Health care cost management

Health Cost Management

Healthcare Cost Management

Especially for Self-Insured Midsize Organizations

A powerful way to control healthcare costs:

We help our clients look at their approach to employee medical care and its cost management in a completely new way. We literally show them a new model, based on their data, for managing their healthcare costs. We focus upon a simple but often overlooked fact: healthcare costs start with the underlying disease and injury pattern.

Health provider charges (the focus of other approaches) reflect the underlying disease and injury pattern plus the provider’s own effectiveness and efficiency, but the primary driver is really the former. By understanding and managing their disease and injury pattern, our clients improve their entire healthcare cost pattern. Understanding the organization’s own employee group epidemiology, then, also permits a knowledgeable study of provider effectiveness and efficiency in a constructive way. In short, we address the root causes of healthcare costs. The effectiveness of this data-driven “leveraged” approach is remarkable, and its effectiveness can be evaluated by the client on an on-going basis, enabling further refinement and improvement.

Booster charging the analysis:

More exciting is that we are able to combine our ability to dynamically model (simulate) the disease/cost system, using the analytical results we discover from the disease and cost experience of the company, permitting us to study future consequences of the employee population projected into the future. We can then do "what-if" testing to evaluate different disease and cost reduction strategies. This method permits a more solid cost effectiveness assessment, pertinent to that company, of each proposed strategy.

Improving health care as a cost improvement strategy:

Variations between providers exist in costs and care, of course. We also analyze provider data statistically to evaluate such variations and their potential for cost improvement. We usually discover that the cost variations due to effectiveness (quality of care) and efficiency are small compared to the influence of disease and injury patterns.

However, we have also learned to pay close attention to indicators of substandard care. We have discovered that substandard care (including failure to provide recommended proactive and preventive care*) is usually the second largest contributor to healthcare costs. To spot substandard care providers (or payers), we compare provider performance metrics to the continuously improving nationally recommended standards. Happily, care improvement strategies (working with providers to improve care effectiveness and efficiency) also tend to improve our client’s underlying disease/injury pattern! And the providers themselves benefit and can thrive (see our page on Clinical office high performance).

Our competency:

To provide this unique capability, we team with a firm, DataPlus Millennium (www.dpm2000.com), specializing in large data base analyses and data mining. Together, our several statistical analyses, using the client's claims data, provide us much new epidemiologic knowledge about our client’s unique healthcare patterns. We use this knowledge to work with our client’s management team and systematically evaluate cost control and quality improvement options. We use dynamic modeling and other sophisticated statistical tools to help evaluate healthcare strategies to maximize the expected return on their healthcare investment. And, we explain what we are doing in “plain English.”

The end result:

The best medical care management is, or should be, a very strategic corporate function. It should minimize costs, not by “squeezing” providers or patients, but by affirmatively managing the disease and injury patterns that drive the costs and then by helping providers improve their value stream – the diagnosis and care of the patient (especially in those areas most significantly affecting cost). This approach to medical care management creates a “win-win” solution for company, provider and employee/patient.

* Sometimes the payer (the company itself in the case of self-insured companies) is the culprit by denying payment for care recommended by well recognized guidelines.