Healthcare Costs and Bundled Pricing

According the Bureau of Labor Statistics, consumer healthcare inflation averaged only 2.7% in 2015, significantly less than its rate of 4.7% during the second half of 2007[1].  Although still on pace to stay ahead of inflation, the rate at which healthcare costs are increasing is projected to slow even further in 2016.

Consumer spending, combined employer- and government-sponsored healthcare spending, saw a 6.8% increase in 2015, compared to just 11.9% in 2007, according to a report by the PWC Health Research Institute [2].  Although current healthcare spending represents a staggering 17.4% of GDP, many experts have asserted that a slowdown in cost increases is imminent. “Medical costs cannot continue to grow faster than per capita incomes indefinitely. As we get closer to 25% of GDP, spending will have to be constrained,” said Tom Getzen, Executive Director of the International Health Economics Association and Professor of Insurance and Healthcare Management at Temple University.  “As health spending grows faster than the rest of the economy, resistance to further increases can begin to slow down the growth—or bend the cost curve” [3].

The PWC Health Research Institute report further identifies three factors expected to lower the rate of growth for healthcare costs:

  • Virtual care.  New technologies such as remote monitoring will continue to improve patient outcomes—and lower treatment costs.
  • New types of advisory services.  The services provided by BridgeHealth, employers, consultants, and third party administrators are increasingly being implemented to inform employees and provide the tools to assist them in making good choices when seeking healthcare.
  • The impending “Cadillac Tax”. The Affordable Care Act’s excise tax on certain plans will take effect in 2018.  According to the PWC report, many employers will avoid paying the 40% tax on high-value health plan premiums (over $10,200 for individuals and over $27,500 for self and spouse or family plans) by increasing the amount that employees must pay, keeping their own contributions under the threshold of the tax.

Fortunately, growth trajectory of medical costs seems to be moving in the right direction.  At BridgeHealth, however, we have a tool with the capacity to dramatically lower costs without sacrificing quality of care.  That tool is the bundled payment system.  In this system, we build the prices around an entire episode of care.  These prices are pre-negotiated, meaning that patients—and their employers—to know the exact price of a procedure so that they can plan accordingly, without having to worry about additional costs.  Whereas any complications would normally require additional out-of-pocket expenses, pre-negotiated procedure costs mean that doctors and hospitals are responsible for these expenses—a huge benefit to the patient.

Plan sponsors enjoy significant case rate savings with BridgeHealth, and we only work with the top 25% of hospitals in the nation [4].  Pre-negotiated, bundled pricing and top-rated surgical care will help control rising healthcare costs—and help Americans to maintain the greatest healthcare system in the world.

 

    1. http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-medical-cost-trend-2016.pdf  – Medical Cost Trend: Behind the Numbers 2016, by Price Waterhouse Cooper Health Research Institute
    2. http://data.bls.gov/timeseries/CUUR0000SAM?output_view=pct_12mths – Hospital-acquired Condition Reduction Program by Centers for Medicare & Medicaid Services
    3. http://www.cbsnews.com/news/how-much-will-your-health-care-costs-rise-in-2016/ – How painful with health care costs be in 2016?,  CBS News
    4. http://www.carechex.com/ScoringRatingMethods.aspx – Hospital Quality Scoring and Rating Methods, Comparion Carechex