Get more bang for your health care buck

Why smart employers are using data analytics to prioritize and maximize health care investment

In the US, health care is typically the second largest human resource investment an employer makes, behind wages. For large employers this can run into hundreds of millions, even billions of dollars annually.

The average employer has 28 ‘point solutions’ – 28 different suppliers, vendors, service providers, products and insurance providers delivering their health care program.

Even if you’ve got a great HR team and you’re on top of your game, that’s a lot of information to manage and analyze. All in different formats, possibly in different parts of your organization. You’ll likely have little or no data to benchmark your costs and utilization rates against peer organizations. Your capacity to measure how vendors are managing complex patients and large claims is likely to be limited, particularly when it comes to understanding which vendor gets the credit.

What are you paying for?

Put simply, you must be on top of your data to know whether your significant health care investment is being put to best use. Do you know with certainty what you are paying for??Do you know if the suppliers you are relying upon are performing to your level of expectations and driving the desired outcomes? If you want to understand, you need to interrogate your data. The insights can not only lead to better outcomes, including a happier and more productive workforce, but they can save money too, ensuring spend goes in the right direction.

Why measure now?

Health care data analytics is becoming more important because of the huge cost and affordability challenges for employer and employee. For the first time in recent business history, general inflation is outpacing health care inflation, so costs are going up, but health care inflation is yet to work its way through the system. This backlog effect means that health care costs are going to go up at an even higher rate in the future. The challenge of how to manage your health care spend is only going to get harder. Add to this picture a potential recession and its impact on revenues. Spend on health care is going to be under even greater pressure.

Increased demand on health care services will also push up costs. Post-pandemic, there is a greater inactive population, as more people work from home and access to active outlets is lessened. Chronic conditions are building e.g., the US obesity rate is up 37% for adults and 42% for children.1 Growth in mental health costs is outpacing traditional ‘expensive’ conditions and is now in the top 10 drivers of health care costs.

Health care benefits for insured employees are on the brink of unaffordability. Many employees are seeing their deductibles going up. The average deductible in most plans is around $3,000. Since almost 2/3 Americans have less than $2,500 saved, it means they cannot afford to pay for basic care. This results in taking on credit card debt or making other painful trade-offs, such as cutting back on food and utilities or the increased stress of taking on additional jobs. They are choosing between paying more out of pocket or avoiding, deferring or self-rationing care, taking half instead of a full dose, or skipping refills.

Cost effectiveness measurement

With these competing pressures, it’s important to figure out how to change the trajectory. ?That’s where data analytics can play an important role to help understand the cost effectiveness of health care programs. In other sectors, this type of analysis has been used for many years.

Let’s take the management of diabetes, the second biggest chronic killer, as an example. With Aon’s CEM (Cost Effectiveness Measurement) tool, organizations are able to identify the lowest performing health system in their network and use the findings to change provider access. Diabetic patient costs can be assessed compared to diabetics in peer organizations. Cost and utilization benchmarks can be established, and vendor management of complex patients and large claims assessed. Financial tracking compares trends and cost / utilization drivers over multiple years to robust market actuals, and reduction in costs due to initiatives can be measured. Areas for improvement in utilization or cost metrics can be identified. This can lead to important savings.

It’s possible to go one stage further to ensure that the employer is investing in the right solution for their employees. We have helped a multi-state employer dealing with diabetes identify the number and profile of employees who have the opportunity to slow disease progression. By investing in the appropriate solutions early on e.g., virtual coach vs in person gym membership, the clinical outcomes can be altered, and substantial savings can be made. This same approach can be applied to uncover emerging complex and chronically ill members and steer them towards meaningful solutions.

What next?

My advice to those wrestling with these health care cost challenges is to incorporate a continuous, scientific test and learn approach. Use data to learn what solutions and interventions are working and then iterate. It’s all about making better decisions to protect and grow your business.

1. Trust for America’s Health - The State of Obesity 2022: Better Policies For A Healthier America (tfah.org https://www.tfah.org/wp-content/uploads/2022/09/2022ObesityReport_FINAL3923.pdf )

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