Integrating Healthcare Plans Without Increasing Costs
Editor's note: This blog was written by Sam Muppalla, vice president, McKesson Health Solutions, Network Performance Management (NPM).
Over the past few weeks, I've covered a lot of ground. We looked at the pressures on health plans and the ways in which those pressures are forcing a new dynamic in how the plans create new, scalable competitive products that enable affordable, high-quality care. We talked about some of the innovations that leading health plans are bringing to the areas of product, network, care model and reimbursement designs. The pilot initiatives in these areas continue to show positive results.
The next level of scaling requires an integrated and automated approach to enable health plans to deploy, manage and maintain these innovations in a much more rapid fashion. This all has to be done without increasing health plan costs while delivering new value health plan's customers, providers and members.
It is our position at NPM that achieving this alignment will deliver affordable care. Additionally, through this alignment, health plans will gain a competitive and cost savings leadership position. Through collaborative and independent research with our health plan partners, we have identified three main areas of competitive and cost savings leadership. The potential cost savings of achieving alignment are impressive. For example, working with a regional Blues plan with three million members, the potential cost savings due to achieving an integrated approach to network design were projected to be:
Administrative Cost Savings: Total Potential Annual Savings = $13 million to $25 million
Medical Cost Savings: Total Potential Annual Savings = $45 million to $100 million
- Streamlined member health advocacy: $5 million to $10 million
- Pay for Performance: $15 million to $40 million
- Network design and performance improvements: $25 million to $50 million
Provider IT Cost Savings: Total Potential Annual Savings = $.5 million to $2.5 million
- Redundant system consolidations: $0.25 million to $2 million
- IT change management cost reductions: $0.25 million to $0.5 million
The total aggregated annual potential for savings is between $59 million and $127 million.
Some Final Thoughts
In 2009, the National Health Expenditure (NHE) rose to $2.5 trillion or 17.6 percent of the gross domestic product (GDP) with private health insurance accounting for 32 percent of the NHE. Yet all of this spending is not translating into any measure of higher quality care, as the World Health Organization (WHO) also ranks the U.S. as 72nd in overall level of health in the world.
To affect high-quality, affordable care, health plans must be able to harness innovative product, network, care model and reimbursement designs. Network design is the critical element that will orchestrate the operational scaling of innovation. Therefore, automation of network design and efficient implementation of it through end-to-end integration will be crucial to success of health plans in the post reform world.
Thanks for taking the time to follow me on this journey.