Fully Documenting Healthcare Waste Caused by Big Insurance

You think you have heard it before, but it’s worse than you know

Introduction

Today we are discussing the tired old subject of insurance waste. This is new however in the fact that we have combined all the ways that these fat cat bankers are not only wasting your money internally, but also causing work and rework at every level of healthcare.

The Situation

Big health insurers waste about 70% of your healthcare dollar, either directly or indirectly. Today, we take a close look at not only the 400,000 people who make the health insurance industry run actually do, but what their inane requirements and stubborn refusal to honor valid claims and valid, signed, funded contracts costs, but also what the accounting tricks are and also the work they force your doctor to do in order to get paid.

Waste at the Insurance Company

This section details the internal things the big payers do that doesn’t need to be done and as such, are a waste of time, money and effort.

Internal Eliminations

Internal eliminations are the accounting practices that big companies use to hide money and avoid taxes and regulations. Vertical integration is the way this happens. Vertical integration is the consolidation of different stages of the healthcare supply chain under a single organization, often involving insurers acquiring or merging with providers, pharmacies, or other healthcare services. While this might sound harmless, the intent is to hide money to avoid regulation that is designed to bring down the cost of healthcare and improve profits. Christopher Whaley at Brown University states that vertical integration increases costs, causes longer travel times and limits access to care.

Milliman is a global independent actuarial and consulting firm specializing in healthcare, insurance, employee benefits, and financial risk management. They state that Internal eliminations and vertical integrations waste $145 billion or 10.36% of monies paid to health insurers in 2025.

Claims Processing and Adjudication

Your doctor has decided you need a treatment and, in many cases, already performed it when he files a claim for payment on your behalf. Your insurance company just blanket denies up to a third of all claims as medically unnecessary. In most of Europe if your Primary Care Physician (PCP) says you need treatment, you need treatment, and you get it. They are the final arbiter of care, and as your doctor, rightly so. In the US we have these insurance companies who sign contracts to pay for the care you need and then deny it and literally just keep your money.

Health Affairs is the leading journal of health policy thought and research. The peer-reviewed journal was founded in 1981 under the aegis of, a global health and humanitarian organization. Health Affairs explores health policy issues of current concern in domestic and international spheres. Its mission is to serve as a high-level, nonpartisan forum to promote analysis and discussion on improving health and health care, and to address such issues as cost, quality, and access. They found in their 2025 study that $112 billion or 8% of your health insurance premium went to claims processing and adjudication, neither of which is ‘pay for your healthcare.’

Regulatory, Legal, & Lobbying

This category includes mandatory taxes, compliance fees, and governmental affairs.

AHIP is the national trade association representing health insurance providers in the United States, advocating for policies that improve healthcare access, affordability, and quality.

AHIP’s Health Care Dollar report breaks down these regulatory requirements. And sums them as $45 Billion or 3.21% of revenue

Executive Compensation & General Overhead

These are management salaries, human resources, and general corporate maintenance. BDO Executive Compensation Insights and individual SEC filings point to $34 billion wasted or 2.43% of revenue.

Corporate Profit

This is earnings after all medical claims and business expenses are satisfied. NAIC Audited

Financial Data confirms this net industry margin to be $24.8 Billion or 1.77% of revenue.

Cost Containment & Utilization Management

These are labor and systems used for prior authorization and utilization review. AHIP Medical Management Analysis identifies this as a cost-reduction strategy expense worth $30.8 Billion or 2.20% of revenue.

Sales, Marketing and Broker Commissions

These are expenses related to member acquisition and external broker payouts. NAIC 2023 Annual Health Results confirm these competitive acquisition costs of $31.4 Billion or 2.24% of revenue.

Fraud, Waste, and Abuse (FWA) Detection

These include investigative units and software to detect billing errors and fraud. NHCAA Fraud Facts benchmarks the investment in healthcare integrity at $18.0 Billion or 1.29% or revenue.

Reinsurance Premiums & Risk Transfer

Costs to mitigate catastrophic losses through stop-loss and reinsurance. NAIC Risk Reporting

details these financial risk management costs to be $13.5 Billion or 0.96% of premiums paid.

