UnitedHealth Group Report Shows How Technology Can Streamline Administrative Processes and Create Potential Health System Savings of $332 Billion over Next Decade

Savings of $332 billion in national health expenditure could be achieved over the next decade by making better use of technology and streamlining administrative processes, according to a new report released today by UnitedHealth Group’s Center for Health Reform and Modernization.

The report is a companion to the Center’s first paper released in May that identified $540 billion in potential federal medical cost savings by applying to traditional Medicare some of the well-tested techniques UnitedHealth Group uses in the funding and management of care for more than 70 million Americans.

This second research report provides practical ways in which technology can save money by modernizing the administrative and transactional aspects of health care. The paper’s focus is on savings across the health care system as a whole – savings that will accrue to physicians, hospitals and health plans, and to consumers, employers and the government.

"There is too much administrative waste in our health care system – this report shows how technology can help fix it,” said Simon Stevens, executive vice president, UnitedHealth Group, and director of the UnitedHealth Center for Health Reform and Modernization. "Patients, physicians, hospitals, and insurers will benefit from applying streamlined modern approaches to the day-to-day support of care delivery. Now is the time to insist these changes happen across the health care system.”

The report estimates that perhaps half of the $332 billion savings would accrue to physicians and hospitals, 20 percent directly to the government in its role as a healthcare payer through Medicare and Medicaid, and 30 percent to health plans. However, there are various ways in which a higher share of the savings could become available to the federal government.

The paper details how in practice these reforms could be designed and implemented through:

• Tighter mandatory data and transaction standards;
• Elimination of antiquated manual processes, unnecessary paperwork, and redundant intermediaries;
• Automated payment accuracy processes across the health care system;
• A single credentialing and quality measurement process; and,
• A sophisticated and consistent regulatory regime.

The 12 proposals derive, in part, from UnitedHealth Group’s experience as one of the largest health care technology companies in the United States. The company’s 12,000 technology professionals oversee 30 terabytes of health care data and invest seven million hours annually in software application development. In funding and arranging $115 billion of health care the company interacts with over 5,000 hospitals and 650,000 physicians and other health professionals across the country, and its technology systems process 60 billion transactions and support 82 million calls, routed to 20,000 service agents.

"Shared action is now needed across all payers – commercial and governmental – in partnership with physicians and hospitals,” said David Wichmann, president of UnitedHealth Group Operations, and one of the report’s co-authors. "UnitedHealth Group, for example, now has 30 million magnetic swipe cards in circulation that would eliminate much red tape for patients, but the full potential of these cards will not be realized without agreed upon universal standards adopted across the health care system.”

Examples of approaches that could achieve administrative simplification and significant administrative cost savings over the next 10 years, include:

• Broader use of automated swipe cards ($18 billion);
• Creation of a national payment accuracy clearinghouse ($41 billion); and,
• Elimination of paper checks and paper remittance advice ($109 billion).

UnitedHealth Center for Health Reform and Modernization

The Center serves as the focal point for UnitedHealth Group’s work on health care modernization and national health reform. The Center assesses and develops innovative policies and practical solutions for the health care challenges facing the nation. Drawing on the company’s internal expertise and extensive external partnerships, the Center’s initial work program falls into six priority areas:

1. Practical cost containment strategies to slow the growth of U.S. health care costs

2. Payment reform strategies that better support physicians, hospitals and other providers deliver high quality patient-centered care

3. Reducing health disparities, particularly in underserved communities

4. Innovative approaches to universal coverage and health benefits, grounded in evidence-based care and consumer engagement

5. Modernizing the care delivery system, including strengthening primary care

6. Modernizing Medicare, including chronic disease management and end-of-life care

For more information about the Center and to view the full report, go to: www.unitedhealthgroup.com/reform.

About UnitedHealth Group

UnitedHealth Group is a diversified health and well-being company dedicated to making health care work better. Headquartered in Minneapolis, Minn., UnitedHealth Group offers a broad spectrum of products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, OptumHealth, Ingenix, and Prescription Solutions. Through its family of businesses, UnitedHealth Group serves more than 70 million individuals nationwide.