Strategies to manage and reduce healthcare costs
The high cost of healthcare is a major concern for individuals and organizations alike. According to the Centers for Medicare and Medicaid Services (CMS), healthcare spending in the US reached $3.8tn in 2019, accounting for 17.7% of the country’s gross domestic product (GDP). While healthcare is a vital service, the rising costs are putting a strain on both individuals and the economy as a whole.Thank you for reading this post, don't forget to subscribe!
The rising cost of care can be a barrier for many people, particularly those who are uninsured or underinsured. In response to this, we see so many people cutting corners and making risky decisions just to save money. It is not uncommon to hear of people opting to have procedures done in other, less developed countries, leading to a wide array of health issues branching from their suspect procedure. Many more people often skip seeing doctors and medical professionals entirely, leaving them susceptible to undetected ailments continuing to get worse.
It is an epidemic in itself that so many people have to make these tough decisions because of the outlandish costs of healthcare. Thankfully, there are effective strategies for managing and reducing healthcare costs.
Promoting preventive care
One of the most effective ways to manage healthcare costs is to promote preventive care. Preventive care measures such as regular check-ups, screenings and immunizations can help detect health problems early and prevent them from becoming more serious. For example, catching cancer in its early stages can result in more successful treatment and lower healthcare costs in the long run. According to the Centers for Disease Control and Prevention (CDC), vaccinations can save up to $10bn in direct medical costs and up to $43bn in lost productivity each year.
Organizations can promote preventive care by offering health screenings, vaccinations and other preventive services to their employees. They can also provide education and resources to encourage healthy behaviors such as exercise and healthy eating. Individuals can take responsibility for their health by staying up to date on preventive services and seeking medical attention when needed.
Telemedicine and other digital healthcare technologies can help reduce healthcare costs by allowing patients to receive care remotely, reducing the need for expensive in-person appointments and hospitalizations. Tools such as electronic health records, telehealth and mobile health applications can help to improve the efficiency and effectiveness of healthcare delivery. For example, telehealth can help to reduce healthcare costs by allowing individuals to access care remotely, while electronic health records can help to reduce the administrative costs associated with paper-based records. Telemedicine has become increasingly popular during the COVID-19 pandemic, allowing patients to receive care without leaving their homes. According to a report by McKinsey & Company, up to $250bn of current US healthcare spending could be virtualized.
Negotiating with healthcare providers
Negotiating with healthcare providers for lower costs or seeking out providers with lower costs can help reduce healthcare expenses. Many healthcare providers are willing to negotiate prices with patients, especially for elective procedures. Shopping around for healthcare services can also help individuals find lower-cost providers.
Organizations can negotiate with healthcare providers to reduce costs for their employees. They can also provide resources and guidance to help employees find lower-cost providers.
Encouraging healthy behaviors
Encouraging healthy behaviors such as exercise, healthy eating, and avoiding smoking and excessive drinking can help reduce the incidence of chronic conditions and lower healthcare costs. According to the CDC, chronic diseases such as heart disease, cancer and diabetes are responsible for 75% of healthcare spending in the US, as well as being responsible for seven out of 10 deaths is the US every year. These conditions not only have a significant impact on quality of life, but they also require ongoing treatment and management that can be expensive. Furthermore, lifestyle factors such as obesity and physical inactivity contribute to the development of chronic disease, highlighting the need for preventative measures that can reduce healthcare costs in the long term. Encouraging healthy behaviors can help prevent these conditions from developing or becoming more serious.
Organizations can encourage healthy behaviors by offering wellness programs that promote exercise, healthy eating and stress management. They can also provide incentives for employees who participate in wellness programs or achieve health goals. Individuals can take responsibility for their health by making healthy choices and seeking support from their employers and healthcare providers.
Implementing wellness programs
Wellness programs that focus on disease prevention and management can reduce healthcare costs by helping employees avoid costly medical treatments. According to a study by the RAND Corporation, wellness programs can save employers up to $6 for every $1 invested. Wellness programs can include activities such as health screenings, nutrition education and stress management.
Related to stress management, mental health is another important factor to consider when it comes to healthcare costs. Mental illness affects millions of people in the US each year, and can result in significant healthcare expenses related to hospitalization, medication and therapy. Addressing mental health concerns and providing timely interventions can not only improve quality of life for individuals, but can also help to reduce long-term healthcare costs associated with untreated mental illness.
Organizations can implement wellness programs to reduce healthcare costs and improve employee health and wellbeing. They can also work with healthcare providers to offer disease management programs for employees with chronic conditions. Individuals can participate in wellness programs offered by their employers and take advantage of resources and support for managing their health.