Quality Reporting & HEDIS Compliance

Measurement and reporting of clinical performance metrics. NCQA HEDIS Overview outlines the rigor of performance tracking costs $12.0 Billion or 0.86% of premiums.

Payer Waste Conclusion

The only thing your insurance company should be doing is paying for your healthcare. All of the things above are solely intended to create barriers to accessing care, deny claims and simply keep the money you pay them, instead of providing for you and your family as they are contractually obligated to do.

The Total Payer Unnecessary Administrative Spend: $595.6 Billion

The Total Ratio of Waste to Premiums Paid: 42.5%

Practice and Hospital Spending to comply with Insurance Requirements

The story isn’t over with what the payers waste. They also force your doctor into all kinds of manipulations and gyrations to get paid.

Medical Coding & Clinical Documentation

Administrative and clinical time spent on ICD-10/CPT coding for reimbursement. JAMA BIR Cost Study identifies this as a primary administrative burden eating up $120.0 Billion or 8.57% of your premium money.

Claims Follow-up & Managed Care Appeals

The back-office labor to track payments and manage clinical appeals. AHA Costs of Caring Report details the labor intensity of this category and values it at $115.0 Billion or 8.21% of the cost of health insurance.

Eligibility & Benefit Verification

Pre-visit tasks to confirm insurance coverage and patient co-pays. CAQH 2023 Index monitors

transaction costs for insurance verification and values it at $42.0 Billion or 3.00% of cost.

Audit Response & Regulatory Compliance

Staffing used for post-payment audits and federal compliance. AHA Regulatory Overload Fact Sheet estimates the impact of external reviews to be $39.1 Billion or 2.79% of costs.

Patient Financial Services (Collections)

The cost to collect patient portions as deductibles and co-pays increase. Medical Debt Collection Research tracks the administrative cost of patient revenue cycles and estimates them at $35.8 Billion or 2.56% of revenue.

Denial Management & Re-submissions

Labor required to correct and re-file claims denied by payers. AHA Findings on Denial Trends

highlight the resource drain of administrative barriers and assign the cost of $20.0 Billion or 1.43% of the total spend.

Prior-Authorization Labor

Clinical and administrative labor spent obtaining pre-approval for procedures. AHA Administrative Labor Analysis quantifies time lost to prior-auth hurdles to be $15.6 Billion or 1.11% of the total.

Practice and Hospital Waste due to Payers Conclusion

The administrative burden placed on providers by the multi-payer system represents a massive

non-clinical expense that detracts from available hospital and practice clinical resources.

Total Provider Administrative Spend: $395.7 Billion

Total Percentage of Revenue: 28.26%

That means that all told, combined payer/practitioner wasted costs are $912,000,000,000

As a percentage of the $1.4 trillion given to the big payers they either wasted or caused others to waste 65.56%

The Short Answer

Automate health insurance; get rid of everything that isn’t “pay for your care.” That saves the patient OVER 65% because they don’t pay for all the profits and hurdles the big insurers put in their way. Automating health insurance saves the hospital and practice more than a quarter and for the same reasons. They don’t have to deal with trying to wrestle payments for services already rendered.

We provide the practice and hospital the data-driven Electronic Medical Record (EMR) and detect and pay for procedures documented in real time.

Sentia has this solution in production right now.

The Slightly Longer Answer

The Data-Driven EMR

Universal Medical Language System

The first order of business to streamline and automate these processes is to find a universal nomenclature, a set of concepts that is adequate to document the entire medical process. The National Institutes of Health (NIH) provides the Universal Medical Language System (UMLS) that is adequate for this task. That is what Sentia’s EMR is based on.

Solving the General Problem

Since we have a universal data source, we can then produce a universal medical records system. Let’s look at this a different way. If you pulled your F150 into the dealer’s service drive and noticed that they had an engine documentation system and a transmission documentation system and an electronics documentation system and a suspension documentation system, ad nauseum, you would shout “that’s dumb” and go buy a Chevy, and rightly so.

