Reducing costs while increasing the quality of service, thus increasing revenue, are main priorities for any business in today’s economic environment. However, in the healthcare sector, these goals have to be met without compromising patient safety. Managing the credentials of all hospital employees and professional visitors can mean high administrative costs.  However, failure to manage these processes leaves patients at greater health and safety risks, while exposing hospitals to major financial risks.
The Cost of Credentialing May Be High…
By definition, credentialing is the process of obtaining, assessing, and verifying the background information and professional qualifications of healthcare personnel, including anyone who has the potential for contact with patients.
Credentialing is a vital component of regulatory compliance with standards set forth by the Centers for Disease Control and Prevention (CDC), The Joint Commission (TJC) and other authorities.
It costs a typical hospital about $6,700 per patient bed each year to establish and maintain appropriate credentialing within the facility. Most of that cost comes from the staff salaries required for credentialing. Additional costs arise from the use of multiple information systems as well as credential fulfillment which includes immunizations and continuing education. For an average-sized hospital of 161beds, implementing a credentialing program will typically be $1.1 million per year in system and personnel related costs.
But the Cost of Not Credentialing Is Even Higher…
Clearly, at over $1 million the cost of credentialing is significant, but not credentialing could cost your hospital even more. In fact, the cost of not credentialing is estimated to be at least five times as great!
Direct Costs An adverse event is defined as an unintended injury or complication that is not caused by the patient’s underlying disease. An estimated 3.4 million adverse events occur in acute hospitals annually. Adverse events can result in a longer hospital stay, disability or even death.
Adverse events can also create a sizable financial burden for hospitals. With recent changes in Medicare reimbursement and insurance company policies, hospitals will not be reimbursed for the costs incurred from the extended length of stay and medical treatment associated with these events. Adverse events, which include hospital-acquired infections, falls and violent crimes, cost an average-sized hospital $32,100 per bed each year.
An average-sized hospital can also suffer a yearly total loss of more than $600,000 through theft. High value drugs and medical devices as well as common products such as syringes are often the targets of criminals and drug addicts. Controlling access to hospital supplies through criminal background checks and drug tests is essential in reducing this annual cost.
For an average hospital, the direct costs of not credentialing are estimated to exceed $5.8 million per year.
Indirect Costs
While indirect costs are not as easy to quantify as direct costs, they still prove to be a heavy financial burden. According to a survey of 221 U.S. healthcare institutions, at least 35 percent of them faced staff shortages during flu season; an estimated cost of $133,000 per hospital annually in healthcare worker sick leave. This loss of time could be drastically reduced by including proper vaccination policies as part of the credentialing process.
When medical personnel are not properly credentialed, the risk of preventable adverse events drastically increases. In turn, a greater number of adverse events can lead to higher malpractice litigation costs. According to the American Hospital Association, average annual expenditure in 2011 was $135.1 million per hospital, and according to Malpractice Litigation and Medical Costs, between 2 and 10 percent of that amount was spent on malpractice litigation.
Opportunity Costs and Reputation Impact
The cost of lost opportunities and damaged reputation are difficult to calculate, but cannot be ignored. Accountable Care Organizations (ACOs) are having a major impact on healthcare. These groups of doctors, hospitals and other healthcare entities come together to improve patient care, and in order to participate in these programs, hospitals are responsible for the credentialing status of all participating healthcare workers.
In addition, consumer perception can now have a dramatic impact on a hospital’s bottom line. The Hospital Consumer Assessment of Health Plans Survey (HCAHPS) is designed to allow consumers to rate their inpatient experiences and perception of care. Low HCAHPS scores have a negative impact on a hospital’s reputation, and they can also decrease Medicare reimbursement.
The Cost of Not Credentialing
The combined cost of a credentialing program is estimated to reach $1.1 million each year, while the direct costs of not credentialing can cost well over $5 million per year. A successful credentialing program can help your hospital improve clinical quality and build a reputation for safety and quality of care while saving millions of dollars in unnecessary expenditures. Can your hospital afford not to have a comprehensive credentialing program?
Adverse events cost an average hospital over $5.1 million per year!  Can your hospital afford not to have a credentialing program?  Click here to download our white paper to learn more about the cost of not credentialing.

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