For decades, healthcare has responded to new challenges with more administration—more documentation, more approvals, more coding, and more compliance. Each new requirement may be well-intentioned, but together they have created a system increasingly focused on managing transactions instead of improving health.
The result is a paradox. The United States spends more on healthcare than any other nation, yet patients struggle to navigate a system burdened by paperwork, providers face record levels of administrative burnout, and organizations devote enormous resources to managing regulations rather than preventing illness.
Joanne M. Frederick, CEO of Government Market Strategies, believes the industry’s greatest challenge is no longer simply controlling costs or expanding access—it’s reducing operational complexity.
“The future of healthcare depends on redesign, not just more regulation,” Frederick says. “We need simpler operations, better-aligned incentives, stronger program integrity, and technology that helps us see meaningful patterns rather than manage every transaction one at a time.”
Medicare Advantage illustrates the challenge. Risk adjustment was designed to ensure health plans caring for sicker beneficiaries receive appropriate resources. Frederick argues the concept remains sound, but the system surrounding it has become increasingly difficult to administer.
“The problem isn’t risk adjustment itself,” she says. “The problem is the level of complexity around it.”
Years of evolving regulations, audits, and documentation requirements have created an environment where compliance demands significant administrative effort. While health plans should continue strengthening provider education and internal controls, Frederick believes the industry should also ask whether reimbursement has become unnecessarily complicated.
Healthcare often responds to compliance concerns by adding another checklist, another review, or another approval step. Over time, those incremental changes accumulate into a significant burden for clinicians.
“Providers shouldn’t be treated as data entry specialists,” Frederick says. “Organizations should spend less time asking providers to document more and more time asking why documentation has become so difficult in the first place.”
That same philosophy extends to prior authorization. While oversight remains important for high-cost or high-risk services, Frederick questions whether insurance has become involved in too many routine healthcare decisions.
“Insurance was designed to protect people from catastrophic financial risk,” she says. “The goal shouldn’t simply be better prior authorization. It should be a healthcare system where insurance is involved where it creates value—and steps back where it doesn’t.”
Technology offers an opportunity to rethink these processes. Artificial intelligence can summarize clinical documentation, identify unusual billing patterns, improve coding quality, and help detect fraud far more efficiently than traditional manual reviews.
But Frederick cautions against viewing AI as a replacement for human judgment.
“AI is exceptionally good at recognizing patterns. It is not capable of determining intent,” she says. Documentation errors, operational complexity, and deliberate fraud require different responses. AI can help prioritize investigations, but experienced professionals remain essential to evaluating context and determining appropriate action.
She also notes that AI is accelerating both sides of healthcare program integrity. Organizations are using advanced analytics to strengthen oversight, while increasingly sophisticated bad actors are leveraging the same technologies to automate fraudulent activity.
“This is becoming an arms race,” Frederick says.
Beyond Medicare, operational complexity is especially evident in Medicaid, where every state operates under different contracts, reporting requirements, and quality measures. Combined with years of mergers and acquisitions that have left organizations managing multiple legacy systems, operational excellence has become a competitive advantage.
Frederick believes stronger collaboration between states and managed care organizations can improve program integrity by identifying risks earlier and designing systems where compliance becomes the natural outcome of efficient operations.
Ultimately, she argues, enforcement alone cannot solve healthcare’s deeper structural problems.
For decades, policymakers have addressed new regulations and operational challenges by adding more processes instead of redesigning the underlying system. The result is a healthcare ecosystem that often prioritizes managing transactions over improving health.
“The future of healthcare isn’t more bureaucracy,” Frederick says. “It’s redesigning a system where improving health is easier than managing transactions.”