BUSI 311 Week 5 Discussion Board Forum 5 Example

Discussion Board Forum 5: Managing Costs and Revenues

BUSI 311 Introduction to Healthcare Administration, Discussion Board Forum 5

Thread by [Student Name]

The practice, its figures and the classmates are composites; the textbook, Scripture and the peer-reviewed articles cited are real.

Our internal medicine practice collected about $4.2 million last year and kept a margin of under 3%. When I reviewed our expenses, the surprise was not rent or supplies but the cost of getting paid: four full-time billing staff, a clearinghouse fee on every claim and hours of medical assistant time spent on prior authorizations and denials. Buchbinder and Shanks (2017) explain that managers can improve financial performance by controlling costs, by improving revenue or both, and that in health care the two are linked, because much of a practice's cost exists only to secure its revenue.

Research shows how large that cost can be. Tseng et al. (2018) applied time-driven activity-based costing inside a large academic health system and reported that billing and insurance activities took 13 minutes and $20.49 for each primary care visit, 14.5% of the professional revenue for that visit, and 32 minutes and $61.54 for each discharged emergency visit, 25.2% of its revenue. For a primary care practice, nearly one dollar in seven may go to the work of collecting the other six.

Payer rules drive much of that work. Marr et al. (2026) found that Medicare Advantage beneficiaries in contracts with the highest prior authorization rates were 4.7 percentage points, or 44%, more likely to leave their plan than those in contracts with the lowest rates, which suggests that patients feel the burden as well as practices. For us, three plans account for most of our prior authorization requests, and the same three produce most of our denials. That concentration matters, because it means a few contracts drive a large share of our administrative cost and could be renegotiated with evidence.

I proposed three changes: track billing cost per visit by payer so we can see which contracts cost most to administer, centralize prior authorization with two trained staff members and bring the denial data to our annual contract negotiations. Jesus taught that trustworthiness with small things shows trustworthiness with large ones (English Standard Version Bible, 2001/2016, Luke 16:10). Careful stewardship of small costs protects the practice's ability to serve patients, especially when margins are as thin as ours. Every dollar spent arguing with a payer is a dollar not spent caring for a patient.

Reply to Jasmine

Jasmine, you proposed cutting one of your clinic's three billing positions to close a budget gap. I understand the pressure, since payroll is usually the largest controllable cost, but billing is one area where cuts can cost more than they save. Tseng et al. (2018) showed how much time each claim requires; with fewer staff, claims wait longer, denials go unappealed and revenue is lost, often exceeding the salary saved. Turnover adds to the risk. According to Abraham-Aggarwal et al. (2026), the replacement of a single physician faculty member runs 60% to 78% of a year's salary once vacancy and the slower first year are counted, and although billing staff cost less to replace, losing an experienced coder to burnout after a cut can be expensive in missed charges and errors.

Before cutting, it may be worth measuring your denial rate and days in accounts receivable. If those numbers are poor, the billing team may need better tools rather than fewer people. A claim scrubber that catches errors before submission, or training on the payers with the most denials, often recovers more than a salary costs. If the numbers are good, a smaller team might work, but the decision should rest on data rather than on the size of the budget gap. Proverbs observes that one who is slack in his work is a brother to him who destroys (English Standard Version Bible, 2001/2016, Proverbs 18:9); a billing office stretched too thin can become slack through no fault of its own. Does your clinic track how much revenue is written off each month because claims were denied and never appealed?

Reply to Derek

Derek, your practice's decision to drop a Medicare Advantage plan because of its prior authorization demands is a hard trade-off, and I respect that your managers looked at the numbers before deciding. Marr et al. (2026) found that Hispanic, Asian, Black and dual-eligible beneficiaries were more likely to be enrolled in plans with high prior authorization rates, so dropping such a plan may fall hardest on patients who already face barriers. At the same time, the administrative cost is real. Schaffer et al. (2026) showed that centralizing prior authorization in one Veterans Affairs network allowed six staff to handle work previously spread across 161 clinicians while improving timeliness, which suggests that redesigning the process might reduce the burden enough to keep the contract. Your practice could also send the plan's medical director a summary of approval rates; if most requests are approved after delay, the plan may agree to exempt your physicians from routine requests, a practice some plans now call gold carding.

A middle path could be to stay in the plan for a year while centralizing prior authorization and tracking the plan's cost per visit, then decide with real data. Proverbs warns against holding back help from people who need it when we are able to give it (English Standard Version Bible, 2001/2016, Proverbs 3:27), and a practice that can keep serving these patients at a manageable cost has some obligation to try. Has your practice told affected patients how to keep their physician, perhaps by switching plans during open enrollment, and offered help comparing their options?

References

Abraham-Aggarwal, K., Spertus, D., Sheth, A., McCarthy, J., Parajon, D. C., & Kacker, A. (2026). Cost of turnover in academic otolaryngology departments. Otolaryngology-Head and Neck Surgery. Advance online publication. https://doi.org/10.1002/ohn.70480

Buchbinder, S. B., & Shanks, N. H. (2017). Introduction to health care management (3rd ed.). Jones & Bartlett Learning.

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Marr, J., Trivedi, A. N., & Meyers, D. J. (2026). Prior authorization in Medicare Advantage: Beneficiary exposure and plan disenrollment in 2021. Health Affairs, 45(7), 756-763. https://doi.org/10.1377/hlthaff.2025.01373

Schaffer, K., Patel, A., Andrews, C., Beck, N., Tatter, J., Agnew, M., Nation, T., Marin, J., Pressley, B., & Taylo, J. (2026). Implementation and workload impact of a Veterans Integrated Service Network (VISN) centralized prior authorization program. American Journal of Health-System Pharmacy. Advance online publication. https://doi.org/10.1093/ajhp/zxag308

Tseng, P., Kaplan, R. S., Richman, B. D., Shah, M. A., & Schulman, K. A. (2018). Administrative costs associated with physician billing and insurance-related activities at an academic health care system. JAMA, 319(7), 691-697. https://doi.org/10.1001/jama.2017.19148