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5 Ways Employers Can Help Tackle Healthcare Waste

For decades we have been discussing the problem of waste in healthcare. Yet each year the healthcare industry is estimated to waste $750 billion on inappropriate or unnecessary services, excessive administrative costs, fraud, and other problems, with employers paying a large share of that bill. And while employers overwhelmingly perceive this to be a problem, a sizable percentage (60 percent) are not actively managing the issue.

In fact, when it comes to waste, employers are generally operating blind. Employers can begin by collecting data to identify where the healthcare inefficiencies are in their communities and specifically for services provided to their workforce. Collectively, we must take a more disciplined approach to address the top drivers. 

While most employers are overwhelmed and unsure where to start, even small steps can positively impact outcomes, drive value, and reduce system waste. Some recommended strategies include:

  1. Ask vendors to track and share information on healthcare waste and report on their efforts to address overuse in areas such as medical imaging (MRIs, X-rays), clinical tests, and diagnostic screenings.
  2. Consider value-based benefit design strategies that encourage reduced utilization of low value services. Some of the ways this can be accomplished is by increasing copays, requiring prior authorization and steering employees to high value providers.
  3. Demand a move towards alternative payment methods such as bundled payments for episodes of care. By paying a fixed fee and having a warranty on the care provided, we can stop rewarding waste, poor quality, or unnecessary services.
  4. Channel care towards centers of excellence where care processes have been standardized around high performance and patient-centered value. There can be significant potential savings when focused on a reduction in the provision of inappropriate care and the cost of poor quality. 
  5. Engage with the Choosing Wisely® initiative to promote greater engagement of and shared decision making by employees and their families in their care—focusing particularly in areas where there is recognized opportunity to reduce inappropriate care.

Bottom line, we need to be more strategic, targeted, and disciplined if we are to make a dent in unnecessary care. It starts by working with our health plans and providers to refocus on value to deliver better healthcare outcomes, improve productivity, and increase the quality and efficiency of our healthcare delivery system.

Michael Thompson, President, National Alliance of Healthcare Purchaser Coalitions, [email protected]

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