Improving medication management
Better medication management can help lower healthcare costs by reducing the need for emergency care, hospitalization and other expensive treatments. Medication adherence is another area that can impact healthcare costs. Non-adherence to prescribed medications can lead to complications and increased healthcare utilization, which can drive up costs for both individuals and the healthcare system as a whole. According to the National Council on Patient Information and Education, medication non-adherence is responsible for up to $300bn in avoidable healthcare costs each year. Strategies such as medication reminders, simplified medication regimens, and increased patient education can help to improve medication adherence and reduce healthcare costs.
Healthcare providers can improve medication management by educating patients about their medications, simplifying their medication regimens, and monitoring patient adherence. Patients can also take responsibility for their medication management by following their healthcare provider’s instructions, asking questions, and keeping track of their medications.
Reducing administrative costs
Streamlining administrative processes and decreasing waste can help to reduce healthcare costs by cutting down on unnecessary expenses. Administrative costs account for a significant portion of healthcare spending, with estimates ranging from 7% to 30%. This includes costs associated with billing, claims processing and other administrative tasks. Efforts to simplify and streamline administrative processes can help to reduce these costs and make healthcare more affordable for individuals and families.
According to a report by the Commonwealth Fund, the US healthcare system could save up to $150bn per year by reducing administrative costs. Healthcare organizations can streamline administrative processes by using electronic health records, decreasing paperwork, and implementing lean management principles. Patients can also play a role in reducing administrative costs by being proactive about their healthcare, communicating effectively with their providers, and avoiding unnecessary tests and procedures.
While patients do have a hand in this strategy, it is still mostly up to healthcare business leaders to follow through with lowering administrative costs. These individuals play a vital role in the healthcare system as a whole as they shape so much of the industry. The only problem is that there are not enough qualified leaders out there who can recognize that change is needed in various areas.
If you have a passion for healthcare and want to make the world a better, healthier place without going through the hoops of medical school, pursuing an online executive master of health administration degree is an excellent route to take. This program trains students on the specific skills required to make sound business management decisions within the healthcare sector, including the technical skills required to be successful in this field. The knowledge gained through this degree can help you have a profound impact on the lives of many people, helping others have peace of mind knowing that they are not under mountains of medical expenses.
Encouraging value-based care
Value-based care emphasizes quality of care over quantity, focusing on improving outcomes and reducing healthcare costs. This approach to healthcare incentivizes providers to focus on preventive care, disease management and patient-centered care. In other words, it drives the focus toward outcomes, rather than the volume of services provided. This approach can help to reduce unnecessary testing and procedures, and can improve coordination of care and promote preventive measures.
According to a report by the Health Care Payment Learning and Action Network, value-based care accounted for 36% of healthcare payments in 2018, up from 23% in 2015. Healthcare organizations can encourage value-based care by working with healthcare providers to develop quality metrics and incentivizing providers to achieve those metrics. Patients can also seek out providers that offer value-based care and prioritize preventive care and patient-centered care.
Promoting transparency in healthcare pricing and quality can help reduce healthcare costs by giving patients the information they need to make informed decisions about their care. According to a study by the Journal of the American Medical Association, patients who were provided with price information for medical procedures chose lower-cost providers and saved an average of $124 per procedure. Healthcare organizations can promote transparency by providing price and quality information to patients, using price transparency tools, and working with insurance providers to develop cost-sharing tools. Patients can also seek out price and quality information and compare costs and quality across providers. This can encourage competition among providers, ultimately leading to lower costs for patients and insurers.
Investing in population health management
Investing in population health management can help reduce healthcare costs by identifying and addressing the root causes of health problems, rather than just treating the symptoms. Population health management involves analyzing data to identify health trends and risk factors, developing interventions to address those factors, and evaluating the effectiveness of those interventions. The goal is to address the health needs of a specific group or community through targeted interventions and preventive measures. This can include initiatives such as health screenings, education and outreach programs and disease management programs. By focusing on the health needs of specific populations, healthcare organizations can work to prevent the development of chronic disease and reduce healthcare costs over time.
According to a report by the National Business Group on Health, employers can save up to $7 for every $1 invested in population health management. Healthcare organizations can invest in population health management by partnering with employers and other stakeholders, using data analytics to identify health risks and trends, and implementing interventions to address those risks. Patients can also participate in population health management by sharing their health information and participating in interventions such as disease management programs and health screenings.
Managing and reducing healthcare costs is a complex and ongoing process that requires collaboration between individuals, healthcare organizations, employers and policymakers. By promoting preventive care, utilizing technology, negotiating with healthcare providers, encouraging healthy behaviors, introducing wellness programs, improving medication management, reducing administrative costs, implementing value-based care, promoting transparency and investing in population health management, individuals and organizations can work together to create a more affordable, accessible and effective healthcare system.
Healthcare costs are a major concern for individuals, organizations and policymakers. With rising costs and a growing population in need of care, it is crucial to find ways to manage and reduce healthcare costs while maintaining quality of care. By implementing the strategies discussed in this article, we can work toward a more sustainable and effective healthcare system that benefits everyone.