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The Editors

U.S. Health Care Is Tied Up in Red Tape

Doctors, hospitals and insurers need standardized electronic billing systems.
Expensive bills.

Expensive bills.

Photographer: Craig F. Walker/The Denver Post via Getty Images

The American health-care system has a unique problem with paperwork. The sheer number of participants -- doctors, hospitals, clinics, insurance companies, patients -- makes settling payments complicated, time-consuming and really expensive. The share of U.S. health-care spending devoted to administrative costs, including billing, is roughly three times what it is in other affluent countries, and it's a major reason the U.S. spends twice as much on health care.

Some health clinics employ more clerks than care providers -- not just to generate invoices but to send along the patient information insurers need to approve treatments, to dispute insurer decisions denying payment, to fix mistakes, to handle patients' questions, and on and on. For every $1 billion in revenue, the health-care system employs the equivalent of 770 full-time people to settle the bills. That's almost eight times more than other industries. And doctors have to spend inordinate time dealing with red tape.