Ask anyone in the U.S. healthcare industry where we should focus our cost-cutting efforts, and you’ll likely hear a familiar answer: reduce medical spend. It’s a refrain that drives some of the industry’s most dramatic strategies - vertical integration, tighter care authorization, narrower formularies, and heavy investment in point solutions promising to “bend the curve” through better disease management or wellness outcomes.
And yet, most of those efforts miss one critical detail: they rely on a combination of time, behavior change, and assumptions that are difficult to measure or control. The savings are theoretical, the results delayed.
Meanwhile, there’s another area of spend that’s far more immediate, far more controllable, and far less scrutinized: administrative overhead.
Administrative waste is estimated to account for $266 billion annually in unnecessary U.S. healthcare costs every year. Unlike medical trend or utilization, these costs are often fully within a payer’s control - and unlike other savings initiatives, the impact can be felt in this fiscal year, not the next.
So why is this area so overlooked?
The Fallacy of the Big Fix
Part of the problem is that tackling administrative costs gets conflated with massive transformation initiatives: $50M modernization programs, new core systems, large-scale reorgs, etc. These efforts are costly, slow, and often misaligned with how tech and markets move. Leadership turns over. Scope changes. A new solution is born…and outdated before it’s even launched.
The result? Payers are stuck in an endless cycle of tech debt and reactive patchwork. It's no surprise that, year after year, administrative costs remain stubbornly high.
What’s Actually in Your Control
At its core, administration is a data problem: data about eligibility, benefits, providers, claims, care gaps. Systems don’t talk. Teams manually reconcile files. Processes break without anyone noticing. And yet, solving for this chaos is too often outsourced to the slowest-moving, highest-margin players in the system: large consultancies and IT contractors.
The irony is this: many health plans are cutting costs by trimming internal IT teams - teams that, if enabled with the right tools and architecture, could generate real savings through improved data quality, faster time-to-insight, and lower integration overhead.
Instead of investing in capabilities that improve data integrity, reduce human dependency, and increase operational agility, organizations continue to spend on people-intensive workarounds and vendor-managed complexity.
We’re not saying don’t address medical spend. We’re saying: start with what you can actually control.
A Call to Refocus
The U.S. healthcare system is in need of more than another patch. It needs a flexible infrastructure that allows for progress - piece by piece, team by team, without the need for a complete pause or reorg.
The answer isn’t a single “Big Bang” transformation. It’s building a system that lets you evolve continuously without losing momentum.
Administrative savings aren’t theoretical. They’re real, measurable, and within reach.
It’s time to focus on what’s actually fixable.
