Overview of High Healthcare Costs
Healthcare costs are unbelievably high and continue to rise year after year to the tune of 7%. These costs are rising three times the rate of inflation. The average healthcare cost for employers in America is $10,000 per employee on the plan per year. The decision-makers within companies understand that this is completely unsustainable and look for solutions. Let us take a look at the population that is driving these costs.
The 80/20 rule
The 80/20 rule means that 80% of healthcare costs are generated by 20% of the plan members. This is the group that is taking expensive medication, being hospitalized frequently, having multiple procedures, and/or tests done etc. On the other hand, there is a significant amount of people that will never use their healthcare insurance at all. They are healthy and they do not need to consult with doctors frequently or receive care. Taking that into account, we see that healthcare costs are concentrated within a specific group; 20% of the people are driving for 80% of the costs. Furthermore, 50% of the costs are driven by the top 5% of members. To put it simply, half of a company’s health costs are driven by just 5% of people.
For example, if you have a 200 member plan, according to the 80/20 rule, only 10 people are driving half the healthcare costs for the entire plan. That means on average if a company is spending 2 million dollars on plan costs, those 10 people are driving a million dollars of healthcare spending a year. This is equivalent to $100,000 dollars per person.
Self-insured employers must ask themselves, “Where is my spend going and what are the outcomes?” Companies need to focus on finding better care and higher quality care so members have ways to maintain health and provide solutions to prevent health issues in the future.
4C’s population health and trend reporting highlights trends, improvements and targeted intervention opportunities. Understanding how your membership is experiencing care is key to controlling cost and improving outcomes.
4C can help uncover employee health needs within your population, enabling you to understand what investments may yield the greatest return. Whether the opportunity is clinical (e.g., Disease Management) or financial (e.g., Referenced Based Pricing), you can understand your options from an unbiased perspective.
4C can help ensure any Point Solutions or Strategic Partners employed by the plan are having the intended impact. By objectively evaluating outcomes, 4C is well positioned to offer self-insured employers peace of mind when it comes to targeted investment.
Solve the high concentration of cost issues with 4C’s unprecedented solutions. Contact us today to learn more.