Administrative costs in the U.S. health care system: the problem or the solution?

The estimates of potential savings as a result of reductions in administrative costs have generated considerable controversy. In response to this debate, the Robert Wood Johnson Foundation sponsored an invitational workshop for policymakers, health services researchers, and key stakeholders in the health care system. The workshop, conducted by the Alpha Center in February this year, provided a framework for identifying, measuring, and weighing the value of administrative costs and served as a vehicle for discussion of these issues. This article summarizes the presentations, the issues raised, and questions for further research. Overall, the papers and presentations emphasized that while the focus of attention has been on the controversy over whether particular aggregate estimates of administrative costs and potential savings are correct, the fundamental underlying issue is how the health care system might best be managed.