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Study: Large employers spend $2B in wasteful healthcare spending — 3 insights

The American Health Policy Institute and VBID Health released the study, "Using Data-Driven Disruption to Reduce Wasteful Healthcare Spending." The study examines wasteful spending of 35 large, self-insured employers in the United States.

Here are three insights:

1. The study uncovered these employers spend about $2 billion, or 20 percent of total spending, in waste and unnecessary healthcare spending.

2. The study categorized four main areas of wasteful spending:

• Outpatient — This category topped the wasteful spending categories, generating 9 percent, resulting from instances like missed prevention opportunities.
• Inpatient — Medical errors, preventable admissions and hospital-acquired infections generated 6 percent wasteful spending.
• Pharmacy — Practices such as over-prescribing resulted in 4 percent wasteful spending.
• Administration — Generating 2 percent wasteful spending, administrative instances like inefficient claims processing led to unnecessary spending.

3. To get a handle on wasteful spending, VBID Health suggests five goals:

• Leverage software, like the Health Waste Calculator, to determine spending on a per-member per-month basis. Then, develop targets and interventions for spending.
• Establish payment approaches that reflect a value-based environment.
• Encourage healthy behavior and discourage unnecessary care.
• Implement predictive modeling to pinpoint high-risk patients by disease type and cost ranking.
• As a large employer, use your combined purchasing power and economies of scale to your advantage.

Check out the full study here.

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