Why then do we put up with 130+ versions of an EMR one for each specialty? “That’s dumb.” At Sentia, we believe in solving the general problem. When asked to write a medical scheduling system, we didn’t do that. We wrote a system that could schedule WhiteSnake at Reunion Arena in 1987. We programmatically, and in a data driven fashion, described the stage, the room, all the seats, all the jobs and who would perform the. We solved the general problem. Putting a Doctor, a CRNA, a colonoscope and a patient all in the same room at the same time then, became trivial.

If you need to book WhiteSnake at Reunion Arena in 1987, call me, I can make you such a deal.

Integrating Coverage

Now that we have a data-driven EMR, we can pluck procedures performed out of the database and pay for them in real time. Not five minutes, not a week, not a month, not 180 days. Right now.

That completely automates the healthcare finance system. The whole thing.

Automated Health and Wellness

Also, since we have data, we can compare measurements and lab results to averages and determine a patient’s level of health. To incentivize improving that health we offer a 15% discount on coverage. Sentia provides all patients with health education materials based on their out-of-range measurement and lab results. When the patient follows the education and improves his or her measurements and lab results, he or she gets a 15% discount on coverage

Enterprise Resource Management (ERP) Style Practice/Hospital Management

Part of the cost problem is that no hospital knows how much it is making. They don’t have the first clue how much a procedure costs to perform. They just have to wait until the end of the month to see if they have any money left over to call profit.

Sentia provides an Enterprise Resource Planning (ERP) style Practice and Hospital Management System (PHMS) that accounts for every financial transaction that occurs in the enterprise. The makes it possible to run a Profit and Loss (P&L) statement on every facet of the enterprise. You could run a P&L on any employee, room, procedure, consumable, piece of equipment, wing, floor or the entire enterprise, allowing administration to find cash leaks easily and quickly and most importantly without a team of expensive accountants holed up in a conference room typing into excel for months.

Included with the PHMS is a work queueing system. This allows the work to be assigned to the workers instead of the workers assigned to the work. Let’s illustrate. Normally a nurse is assigned to four rooms and is responsible for everything that happens in them. There is always a nurse charting or gossiping at the nurse’s station, while someone else is working his or her fingers to the bone trying to keep up. The first nurse is a misallocation of resources. The second nurse lets things fall through the cracks and misses steps altogether and jeopardizes lives.

A better way would be to aggregate all the rooms within the ward/floor/wing and have all the nurses work on all the patients. The oldest/most urgent task gets automatically assigned to the longest idle nurse.

That way, we don’t have misallocation of resources, and we don’t have nurses “in the weeds” jeopardizing people’s lives with missed tasks. This also accounts for the one-off tasks that take hours or a shift. Several months ago, my mother was in the hospital. They needed to do an MRI but couldn’t perform it until they had the information on one of her implanted devices. Her stay was eight days. Her nurse needed several hours to sit down and do the research on the device and figure out how to turn it off and simply could not find the time. This queueing system could have turned that stay into half a day, freeing resources for more acute cases.

Coverage Delivery Methods

“Gee that sounds great, but how do you tie the bell on that cat?” You were thinking loudly again.

Sentia as the Coverage Company

Sentia provides the coverage either through direct sales, group plans or on healthcare.gov

Sentia as TPA/Captive

Sentia provides health plan administration as a third-party administrator or captive insurance company. We provide the policies and coverage and present the employer with an itemized bill at the end of the month for services rendered to employees

Sentia as Direct Universal Care (DUC) Facilitator

The real hero in this system is the software. This is how we achieve the streamlining and automation of processes. To that end we will provide your local hospital(s) with the software for a small data management fee. They can then partner with specialty and primary care practices in the community and even Ambulatory Surgical Centers (ASCs) to provide all the healthcare a patient will ever need.

For procedures and care not offered locally we can partner with nearby hospitals to provide the rest at a pre-arranged rate.

The patient pays the hospital directly for the coverage, eliminating the big payers and their wasteful processes altogether.

All three of these delivery methods are the same cost and will save patients half. Practices and hospitals also using this suite will save an additional quarter through not only streamlining their own processes, but by not having to deal with the big insurance companies.

