundered, diapers, a swallowing consultation, a wound nurse consultation, wound care supplies including 3 different ointments and numerous bandages, a consult to switch hospice providers because his wife was unsatisfied with their current hospice.  Also, IV antibiotics and tubing, consultations from the CHF doctor and the pulmonary doctor— and that’s only the costs I can think of.  And why was he here?   All the doctors had written in their reports “There is nothing we can do for this patient.”  But here Frank was, in the same Ken-air bed he had at home, same caregiver at his side, straining our tight fiscal health care budget, using limited resources.

            Healthcare is a right.  Every right comes with responsibility, and by contractually accepting healthcare services, the consumer should be contractually required to accept the limitations of that treatment, deferring to the expert when they accept healthcare services.  When a plumber is contracted to repair something at my house, I defer because he is the expertHe can explain the options to me and we can decide together which will be the best for my budget and circumstances, and he can also refuse to use certain tools on my drain if they are unsuitable for the job.


Why don’t healthcare workers, physicians and nurses especially, have that same autonomy? 

            Families are making a very emotional and terrifying decision when they decide on palliative versus aggressive care.  I worked in a nursing home for years before becoming a cardiac nurse, and I treat many of the patients from the nursing home at the hospital.  They are shuffled between hospice care, nursing home, and the hospital.

            Healthcare has changed in many positive ways.  There are increased credentialing requirements and multiple life saving treatments exist to improve quality of life for individuals.  Patients have extensive rights, are more educated, and participate in managing chronic illnesses.  Modern medicine is a wonderful thing; however, the increase in patient rights and life expectancy, and information available to lay people has created the modern medicine myth, where dying is an option only after a “long and hard fight”.  Because of this, families of chronically and terminally ill patients have concluded that they, not trained medical staff, are responsible to decide the best treatment for their family member.

            It is critical to the effective delivery of healthcare in our country that we stop the abuse of terminally ill patients.  One approach would be to give more autonomy to medical experts in directing the care of patients.   Provide institutional support to healthcare workers who refuse admission of terminally ill, end-of-life patients.  Provide regulatory support granting healthcare delivery workers the ability to refuse the performance exhaustive medical tests on patients who have been determined terminally ill.  Prevent nursing homes from admitting end-of-life patients to the hospital in a misguided effort to prolong their life span, thereby increasing the amount of time they receive Medicare funding.   Punitively treat doctors who admit patients inappropriately, collecting money for unnecessarily long visits.  Honestly evaluate the benefits of life-prolonging treatment while taking a holistic view of the patient, not one based on money or grief, but on the patient’s quality of life.  Let the money spent on hospital admissions for our terminally ill be spent on better hospice programs and grief services for families.  Cut the benefits of nursing homes that continue life prolonging interventions for the terminally ill patient; financially encourage alternative approaches to improving quality of life.  Healthcare will never be affordable or effective if it continues like this. This is a change healthcare desperately needs.