Payers Possess the Tools to Tackle Rising Healthcare Costs

The U.S. healthcare system is on an unsustainable trajectory. Healthcare prices continue to rise and projections show fewer people securing healthcare coverage over the next ten years. Healthcare spending in the U.S. is projected to exceed $5 trillion by the end of 2024, which is 18% of the U.S. GDP. Payers are in a critical position to right the ship and find ways to make healthcare more affordable for patients. The tools to address these issues exist, and payers are in a unique position to leverage them to drive systemic change. . 

Historically, we, as an industry, have approached cost containment from a more microeconomic perspective, rather than addressing systemic inefficiencies. Focusing on the latest cost area that is exceeding trends and norms may occasionally yield short-term gains, it fails to tackle the pervasive issue of growing healthcare expenditures holistically. The typical process involves identifying isolated areas of excessive spending, implementing targeted cost-control measures, and subsequently directing patient flow toward these “optimized” channels. While this approach may demonstrate localized efficacy, it ultimately fails to induce the paradigm shift necessary for industry-wide reform.

That required paradigm shift is fundamentally rooted in the transformation, manipulation, and utilization of data. The entire U.S. Healthcare industry encompasses over 50 petabytes of data — a volume so vast it renders conventional data management strategies obsolete. Health systems, payer organizations, and technology companies are rushing to maximize this data to tackle problems on every scale. I believe this data holds the potential to revolutionize healthcare delivery and economics. By ensuring data fluidity, technological synergy, and intelligent health market dynamics, we can usher in a new era of healthcare economics — one characterized by informed decision-making, optimized resource allocation, and, ultimately, a more transparent, cost-effective healthcare system for payers, providers, and patients alike.

Data standardization and liquidity

The healthcare industry’s vast data ecosystem presents a formidable challenge. Data scientists, healthcare decision-makers, and innovators must first discern which data subsets are pertinent to solving healthcare’s cost problem. Fortunately, the U.S. federal government’s prioritization of healthcare price transparency over the past several years has been a catalyst for change. These initiatives have empowered patients, providing transparency in care costs prior to receiving it. These regulations have also ushered in a new era of data consistency and transparency through machine-readable files (MRFs), allowing organizations and key stakeholders industry-wide to engage in meaningful conversations using the same language or common data framework. 

Modern technology architecture

The instantaneous price comparison capabilities realized in contemporary marketplaces across most industries remain absent in the healthcare sector, particularly in the realm of payer-partner selection. Comparing prices at a moment’s notice for varying products is expected in marketplaces across other industries. That’s not a reality for most buying decisions in  healthcare, especially when it comes to payers choosing the partners that will be critical players in delivering care to their members. 

Healthcare organizations have begun to harness vital financial data, but they often lack the technological infrastructure to leverage this information for real-time decision-making. The lack of harmony between data availability and technological capabilities creates a conflicting situation where payers, despite speaking a common data language, find themselves constrained by antiquated technology stacks, hindering timely and informed decision-making processes. To bridge this technological gap, payers must make a strategic shift, investing in cutting-edge technology platforms that facilitate seamless integration across the vast healthcare provider supply chain.

This integration requires the adoption of sophisticated tools, such as application programming interfaces (APIs) and electronic data interchanges (EDIs), which serve as the conduits for real-time communication and collaboration among payers, providers, care networks, and competitors.

Marketplace dynamics

The convergence of MRF data along with proprietary and publicly available datasets empowers payers to benchmark and conduct sophisticated analyses of cost variances across diverse member populations, including Medicare, commercial, fully insured, and Administrative Services Only (ASO) segments. This granular approach to cost benchmarking facilitates the identification of statistically significant deviations from market norms, enabling payers to strategically align with providers, partners, or networks that demonstrate cost containment opportunities while still delivering high quality care. The seamless exchange of data through a more modern technology architecture enables a state of perpetual optimization, providing the continuous evaluation of data to ensure that both organizational and patient-level expenditures are consistently minimized while high quality care is delivered.

The implications of this highly connected ecosystem extend beyond the insured population. By fostering a multifaceted approach to provider access and maintaining a relentless focus on cost reduction, this creates the opportunity to develop more affordable products tailored to the uninsured population — addressing a critical gap in healthcare accessibility.

Payers have an extraordinary responsibility to serve as the orchestrators of this transformation. They sit at the intersection of consumers, providers, and regulators and are uniquely positioned to drive systemic change. By embracing available data, cutting-edge technology, and an intelligent marketplace, payers can design solutions that optimize costs across the entire healthcare ecosystem. This macroeconomic perspective on healthcare has the potential to reconcile the often-competing priorities of quality and affordability. Payers have these tools at their disposal. The imperative now lies in their strategic deployment to build a more equitable and sustainable healthcare future.

Photo: JamesBrey, Getty Images

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