Administrative Burden of Regulations Hurts Hospitals, Physicians and Patients

Thursday, November 9, 2017 | Larry Sobal

Administrative Burden of Regulations Hurts Hospitals, Physicians and Patients

I remember back in 2008 when it was reported that General Motors spent more on health care costs than steel to produce cars, and that health care added $1525 to the price of every new car.  Given medical inflation for a decade, I can only imagine what that number is today. A more recent study suggested that a new car will cost you $3800 extra because of government regulation. Ouch! That should get a lot of people’s attention regarding how the rising costs of regulatory requirements impact health care.

What I’m hoping draws similar attention is a recent Regulatory Overload report from the American Hospital Association that indicates an average-sized community hospital spends $7.6 million annually to comply with federal regulations. This equates to $1,200 every time a patient is admitted. Furthermore, the report indicated health care providers in general spend nearly $39 billion a year on administrative activities related to regulatory compliance. The AHA analysis found that an average-sized hospital dedicates 59 full-time equivalents (FTEs) to regulatory compliance; one-quarter of those employees are physicians, nurses and other health professionals who would otherwise be caring for patients.

An average-sized community hospital spends $7.6 million annually to comply with federal regulations.

The study looked at nine areas, ranging from quality reporting to mandatory recordkeeping, in order to assess the administrative impact that existing federal regulations have on providers. The analysis found that providers are required to comply with 629 discrete regulatory requirements from four different federal agencies.

We don’t have to look any farther than last week’s release of the CMS 2018 Hospital Outpatient Payment System (OPPS), at 1133 pages, the Physician Fee Schedule (PFS),  at 1250 pages, and the QPP (aka MACRA) Final Rule, at 1653 pages, to know that we are drowning in legislative paperwork. These are but some of the 50,000+ pages of hospital- and physician-related federal regulations that were published since the Affordable Care Act in 2010. While some regulation is clearly necessary to ensure safe and accountable care to patients, hospitals and physicians are constantly challenged to interpret and implement new or revised regulations while maintaining their core mission to provide high-quality patient care. 

The real impact of, and outcry against, this legislation is growing. The AHA report joins a long list of similar studies focused on identifying, quantifying and proposing ideas for reducing administrative burdens on physicians. And there have been many studies that closely link administrative and regulatory burdens to physician burnout.

A 2016 study published in Health Affairs found that primary care physicians were spending 3.9 hours every week reporting on quality measures for performance programs. The study further estimated that the average annual cost of compliance for these quality programs alone was $40,069 per physician. This is devastating for practices that already operate on the thinnest of margins.

But what about the impact of excessive regulation and administrative burdens on patients?  Earlier this year, the American College of Physicians published Putting Patients First by Reducing Administrative Tasks in Healthcare. This study demonstrated that there are a growing number of administrative responsibilities that physicians are subject to, due to regulations, insurer requirements and other factors that have adverse consequences for physicians and their patients. The research confirmed that administrative and regulatory tasks are a diversion of providers’ time and focus away from more clinically important activities, such as actual care to patients and improving quality.

Is there any hope for improvement? Maybe, if you have faith in two recent CMS initiatives intended to reduce regulatory burdens on health care providers to allow them to spend more time on clinical tasks. Dubbed Patients Over Paperwork and Meaningful Measures, both are designed to reduce administrative burden by evaluating and amending existing provider regulations.

As part of the Patient Over Paperwork initiative, CMS officials will travel the country to gather information on the impact their regulations have on physicians. Those conversations have been taking place informally for weeks. Likewise, Meaningful Measures is intended to streamline quality measures providers are required to meet, rewarding outcomes rather than micromanaging processes.

It’s a very encouraging sign that CMS Administrator Seema Verma recently stated “revising current quality measures across all programs to ensure that measure sets are streamlined, outcomes-based, and meaningful to doctors and patients” and “patient outcomes should be the focus, and there's no indication that required reporting measures actually improve health outcomes.”

The real question is whether all this talk from CMS is serious or just rhetoric. I think there are some good intentions, but if CMS really wants to demonstrate that patients do, in fact, have priority over paperwork, data submission and excessive mouse clicks, then I would have expected to see more expansive simplification in the 2018 QPP Final Rule than we did. On the other hand, this is the first time in a while that CMS leadership is verbalizing a direction that hospitals and physicians would agree with.

llustration: Lee Sauer


Larry SobalLarry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at


About the Author
Larry Sobal

Larry Sobal, MBA, MHA, is CEO of a yet-to-be-named cardiology practice which is transitioning from employment to an independent physician group effective January 1, 2019. He has a 37-year background as a senior executive in physician practices, consulting, medical group leadership, hospital leadership and health insurance.

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