The Inefficiency of the Status Quo

When it comes to maintaining your hospital’s compliance in the face of with ever-changing regulations, the struggle is real and expensive. Hospitals of all sizes spend boatloads of money on GRC and risk solutions to stay compliant. Plus, clinical teams working on compliance –physicians, nurses, technologists – spend inordinate amounts of time away from patient-care responsibilities trying to decipher and implement the latest rules.

Do you know just how expensive it is for hospitals to stay compliant and maintain the status quo? Let’s look at state-level expenses first.

State of Shock

Last year, the Oregon Association of Hospitals and Health Systems and Pacific University collaborated on a report titled Cost Burden: Evaluating the Financial Impact of Oregon State Regulatory Compliance on Oregon Hospitals and Health Systems. Some of its key findings:

  • In 2018, Oregon hospitals spent a total of $126 million on labor to comply with over 2,000 rules created by the state
  • Of these facilities, large hospitals each spent approximately $3.9 million on labor, and smaller hospitals each spent close
    to $0.5 million
  • Staff salaries represented 85% of total compliance costs for all hospitals
  • At large hospitals, 50% of compliance departments spent 40 hours or more a week overseeing state regulations
  • Many new state laws and regulations are effective as soon as the governor signs them, giving hospitals no time to understand the new rules, train their staffs, or establish procedures — and instantly making them non-compliant

National Numbers

Costs skyrocket when hospitals in all 50 states try to meet federal regulations, as detailed in the 2017 AHA report, Regulatory Overload: Assessing the Regulatory Burden on Health Systems, Hospitals and Post-acute Care Providers. Here are just some of the average costs that community hospitals (160 beds) incurred in 2016:

  • Nearly $7.6 million on administrative activities
  • Almost $760,000 to meet meaningful use administrative requirements
  • Around $411,000 in systems upgrades
  • Approximately $709,000 annually on the administrative aspects of quality reporting

Naturally, the larger the hospital size, the greater the administrative costs. Hospitals with post-acute care beds paid $9 million, whereas large hospitals with at least 400 beds paid $18.8 million in administrative costs. Hospitals of all sizes also spent $3.1 million on administrative compliance activities related to conditions of participation for Medicare programs, plus another $1.6 million on billing and coverage verification.

In 2016, the administrative aspects of federal regulatory compliance worked out to $38.6 billion — or more than $47,000 per hospital bed. And every time a patient was admitted in 2016, hospitals would incur $1,200 in regulatory burdens alone. As high as the $38.6 billion figure is, it does not account for complying with regulations made by federal agencies, such as the FDA.

Thus, the “complete” costs of federal regulatory compliance for hospitals is likely much, much higher.

Simplifying Regulatory Compliance

The proliferation and vast amount of regulatory changes can easily exceed your hospital’s ability to understand and implement them in a timely manner. And if your hospital’s spending a lot of money but still can’t maintain compliance with state, federal, and agency regulations, that could spell disaster.

You need a more effective spend stat. Take a look at what youCompli can do to help you monitor, translate, act upon and track compliance activity throughout your hospital. Get started here.