Physician interaction with insurers costs nearly 4 times more in U.S. than in Canada

The price of a multipayer environment for U.S. physicians is costing nearly four times that of interacting with insurers compared with their colleagues in Canada, according to a study posted Aug. 3 on the Health Affairs website.

The per-physician cost of dealing with payers was $22,205 a year in Canada and $82,975 in the U.S., according to the study. If physicians in the U.S. could spend only what Canadian doctors spend, they would save about $26.7 billion a year, the authors estimated. Researchers studied 423 Ontario physicians for the latest study, then did a side-by-side comparison with totals they found in a survey of U.S. physicians, published in Health Affairs in May 2009.

"It's not that [health plans] are evil," said study co-author Sean Nicholson, PhD, an economist who teaches at Cornell University in New York and a research associate at the National Bureau of Economic Research. "They put rules in place to try, most notably, to control medical costs. The unanswered question in my mind is: How large are the benefits of all those rules?"

The surveys, conducted in 2006, found that physicians in Ontario spent an average of 2.2 hours a week dealing with patients' insurance coverage. Physicians in the U.S. spent an average of 3.4. hours. The real difference in time and cost to physician offices was in what nurses and other staff members spent: 2.5 hours a week per physician in Canada and 20.6 a week per physician in the U.S.

The study found much of the difference in time and money spent was due to dealing with obtaining preauthorizations, which aren't required in Canada.

Nicholson said he and the other authors realize that the U.S is not moving to a single-payer system, and that the research isn't meant as an argument for the U.S. to move to a Canadian-style system.

"I'm one who has trouble imagining you'd ever have a single payer system [in the U.S.]," he said. "I wouldn't spend a lot of time on studies proposing that. But it's interesting to know what it costs, and you could then decide, are the benefits greater?"

In other words, the authors wanted to accurately measure the cost of the U.S. multipayer policy to weigh against its benefits -- choice and competition.

Susan Pisano, spokeswoman for health insurer trade group America's Health Insurance Plans, said that in the five years that have passed since the surveys were done, insurers and others have made major strides toward a more efficient administrative process. Preauthorizations, for example, are now more targeted and often automated. Credentialing is moving toward a standardized process.

Pisano questioned some elements of the study, including what the authors admit is the first weakness of the research -- it is based on self-reported data rather than observation, because it would be prohibitively expensive to directly observe and measure how hundreds of physicians and their staffs spend their time.

Whether or not they endorse this particular research, insurers join physicians in striving for a simpler, more efficient way of doing business, Pisano said.

However, American Medical Association President Peter W. Carmel, MD, said the inefficiencies reflected in the study still exist, as witnessed by an AMA survey finding mistakes in one out of every five claims.

"The latest study on physician administrative costs echoes findings from the AMA's National Health Insurer Report Card, which demonstrate an urgent need to adopt standardized claims and administrative requirements for our multipayer health system," Dr. Carmel said. "These improvements would create systemwide savings, while allowing physicians to redirect their time and resources back to patient care and away from excessive paperwork."