How Staffing Challenges, Automation Affect Health Care Spending

Every aspect of the dental industry has faced an ongoing workforce shortage for several years. Vacant dental assistant and hygienist roles are estimated to have reduced dental practice volume by 10% nationally.¹

Although these staffing challenges have largely been attributed to the Covid-19 pandemic, there are several other contributing factors, including a decline in enrollment in dental assistant programs since 2015.¹ Research suggests that this decline in enrollment will not recover anytime soon, resulting in a continuing personnel shortage for the foreseeable future.¹

Dental Products Report® spoke to April Todd, MPH, chief policy and research officer for the Council for Affordable Quality Healthcare, Inc (CAQH), a nonprofit organization that was formed over 20 years ago by a number of health insurance companies with the goal of transforming business processes through collaboration and innovation. Todd shared key findings from the company’s 10th annual Index, including how staffing challenges affect spending on administrative functions, adoption of automated processes in health care, and trends within the industry.

Kristin Hohman: Can you explain what CAQH does?

April Todd: CAQH is a nonprofit collaborative organization that was formed a little over 20 years ago. We were formed to help reduce the cost of administrative processes, to help simplify administrative processes. We do that in a few different ways. One of them is, we have … technology solutions that help to reduce the burden of the submission or exchange of data in duplicative ways. So, we do that in areas related to collecting credentialing data from providers, collecting provider directory data from providers, helping with coordination of benefits, those kinds of back-end processes. The second thing that we do is, we have an organization called CORE [Committee on Operating Rules], which creates what are called operating rules. And these are rules that help to further standardize electronic transactions, help to simplify the business flow of data, and help to further streamline the exchange of [those] data. And then the third thing that we do … is our research function, which is called Explorations. And every year through that program, we put out our Index, which is a study of the cost, volume, and mode [of conducting] administrative transactions within the industry.

KH: Can you give a broad overview of the report and its aims?

AT: This is our 10th anniversary report, so we’re very, very proud of this. What the Index does is, it surveys plans and providers, within both the medical and dental spaces, to track how administrative functions are being conducted within the industry. So, we look at the volume of transactions that are going through; we look at what it costs to conduct those transactions, how much time it takes, as well as how they’re conducted, whether it is electronically or needing to be conducted manually or phone or fax, for example. And in the 10th year of the Index, the last 2 years have been an interesting time to be tracking this because we’ve been going through the early part of the pandemic and the second year of the pandemic. So, we’ve seen some different patterns than we have historically seen. One really nice thing is that we have seen the industry automate more transactions out of necessity. And so, with some staff working remotely, there’s just been a need to automate; call centers have not worked as frequently as they had in the past, and the ability [to use] fax machines and to reach someone over the phone has gone down. The availability of electronic transactions and the use of them has really increased significantly; that’s 1 change. The other thing that we’ve seen, I would say, particularly in the last year, is just a shift in utilization. So, we saw volume go down in the first year of the pandemic. And we’ve seen that pent-up demand, leading to more volume in the second year of the pandemic. We’ve seen some shifts in volume, and some shifts in spending as well. And then lastly, I would say the interesting trend that we have seen, which the industry is going to need to figure out how to address, is this change in workforce. We have seen staff leave the healthcare industry. And we have also seen new staff come on [who] are needing to get trained; they take longer to perform certain functions. And so there’s definitely a workforce shift going on right now as well.

KH: What role did Covid-19 play in expediting the use of digital/automated workflows?

AT: This is a strange thing to say, but Covid was a little bit of a silver lining for administrative transactions. It helped to accelerate the adoption of more automated processes, as I mentioned, just out of necessity to help to facilitate an environment where more electronic processes were needed. We just had [fewer] people in person [and] less ability to process things manually. And so we definitely saw that adaptation, during both the first and the second years of the pandemic.

KH: The US health care system spent $60 billion on 9 specific administrative functions, compared with $42 billion the previous year. These 9 functions are:

• Eligibility and Benefit Verification

• Prior Authorization
• Claim Submission
• Attachments
• Acknowledgments
• Coordination of Benefits
• Claim Status Inquiry
• Claim Payment
• Remittance Advice

What accounts for such a dramatic increase of spend on these functions year over year?

AT: We saw an increase in spending for a few different reasons. As you might expect, during the first year of the pandemic, we saw volume go down; people were not going to the doctor, [and] dentist offices were closed, a number of them. We just saw volume and utilization, generally speaking, go down. In the second year of the pandemic, all of that pent-up demand, it came back. We saw pretty significant increases in volume of all transactions across the board, from eligibility to claims to prior authorizations. Volume is 1 of the reasons for the increase in spending. The other reason for the increase in spending, although we had more adoption of electronic processes, which was great to see, those processes were being conducted by new staff. As I mentioned before, we’ve had workforce challenges. Since the pandemic, and particularly in the second year of the pandemic as people retired, left the industry due to burnout, we have [had] some new staff coming in. We also have [had] actual providers and dentists themselves doing the transactions, who are high-cost administrative staff. The actual cost and time to do these transactions, even electronically, [have increased] a little. Those are 2 of the main components that we’ve seen, resulting in increasing spend.

KH: The Index found that the healthcare industry as a whole can save up to $25 billion just by switching to fully electronic transactions, which is pretty remarkable. Do you find that there’s a hesitancy among healthcare professionals to switch to automated technologies?

