by Jacob Luria

Today the Health Care Cost Institute (HCCI) posted their annual report of United States health care spending. With an enviable data set of claims from commercial under 65-yr populations from. Aetna, Humana, Kaiser and UnitedHealthcare, HCCI concluded that health spending grew by 4.6% in 2016. In a vacuum that number may be seen as a success given historical year over year growth. Diving into the details we can view multiple trends that create opportunities in better managing care and ultimately supporting a reduction of costs in the future.

HCCI Graphic credit: HCCI

First and foremost - the key finding is about price of clinical services. HCCI demonstrates that the 4.6% increase occurred while health care utilization among the commercial populations is flat or declining. With today’s market consolidation of health systems - we would be foolish to expect prices to decline as market power increases. Those elements taken together mean that opportunities for medical management largely rely on utilization trends and substitution of inpatient and observation services with outpatient services.

Now the hard work begins - substituting care involves a level of member engagement and loyalty that needs to be earned. Algorex Health has supported multiple clients with both lifetime value calculation and loyalty. Using external data and approaches of consumer marketing firms, healthcare organizations can know which members to engage in care substitution or ED deferral actions, ultimately making those interventions more valuable.