http://www.nejm.org/doi/full/10.1056/NEJMsa022033#t=articleResults said:
Results
Insurance Overhead
In 1999 U.S. private insurers retained $46.9 billion of the $401.2 billion they collected in premiums. Their average overhead (11.7 percent) exceeded that of Medicare (3.6 percent) and Medicaid (6.8 percent). Overall, public and private insurance overhead totaled $72.0 billion 5.9 percent of the total health care expenditures in the United States, or $259 per capita.
The overhead costs of Canada's provincial insurance plans totaled $311 million (1.3 percent) of the $23.5 billion they spent for physicians and hospital services. An additional $17 million was spent to administer federal government health plans. The overhead of Canadian private insurers averaged 13.2 percent of the $8.4 billion spent for private coverage. Overall, insurance overhead accounted for 1.9 percent of Canadian health care spending, or $47 per capita (Table 1).
Employers' Costs to Manage Health Benefits
U.S. employers spent $12.2 billion on internal administrative costs related to health care benefits and $3.7 billion on health care benefits consultants a total of $15.9 billion, or $57 per capita (Table 1). Canadian employers spent $3.6 billion for private health insurance and $252 million to manage health benefits, or $8 per capita.
Hospital Administration
The average U.S. hospital devoted 24.3 percent of spending to administration. Hospital administration consumed $87.6 billion, or $315 per capita (Table 1). In Canada, hospital administration cost $3.1 billion 12.9 percent of hospital spending, or $103 per capita.
Nursing Home Administration
California nursing homes devoted 19.2 percent of revenues to administration in 1999. Nationwide, U.S. nursing homes spent $17.3 billion on administration, or $62 per capita (Table 1). Administration accounted for 12.2 percent ($882 million) of Canadian nursing home expenditures, or $29 per capita.
Administrative Costs of Practitioners
In the United States, administrative tasks consumed 13.5 percent of physicians' time, valued at $15.5 billion. Physicians spent 8.3 percent of their gross income on clinical employees; the administrative portion (13.5 percent) of compensation of these employees was $3.0 billion. Physicians' costs for clerical staff averaged 12.3 percent of physicians' gross income, or $33.1 billion. The one third of physicians' office rent and expenses attributable to administration represented 4.6 percent of physicians' gross income, or $12.4 billion. Finally, the half of other professional expenses (a category that includes accounting and legal fees) attributable to administration accounted for 3.2 percent of physicians' income, or $8.6 billion. In total, physicians' administrative work and costs amounted to $72.6 billion $261 per capita, or 26.9 percent of physicians' gross income.
The administrative costs of dentists and of other nonphysician practitioners totaled $8.6 billion and $8.8 billion, respectively. Overall, U.S. practitioners' administrative costs amounted to $89.9 billion, or $324 per capita (Table 1).
Canadian physicians devoted 8.4 percent of their professional time to practice management and administration, valued at $592 million. They spent 6.1 percent of their gross income on clinical office staff. The administrative portion (8.4 percent) of compensation of these employees amounted to $53 million. Physicians' costs for clerical staff averaged 6.9 percent of their gross income, or $716 million. The one third of physicians' office rent and expenses attributable to administration totaled $193 million. Finally, the 50 percent of other professional expenses attributable to administration cost $116 million. In total, physicians' administrative work and costs amounted to $1.7 billion $55 per capita, or 16.1 percent of their gross income.
The administrative and billing costs of Canadian dentists and of other nonphysician practitioners totaled $928 million and $660 million, respectively. Overall, the administrative expenses of Canadian practitioners totaled $3.3 billion, or $107 per capita (Table 1).
Administrative Costs of Home Care Agencies
U.S. home care agencies devoted 35.0 percent of total expenditures to administration $11.6 billion, or $42 per capita (Table 1). Administration accounted for 15.8 percent of Ontario's home care expenditures. Throughout Canada, home care administration expenses totaled $408 million, or $13 per capita.
Total Costs of Health Care Administration
In the United States, health care administration cost $294.3 billion, or $1,059 per capita (Table 1). In Canada, health care administration cost $9.4 billion, or $307 per capita. If the difference of $752 per capita were applied to the 1999 U.S. population, the total excess administrative cost would be $209 billion. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States, as compared with 16.7 percent of health care expenditures in Canada.
Trends in Administrative Employment in Health Care
In the United States, 27.3 percent of the 11.77 million people employed in health care settings in 1999 worked in administrative and clerical occupations (Table 2Table 2
Administrative and Clerical Personnel as a Percentage of the Health Care Labor Force in the United States, 1969 through 1999.). This figure excludes 926,000 employees in life or health insurance firms, 724,000 in insurance brokerages, and employees of consulting firms.26 In 1969, administrative and clerical workers represented 18.2 percent of the health care labor force (Table 2). In Canada, administrative and clerical occupations accounted for 19.1 percent of the health care labor force in 1996, 18.7 percent in 1986, and 16.0 percent in 1971. (These figures exclude insurance personnel). Although the United States employed 12 percent more health personnel per capita than Canada, administrative personnel accounted for three quarters of the difference.