AT: I think there [are] a few different things going on. There [are] definitely some transactions that are very, very automated and are [already] at a pretty high level of automation. Eligibility is 1 of those [transactions], [and] claim submission is another, of those that are very highly automated. Those transactions also have a very high volume. Just with eligibility and benefit transactions, we [conduct] more than 26 billion of those transactions a year. And so, although most of them are automated, just given the high volume, given the percentage that are remaining, that’s a large chunk of spend.

The reasons for those remaining transactions not yet being automated fall into a lot of different categories. It’s not necessarily that providers don’t want to adopt electronic transactions or that health plans don’t want to adopt them. Most health plans and providers are [conducting], for example, [the above 2 types of] transactions electronically. There are some [transactions], though, that are difficult right now to conduct electronically. We have benefit plans that tend to be more complex that go through the system. We also, during the pandemic, had a lot more people using telemedicine, and we hadn’t anticipated that. The transactions don’t work as effectively as they could for those things. There are definitely some scenarios that we’ve been working on over the past year to help address those situations so that more transactions actually can be conducted electronically. So that’s 1 aspect. Another aspect of this is that there are some [electronic] transactions that have very low adoption within the health care industry: things related to prior authorization attachments and things related to payment, in particular in the dental industry, that are low. And in those use cases, there are different reasons for the lack of adoption, for attachments in particular, related to prior authorization and other uses of attachments. We don’t have a national standard yet. And so, without a standardized way of doing things, there [are] a lot of different ways that people are transmitting attachments. And for some of the claim payment aspects on the dental side, we have heard from providers that they actually like to do things more manually, which is a challenge that in the dental industry, we need to address.

KH: Something else I found interesting was that adoption of electronic processes increased by 5% in both the dental and medical industries, but the cost of administrative functions went up to $60 million over the previous year. Of course, you would think that as the adoption of these technologies goes up, costs would come down. But it’s the inverse of that. Could you talk about that disparity?

AT: It is [the inverse], and that’s related to the 2 factors that I mentioned before that are a little unique about the pandemic. I think in any normal year, you would see costs go down when adoption goes up. What’s different about this year (some of it is probably just this year, but some of it might be a more challenging trend going forward) is that we have all this pent-up demand in volume. So, because there’s such a large increase in volume, even though the percentage of that volume that is electronic has gone up, the volume itself has just gone up so much [more] that the spend related to the manual aspect of that has grown, just [because of] pure volume with the pent-up demand. And that’s transitory; we anticipate that volume will go back down to normal levels as we come out of the pandemic. But what is a little more concerning and challenging is thinking about how to deal with the workforce challenges. We have an aging population, and we have the pandemic that led to more retirements and burnout of medical staff. There really is a need right now for training. And for encouraging new people to come into the healthcare industry. We do have some workforce challenges that have resulted also in just things taking more time to complete, and that results in more cost.

KH: As you mentioned, the staffing shortage really played into the spend on administrative functions going up. Could you talk about that a little more?

AT: When we do this survey, we get quantitative information that comes back from providers. But we also do some in-depth, qualitative surveying with them as well to kind of understand what’s going on: why they have seen an increase in cost, why they’ve seen an increase in time [required to complete] some of these transactions. What we have heard from them [are] a few different things. Definitely the staff have left; some of their more senior staff have retired or burned out, left the industry. So that has left some providers, and some dentists in particular, doing the transactions themselves. [Whereas they] previously had administrative staff [who] were doing those [tasks], they either weren’t able to find people to come in to fill those roles or, just out of short-term necessity, they were doing [it] themselves. Providers [such as] dentists are pretty highly paid administrative staff, and it’s not something they were trained to do. It takes time, and it’s expensive to use that time for those tasks. The other thing is, when you are bringing in these new staff, many of them [are] doing this for the first time, and they’re learning; it just takes longer for them to get up to speed. Also, typically [the staff who] came in during the second year of the pandemic, they’re getting paid more than the staff [who] were there before because of the workforce shortage and because of the competition for staff, and [because] we have an extremely low unemployment rate right now.

KH: Were there any other key thoughts or takeaways from the report that you wanted to add?

AT: I think one of the key things from this report, particularly given that it is our 10-year anniversary, is that we’ve looked at things over the history of the 10 years that we have been tracking this. And when you look at that totality, although we’ve identified areas where we can still focus right now, as an industry, on how we can improve, I think it’s also important to take account of what the industry has already done to make significant progress. In total, if you look at what the industry has already done through the automation that has already happened, we are saving over $187 billion annually. In the healthcare industry, that is a significant amount of money that has come from the automation of just 9 transactions, and that is significant progress. And in the dental industry in particular, I would say, within the past 5 years, the automation of eligibility has almost doubled. That’s significant in a 5-year period of time. We’ve also seen significant automation around claim submission, around remittance advice. So, there are definitely areas [where we] are making leaps and bounds, particularly in the dental industry. Acknowledging all of that great progress, I think, is really important because it shows the industry that even though there are areas [where] we can still improve, we’ve done this in the past, so we can keep doing what we’re doing and continue to make progress.

Reference

1. ADA Health Policy Institute in collaboration with American Dental Assistants Association, American Dental Hygienists’ Association, Dental Assisting National Board, and IgniteDA. Dental workforce shortages: data to navigate today’s labor market. October 2022. Accessed March 5, 2023. https://www.ada.org/-/media/project/ada-organization/ada/ada-org/files/resources/research/hpi/dental_workforce_shortages_labor_market.pdf