Situation

We recently worked with one of our brokers to help their client save on healthcare costs since it rose in 2015. The rising healthcare costs was a huge concern for the client and they could not pinpoint the cost drivers and needed help to curb their healthcare costs.

Approach

We examined their data to uncover the main cost drivers

  • Conditions across the population were unchecked and out of control
  • Lots of gaps in preventive care visits, and trending over the last 2 years, possibly leading to higher higher costs
  • Significant care gaps across chronic conditions, including wellness and routine measures
  • Diabetes, a significant cost and health factor in many populations, runs 5 points higher than benchmark

The chart below depicts the high costs that’s trending across the board for two reasons:

  • Inpatient visits grew by 75%, outpatient by 34%
  • While office visits only by 7%

Picture1

Outcome

Working with the client, we recommended the following actionable opportunities to help them save on healthcare costs:

  • Implement novel PBM solution(s) to stem the growing pharmacy costs ($77k impact)
  • Put in programs with incentives to close preventative care gaps: office visits, screening
  • Control unmanaged chronic conditions to target $200k in potential savings
  • Can do in stages, e.g. diabetes then mental health
  • Diabetes management program can potential save $185,000
  • Deploy a telemedicine program and also review plan design to minimize the $125k of avoidable ER and Urgent Care utilization
  • Implement a tool to pro-actively identify cost saving opportunities, risks, and track programs across diabetes, preventative, telemedicine, and others

Since chronic health was a concern, we suggested the following to the client:

  • Large predicted costs tied to Diabetes, Hyperlipidemia, and mental health.
  • All of the prevalent chronic condition risks can be managed for future cost avoidance.
  • Target members for improved engagement and outcomes.

The image below depicts how the chronic conditions are driving future costs.

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Lastly, we also helped the client understand the savings related to ER utilization and pharmacy utilization costs. For pharmacy utilization, we saw a potential of $77,000 in savings because:

  • Cost per prescription has increased drastically for brand drugs from $126 in 2014 to $158 in 2015
  • Opportunity for conversion to generic whenever a therapeutic equivalence drug is available
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