Administrative complexity gets no respect in Healthcare Reform. Take a look at this chart from a 2012 study:



Administrative Complexity accounts for up to $389 Billion in waste. That’s more than 30% of all the waste identified. Since this study was released we’ve created a myriad of programs to attack the other areas. Accountable Care Organizations (ACO), Meaningful Use (MU), Medicaid Reform, Bundled Payments and Population Health initiatives take aim at failures in care delivery, care coordination, over-treatment and pricing failures. That’s a good thing. The problem is that even when these programs are successful, they add to the administrative complexity of healthcare. It’s like we’re trying to bail out our sinking boat, but instead of dumping the buckets back into the lake we’re dumping them on the person next to us.

The problem is that even when these programs are successful, they add to the administrative complexity of healthcare.

You might think that when it comes to the triple aim: Better Care, Better Population Health and Lower Costs, the first two trump the last. It makes sense that we spend the bulk of our efforts addressing delivery issues. It just doesn’t make sense that we ignore the by-products of doing so. We pile on with new quality measures, new programs and new incentives. All with their own set of reporting requirements that kind of overlap, but not exactly. That kind of get reported the same, but are a little different. Then we ask a bunch of clinical folks to figure it out. So they tweak their existing, homegrown Excel-based solutions to handle the new requirements and manage them with the traditional, brute-force approach to healthcare administration (i.e. boots on the ground, phone calls, faxes, etc). It’s wildly inefficient and doesn’t scale.

It makes sense that we spend the bulk of our efforts addressing delivery issues. It just doesn’t make sense that we ignore the by-products of doing so.

As we continue our march towards a value-based system, the problem will worsen and lead to many small failures throughout the business of healthcare. In the aggregate, those business failures lead to care failures and undermine all of our efforts.

We’re all on the hook for this one. First, government agencies, payers and providers must work together to design programs with consistent goals and requirements. Second, innovators must create tools that are flexible enough to handle the rapidly evolving needs and robust enough to enable the crucial feedback loops to occur without excess administrative efforts.