Friction: The Hidden Operational Drag Driving Up Healthcare Costs

Friction: The Hidden Operational Drag Driving Up Healthcare Costs

Policymakers and the healthcare industry are spending considerable energy and resources to make pricing and payment dynamics more visible. That's an important shift. But visibility isn't the finish line.

While we often talk about affordability as the headline issue, friction is one of the biggest reasons costs keep rising. When the system is designed to create friction as a cost containment mechanism, it can't move smoothly, time and money get burned on activities that don't improve quality or outcomes, and the consequences ultimately fall on patients and caregivers.

A system designed around friction can't produce affordability. It only produces delay, waste, and frustration.

What "friction" really means in healthcare

In healthcare, friction is the drag created when stakeholders operate with different or incomplete information-or don't trust the information they do have. It's the administrative and operational "tax" we pay when:

• A claim can't be processed cleanly the first time
• Contracts and reimbursement terms are interpreted differently by each party
• Network participation shifts faster than patients can reasonably track
• Policies often address a single component of the market, while others optimize around them

Every extra touchpoint creates waste, drives up costs, and adds complexity. For patients, "friction" shows up as:

• A claim denial that requires hours of phone calls
• A bill they didn't expect or don't understand
• Navigating the constant network shifts that fragment the continuity of care, forcing them to start over mid-treatment

For payers and providers, friction is the administrative overload of endless back-and-forth processes built to defend positions instead of resolving issues.

Why friction keeps winning

Healthcare is complex by nature, but much of today's friction is self-induced. Driven by fragmented data, uneven incentives, and decisions made without a shared understanding of "common ground". Each stakeholder is forced to operate in a silo, protecting their own outcomes, even when everyone is ultimately serving the same person.

Even when good intentions exist, the system is essentially structured for disagreement:

• Different versions of reality. Payers and providers often evaluate the same situation through different datasets, benchmarks, and definitions.
• Misaligned incentives. Work that reduces effort for one can create cost or risk for the other, so progress stalls.
• Administrative work becomes the default. When a clean resolution isn't possible, resources get diverted to adjudicate, appeal, resubmit, and reconcile.

Transparency is a lever, under the right conditions

This is why data transparency matters, but also why alone it's not enough. Transparency only creates value when it's objective, verifiable, and actionable-when it helps stakeholders move from debate to alignment over a shared source of truth.

Think of it this way:

• If transparency simply "shines a light," it may confirm what each side already believes.
• If transparency is embedded in our healthcare infrastructure, it creates a market-based source of truth. It changes how decisions get made and reduces the friction that drives waste.

When payers and providers can reference the same facts, the conversation shifts from "who's right?" to "what do we do next?"

The next horizon: Incentives that reduce friction, not just expose it

Today, many policy conversations still tend to separate payer and provider dynamics, but friction lives in the space between them.

Now imagine there were incentives, policy-driven or market-driven, that rewarded clean claims the first time. When both sides benefit from accuracy upfront, the system moves from adversarial behavior to share accountability.

That's the next big opportunity. Not just publishing data but designing an environment built for efficiency.

What would it take to incentivize collaboration rather than friction and escalation?

A holistic approach would support transparency evolving from a compliance exercise into a system improvement strategy. Some potential frameworks might include:

• Mutual-benefit guardrails Incentives that make it financially and operationally advantageous for both sides to reduce avoidable back-and-forth.
• Objective data as an arbiter Shared benchmarks that help resolve disputes earlier, before they become denials, delays, or patient confusion.
• A system-level view of "waste" Measuring and addressing inefficiency across the process life cycle, not just within one organization's walls.

Clarity in Action

Economic outcomes in healthcare extend well beyond the balance sheet. Workforce stability, benefit affordability, and access to care are all directly linked to the financial health of our industry.

While the clarity providers derive from actionable transparency does not eliminate financial uncertainty, it can reveal patterns, highlight risk earlier, and help leaders understand where operational friction and administrative burden are quietly eroding performance.

Organizations that leverage this level of transparency gain more than efficient workflows and financial control. They gain the ability to plan with confidence, adapt with intention, and sustain their mission of serving patients in an increasingly complex healthcare environment.