Cost

The cost is very simple. It is $10 per month plus the actual cost of the risk.

The Risk

The calculation of the risk is fairly straight forward. Take the incidence of occurrence in the population, multiply by the cost, divide by the number in the population, and then again by 12 to get a monthly premium.

For example: 228 people are going to need an appendectomy in the coming year in a population of 100,000. The average open appendectomy costs about $5,000.

228 * $5000 = $1,140,000

$1,140,000 /100,000 = $11.14

$11.14 / 12 = $0.95 per month for everyone in the population.

That is not a bad price to be covered against an appendectomy.

Sentia does this calculation for every covered procedure, everything the patient will need, and totals it up for the total risk calculation.

The Management Fee

For the privilege of maintaining your coverage data, Sentia Charges $10 per month. This is lieu of everything your legacy insurance company does. WE automated that entire process and charge $10 per month instead of half your premium.

Conclusions

We have shown a way to regulate every financial transaction a practice or a hospital enters into, the Practice/Hospital Management System (PHM). Included with the PHM is a workflow elimination tool that extracts more and better work from employees and streamlines and automates every facet of patient care. All that increases revenue and decreases costs by about a quarter.

We have shown a way to incentivize healthy living in a population and decrease chronic disease and therefore decrease costs for us all in a streamlined and automated manner. This alone has the potential to save $1.34 trillion or about 25% of healthcare spending in the US

We have shown a way to revolutionize the way medical records are thought of, executed, used and searched. This eliminates Epic, all the legacy EMR vendors and makes research a simple pick and click operation, saving millions of lives.

We have shown a way to integrate health coverage into the EMR. The practice or hospital gets paid as the practitioner documents patient care. That eliminates medical coding, verification, adjudication, pre-authorization, denials, delays, insurance networks, rate negotiations, sales/brokers/agents, money for a third-party EMR, skyscrapers in every major city, hundreds of thousands of employees, all the insurance monkey business and reduces cost by about half.

It also eliminates Epic/Cerner AND the legacy insurers.

It also makes your facility leaner faster, more efficient and more profitable.

We have shown three viable adoption plans to move toward lower cost healthcare in the United States. These plans cut more than half from the cost of health coverage and eliminate the big payers and the legacy EMR vendors in one fell swoop. Over time we will eliminate about half the remaining costs as patients get healthier. That means a 75% reduction in costs overall.

We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. This system includes the automation of the health insurance industry completely, eliminating more than half the costs by Sentia as the coverage company, employer based captive or TPA or by direct payments to doctors and practices.

Here are additional points detailing the costs incurred by the legacy insurance companies that you pay currently, in addition to wasting about half your premium, according to Grand View Research and current as of 2023 and that Sentia would eliminate completely:

Medical Records:

• The average practitioner spends $35,925 annually on electronic medical records
• The average patient spends $106 annually on electronic medical records
• The average patient encounter or visit cost for electronic medical records alone is $32

Medical Coding:

• The average practitioner spends $20,286 annually on medical coding
• The average patient spends $60 annually on medical coding
• The average patient encounter or visit cost for medical coding alone is $18

Compliance and Efficacy Reporting:

• The average practitioner spends $17,165 annually on compliance and efficacy reporting
• The average patient spends $51 annually on compliance and efficacy reporting
• The average patient encounter or visit cost for compliance and efficacy reporting alone is $15

Totals:

• The average practitioner spends $73,376 annually on completely avoidable costs
• The average patient spends $217 annually on completely avoidable costs
• The average patient encounter or visit cost for completely avoidable costs alone is $66

Yes, you read that correctly: $66 per visit. That is probably more than the practice makes on the average encounter. There must be a better way. There is a better way and Sentia has it.

Remember also that these costs are over and above the 50%+ your insurance company wastes or shoves into their pockets.

We have designed and are building an ERP style practice/hospital management system that will pinpoint and eliminate cash leaks and inefficiencies in enterprise medical facilities. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is delivered and paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.

If you liked what you read contact us here, on our site, SentiaHealth.com, our parent company SentiaSystems.com, or send us an email to info@sentiasystems.com or info@sentiahealth.com.