Health care delivery organizations face substantial budgetary pressures. U.S. health care organizations face heavy administrative burdens that consume nearly a quarter of all health care spending, amounting to $950 billion in 2021. Adding to the financial strain, the One Big Beautiful Bill Act, signed into law in July 2025, will reduce Medicaid spending by at least $700 billion over the next 10 years, with 20 states’ Medicaid budgets being reduced by 5 percent or more.
To reduce unnecessary spending, insurers and public payers impose controls, such as requiring prior approval for advanced procedures like CT scans. However, the administrative processes used to comply with the controls introduce process friction. For example, operational failures, ineffective processes and errors that interrupt work, related to obtaining prior approval waste time and slow care delivery. Experts propose that substantial cost savings can be achieved by improving administrative processes. This can be done both “within” organizations, such as automating repetitive work, and “between” organizations, such as streamlining prior approvals (PA). Consequently, health care leaders look for solutions that increase efficiency in administrative work processes.
One promising improvement target is modernizing hospitals’ document exchange processes and infrastructure. Document exchange processes transfer critical patient information between providers, enabling decision-making and care delivery. Messaging infrastructure, including fax-based document exchange, is essential for referrals between provider organizations, prior authorization documentation, transmitting clinical attachments to payers, and sending discharge summaries to patients and primary care providers. Problems in these processes delay care, frustrate employees, waste time, and can lead to errors. Although each hiccup in the process costs only minutes, the large volume of faxes creates significant time drain. Even small percentages of problematic transmissions significantly impact productivity, staff burnout, and organizational compliance risk.
Despite clear benefits of switching to cloud-based messaging systems and automated documentation-handling tools, many health care provider organizations continue using aging legacy fax systems for inter-organizational communications. A 2023 survey of over 1,000 provider employees finds that less than 1 in 5 organizations automated more than half of their PA process. Due to insufficient funds and trust in technology, only 1 in 10 were planning to incorporate artificial intelligence (AI). Only a third report that their PA process is efficient. Billing specialists spend a median of 9 hours per week on PA, and 42 percent of organizations report burnout from the process. Nearly all surveyed providers (92 percent) report that patient care is delayed due to PA, with 14 percent reporting delays up to 2 weeks.
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Retarus, a global provider of cloud-based messaging solutions, recently surveyed over 100 U.S. health care leaders, providing insight into current adoption trends for health care document exchange and messaging infrastructure. In alignment with the 2023 assessment of PA-related workload, Retarus found similar inefficiencies in fax workloads, where staff spend approximately 10 hours per week on manual tasks. Organizations planning to update messaging systems increased dramatically from 10 to 33 percent, incorporating AI tools, secure transactional email, and cloud-based faxing. Nearly 40 percent still use legacy fax systems, with 15 percent reporting that more than half their documents are sent via legacy fax servers. Staff spend approximately 10 hours per week on fax retry or resubmission tasks, corroborating findings from the prior study. About half of the organizations surveyed report that up to 3 percent of transmissions require resending. Document-related burnout increased from less than half to 76 percent.
In high-volume environments processing millions of fax pages annually, transmission costs can reach $50,000 to $60,000 per year depending on usage and pricing structures. Even slight efficiency improvements, such as a 20 percent reduction in manual handling time, can translate to approximately $12,500 in annual labor savings per organization, before accounting for broader productivity gains.
Cloud-based messaging systems and automated document-handling tools improve reliability and enable AI-driven information routing to appropriate personnel and electronic medical records. Customer observations indicate that these capabilities may help address the budget-ROI tradeoff by reducing inefficiencies in messaging workflows that contribute to operational burden, including manual fax processes, transmission errors, and administrative rework. As a result, ROI is often underestimated, because efficiency gains are distributed across incremental operational gains while implementation costs are more immediate and visible in budgeting frameworks.
Despite the clear case for modernization, adoption lags for several reasons. Health care organizations cite concerns about implementation costs, integration with legacy EHR systems, regulatory compliance (HIPAA, state-specific rules), and return-on-investment uncertainty. Additionally, existing fax systems, while inefficient, are perceived as carrying virtually no technical risk, a liability that IT leaders often prioritize over potential gains. Concern over the upfront expense of fax modernization often stems from a lack of visibility into the hidden costs of traditional fax unreliability. To illustrate, consider an organization handling 1 million inbound faxes annually. An increase in transmission reliability of just one percentage point through cloud-based faxing would prevent approximately 10,000 failed transmissions. At an estimated labor cost of $25 per manual follow-up, the organization avoids $250,000 in wasted labor annually that can be redirected toward higher-value clinical and operational initiatives. Even if the cloud migration incurs an incremental cost of $0.10 per fax (totaling $100,000 per year), the organization still nets $150,000 in immediate, reliability-driven savings.
Budgetary concerns remain significant, with two-thirds of health care leaders fearing that Medicare and Medicaid cuts will negatively impact hospital operations, reducing funds available for messaging infrastructure. However, investing in modernized cloud fax solutions may prove fruitful by streamlining tasks, avoiding errors, reducing patient care delays, and enabling AI-driven automation. For safety-net hospitals facing budget constraints, the question isn’t whether modernization is theoretically valuable, it’s whether the investment timeline and migration disruption fit current capacity. Early adopters have found that phased approaches (e.g., modernizing referrals first, then PA) reduce risk while building organizational confidence. This approach helps overcome the well-documented “worse-before-better” obstacles that derail many improvement initiatives.
Anita L. Carson is an operations management educator.
