Paper Pusher

I was surprised that this paper by Douglas Staiger et. al. in the New England Journal of Medicine didn’t get much attention when it was first released—it shows a surge in hiring for health care administrative types in Massachusetts after its health care reform act phased in. From 2005 to 2009, there’s about a 18.4% surge in hiring in those positions as opposed to 8% across the country (hiring for physicians essentially stayed stable). There have been anecdotal reports corroborating this kind of result—see this Kaiser Health News report talking about a few hospitals in New England. If you happen to believe the health care labor force needs reorganization and innovation, then this sort of thing bears close watching.

The big, broad concern is that the health care system has too many paper pushers at the moment—too many people interfacing with a clumsy insurance system, too many people collecting bills, too much overhead, and so on. There’s an argument that, in order to keep up with compliance with the Affordable Care Act, hospitals will have to hire more administrative staff for regulations—there’s too many Medicare dollars at stake. I had a conversation with Ashish Jha of Harvard a while back in which he noted, “For the longer run that worries me; what we need is not more administrative staff in health care; I feel like we’ve got plenty of those in general.”

To what extent might such administrative staff improve care? The Kaiser Health News report talks about IT workers getting hired in health care, and if you consider the competing push to get electronic medical records into our hospitals, you need IT people to install them, to maintain the various firewalls between patient data and prying eyes.

Then there are worries about Accountable Care Organizations, the program that hopes to finally change the way health care is paid for in this country—that is, to pay on a population basis for overall health, rather than for each individual incident of health care. Austin Frakt in The Incidental Economist spends some time on a paper about the implications of ACOs—that is, caring for a health care population will require more administrative staff for primary care physicians, to “coordinate and manage health care” and make sure the quality measures are being hit. The paper wonders where the up-front resources will come from, which makes sense—primary care physicians are, after all, the worst-paid doctors in the U.S.

Nevertheless if there are going to be cuts (there will be), the question is where the money will come from. Efficiencies among administrative staff? Less money for primary care physicians? Less money for specialists? It’s clearly unclear, and there are a lot of moving parts. My guess is, if increasing productivity is a priority, you can’t see this kind of growth among administrative staff as Massachusetts has seen.