Administrative spending by health plans continues to rise for many reasons, including investment in information technology, according to a study by Capgemini, which surveyed health plans that cover over 16 million lives. The consulting company found a huge jump in 2002 over 1999 in IT spending, says Peter Kongstvedt, MD, a vice president of Capgemini. "There are a lot of costs to put in the systems that increase efficiencies," says Kongstvedt. "Back in the mid-'90s, there was a really big press by provider-sponsored plans. 'Let's get the middleman out of here. We're wasting money.' They all tried to do it and they all lost a fortune." As the installation costs disappear, the administrative costs may dip, but even that's not a certainty. "It's ironic," says Kongstvedt. "The efficiencies that automation has brought have been offset by an increase in volume. We saw that the percentage of electronic claims submitted by physicians doubled, but also the number of claims submitted went up and it completely washed out the savings that automation brought. Just the increase in volume."
SOURCE: RESULTS OF THE 2002 MANAGED CARE BENCHMARKING STUDY, CAPGEMINI