Prior Authorization: Healthcare’s biggest bottleneck? – Part 1

December 14, 2017

Prior Authorization: Healthcare’s biggest bottleneck? – Part 1


In today’s highly complex healthcare system many administrative burdens are contributing to skyrocketing physician burnout rates of between 40 and 60 percent, according to a report from AMA Wire. While most widely reported on, feelings of frustration and disillusionment are not exclusive to doctors; all clinicians are feeling the crunch, including nurses, CRNAs and PAs. This situation is scary and does not bode well for healthcare in this country, but what is causing this spike in disillusionment and disengagement? While increasing bureaucracy and forced digitization of healthcare are commonly cited as top contributors to growing physician frustration, there is one particular task that many clinicians feel takes the cake, and that is prior authorization (PA).


Doctors go to school for a very long time, take on massive loan debt and train for hundreds of hours even after finishing med-school. They don’t typically make these sacrifices out of the kindness of their heart, they do it to make a living and are passionate about helping people and caring for the sick. The same can be said about clinical support staff – they train hard and just want to take care of people. Inefficient and broken models like PA eat up huge chunks of time that would otherwise be spent seeing or treating patients. Put simply, clinicians want to be clinicians, not administrators or paper pushers, so it is easy to understand why they are frustrated with the growing list of tasks that take their focus away from patient care. Prior Authorization is not new and has long been an arduous task for clinicians. However, as more and more specialty treatments emerge which require increasingly cumbersome PA processes, it is not surprising that PA is climbing the list of pain points commonly cited by healthcare providers. 


To put the prior authorization plague into perspective, let’s look at the numbers. A recent AMA survey of 1,000 physicians providing 20 or more hours of care a week, showed that doctors receive an average of 37 PA requests a week. You may or may not think that 37 is a lot over the course of a week, but those 37 PA requests took an average of 16.4 hours to process. Extrapolate 16.4 hours a week over a year and clinicians are spending around 40% of their time annually doing paperwork, making calls and or sending faxes just to navigate PA and get medications to their patients. The time burden is so great that about one-third of physicians have staff members exclusively focused on PA. You may be thinking phone and fax – that’s the problem right there – we will get back to that.  


Before we talk about the Stone Age communications technology supporting PA, let’s go a little deeper into the numbers, and put this problem into perspective. Physicians spend an average of 13-16 minutes with a patient, per visit as reported in the Medscape Physician Compensation Report 2016. Conservatively, that means physicians could be seeing and treating more than 3,000 additional patients in a year if it wasn’t for PA. Eliminating, or at least limiting, time spent of PA would also undoubtedly result in happier doctors and nurses, as they’d be able to focus on their core competencies and maintain a better work-life balance. Also, as providers can see more patients, it will increase access to care by making it easier to get an appointment.


Now that we understand how many patient visits PA is disrupting let’s try to put a dollar amount to the PA bottleneck. On average, primary care patient visits typically net out to between $80 and $90 in revenue per visit. This number goes up with more specialized physicians, although for the sake of this exercise, we will look at primary care. Let’s say the average physician sees four patients an hour at 15 minutes per visit. That would mean that the 853 hours or 3,000 patient visits spent on prior authorization nets out to a loss of over a quarter million dollars a year ($272,960), per physician. It suggests that a four-physician practice is losing around a million dollars a year to PA. That number goes through the roof for hospitals and health networks. If PA’s negative impact hasn’t fully sunk in yet, let’s take one more look at it from a national level. According to 2016 census data, there are 953,695 physicians in the US, and with each physician losing $272,960 per year, PA costs the US physician community over a quarter TRILLION dollars or 260 BILLION, annually.


So, why does ZappRx care about PA? This brings us back to phones, fax machines, and paperwork. Much of the delay associated with PA can be attributed to inefficient communications amongst the key players, who typically rely on outdated and ineffective tools when they need to process PAs. You might be asking, why has every other industry digitized communications and doctors are still beholden to the fax machine to secure authorization from insurers and get drugs from the hands of pharmacists to patients? If this is your question, ZappRx has an answer for you. Our mission is to break down the walls between all stakeholders in the ecosystem including patients, providers, insurers, and particularly those interacting with specialty pharmaceuticals, which come with their own unique set of complex PA-related challenges.


What can be done to solve the PA challenge in our healthcare systems? Stay tuned for our next installment on PA, where we will dive deeper into specialty pharmaceuticals and the PA process. We will examine each step of the process from diagnosis and prescription to delivery. We will also look at potential points of failure contributing to the PA bottleneck and outline tools and strategies to address them.

What has been your practices’ standard experience with PA? Feel free to share below as we continue on our discussion!