NJBIA At Issue

A New Way to Control Healthcare Costs 

At Issue

Mary Beaumont, vice president for Health and Legal Affairs

Big data is nothing new. We see it every day when we check our GPS app for a place to eat, when an ad for the product we were just looking for pops up on a website we’re viewing, or when our bank contacts us about a suspicious purchase using our debit card. But big data has been slow to make its way into the healthcare industry, and that’s unfortunate because it has tremendous potential to control or even reduce healthcare costs. 

Fortunately, things are changing. The healthcare industry has begun using technology in records management and coordinating care among multiple providers to the point that one of the fastest growing industry subsectors is healthcare IT.

Employers don’t need to be told how expensive health insurance is; they have been dealing with double-digit cost increases for two decades now, and those costs are a direct result of the care provided to policyholders. Americans enjoy the benefits of the most advanced care in the world, but we also pay the highest prices.

As much as one-third of the $3 trillion the US spends annually on healthcare is wasted on unnecessary tests or procedures. Big data could provide objective evidence about which tests and procedures produce the best outcomes, allowing doctors to compare costs to see if less-expensive alternatives may be just as good.

The medical profession has been moving in this direction, but the effort has been piecemeal. Take the move toward electronic healthcare records, for example. Digital access would allow a cardiologist, a gastroenterologist and a family doctor to see which prescriptions and tests they have ordered for the same patient. But some two dozen different systems are in use today, and unless the doctors are using the same one, they cannot communicate with each other. It’s like having a smart phone with all the apps, but you can’t call the office because it uses the wrong network.

Healthcare IT can fix this. The technical term is called interoperability, but really, it just means that the different electronic health record systems can communicate with each other. That means test results, prescriptions, and the full medical history will be available at every doctor’s appointment and every hospital visit, every time. No need to order duplicative tests or schedule additional visits when new information becomes available.

All of this would help reduce the cost of providing healthcare, which should lead to lower costs for health insurance in general. Beyond that, healthcare IT can help individuals control their own health insurance premiums.

On average, 60 percent of healthcare costs can be attributed to just 5 percent of insureds. They are the ones with the most health issues; typically, they have seven or more chronic conditions to manage and may use the emergency room 100 or 200 times a year. But because electronic records systems don’t communicate with each other, doctors and hospitals have no idea who the high-volume healthcare users are, let alone how to get them into more affordable care. Better healthcare IT can identify those patients who turn up in the ER too often so providers can give them additional preventative care.

The same idea can be applied to employees who are approaching the high-risk category. If expensive chronic conditions can be managed, or even prevented, patients have fewer trips to the emergency room and less expensive treatments. In short, identifying the high-cost users of your health plan allows doctors to focus their resources on them, providing better overall care and lowering costs at the same time.

The cost of health insurance has long been the biggest problem cited by NJBIA’s member companies. Putting big data to use on improving healthcare and lowering costs has the promise to be the solution that so many employers have been waiting for.


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