The hidden cost of healthcare system complexity

Healthcare system complexity is not news to anyone. Yet the impact in hard dollars on payers is news. Not only are people frustrated, but money is being wasted. In fact, more than half of US consumers do not understand how to navigate the current healthcare landscape because it is so complex, reveals Accenture research. This low healthcare system literacy is creating an estimated $4.8 billion annual administrative cost burden for payers.

RELATED: U.S. Health plans can save billions by helping patients navigate the system

Instead of forcing people to continue to battle complexity, payers can invest in simplifying the ways consumers interact and engage with healthcare. Because it’s not Americans who are failing in healthcare system literacy. It’s the complexity of the system that’s failing them.

Accenture developed a Healthcare System Literacy Index to understand the healthcare competency levels of US consumers. This analysis reveals that 52 percent of them have low healthcare system literacy—including 33 percent with no experience and 19 percent who are novices. Of the 48 percent of Americans who have high healthcare system literacy, only 16 percent qualify as experts. See Figure 1.

Consumers with low healthcare system literacy have a higher than average need for customer service assistance. See Figure 2.

Accenture analysis reveals that they contact customer service 13 percent more often than high literacy consumers do.

These interactions create a big administrative cost burden for payers. On average, health insurers and employers spend $26 more on administration for every consumer with low healthcare system literacy. That translates to $4.8 billion annually in administrative cost across the United States. Compare this to the $1.4 billion each year in administrative costs for consumers with high healthcare system literacy. This cost gap signals that health payers could save $3.4 billion a year in administrative costs if all consumers had high healthcare system literacy. See Figure 3.

There’s a human cost to healthcare system complexity too. It is especially detrimental to the 26 percent of US consumers who have both low healthcare system literacy and a high need for intervention. These are people who are more likely to have serious health conditions, including high-cost and pervasive conditions such as cancer, congestive heart failure or renal failure among others. They also have a higher need for weekly and monthly interactions with customer service.