Cut Costs With These Health Care Strategies — and Improve Quality

September 29, 2015

It might seem counterintuitive, but there are ways employers can cut costs that result in better quality. This is according to Randy Abbott, a leader and senior strategist in Towers Watson’s North American Health and Group Benefits practice.

Abbott notes that most employers want to achieve better patient outcomes at a lower cost per patient. He points to two value-based strategies as examples of especially effective pathways for getting there:

  1. Employers can build and “curate” medical service provider networks that leverage all available delivery channels to ensure that care is being provided appropriately and affordably.
  1. Employers can add value-based contracting to traditional fee-for-service reimbursement arrangements, which requires providers to focus on outcomes and not just cost.

Three trends make pursuing these strategies appealing:

Consolidation among health care providers. Consolidation typically results in higher prices because it eliminates competition. However, consolidation among health care providers creates the potential of upside economic advantage for all parties. That’s because larger providers can leverage capital expenses over a larger community while patients and their sponsoring employers benefit from care being delivered in optimal venues.

Physician shortage opens up new channels for delivery. A shortage of primary care physicians is being mitigated in several ways. These include telemedicine, smartphone-based health applications – which can enable remote monitoring of chronic conditions, among other activities – and empowering other health care professionals to assume some of the activities that have been reserved for physicians.

Health reform shifting focus to outcomes. By challenging providers to deliver more than a good price, the Patient Protection and Affordable Care Act has changed the way reimbursement works — forcing providers to manage quality, efficiency and outcomes in addition to cost.

In a recent article on this topic in IndustryWeek, Abbott wrote, “Consolidation of health care providers, the emergence of new channels for accessing health care, and the addition of payment systems that reward outcomes create the ability for employers to develop curated networks and integrate numerous payment models to achieve optimal value. These are strategies that all employers seeking quality at a lower cost should consider.”

To read the entire article, which goes into more detail on these opportunities for employer, visit

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