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The Best Way To Manage Healthcare Costs?

OneDigital’s final piece of the “Managing Health Care Costs” series focuses on the most critical element: you.

We have highlighted in past issues several ways you can reduce costs when you need medical treatment and services. But the fact remains that reducing – even avoiding – your need for health care in the first place has a more direct and greater impact on these costs.

Wellness programs aim for this end, but they need the right focus to return meaningful results.

Your decisions, behaviors and genetics shape your health care needs. So an effective wellness program must target those decisions, behaviors and, perhaps most importantly, genetics.

Most tend to think about wellness as steps one can take to improve personal health by adopting what generally are thought to be healthier habits like more exercise or a better diet.  One recent study, however, shows that better economic results derive from shifting the wellness spotlight to managing chronic ailments, such as diabetes or arthritis.

Evidence shows illnesses like chronic obstructive pulmonary disease (COPD), asthma, clinical depression and hypertension – which can be managed effectively using the right program – represent a large part of overall health care spending. Moreover, these conditions tend to result in repeated or unnecessary hospitalizations. Experts agree that hospitalizations – a major health care cost driver – can be reduced through proper chronic disease management.

The Rand Corporation, a nonprofit research entity, just published its seven-year analysis of one large employer’s wellness initiative. The program included health-risk assessments, wellness events, a health hotline, healthy living features and a disease management strategy. The data showed that those who engaged in disease management saved $136 per month, while those using just the healthy lifestyle features showed no significant savings. Those who used both features managed a $160 cost savings per month.

 Researchers do not suggest there is no measurable benefit to adopting a healthier lifestyle. In fact, the Rand report showed the employer saved 50 cents for each dollar spent on lifestyle management. But chronic illness management efforts saved the company $3.80 for every dollar it spent and accounted for 87 percent of the employer’s overall savings.

Different reports show varying returns on investment for disease management. Recent data suggests that effective disease management must involve a comprehensive approach including:

  • risk assessment to identify those with chronic ailments;
  • individually designed management programs developed through providers and managed care specialists to educate individuals on effective management strategies; and
  • targeted follow-up to ensure compliance with basics like medication schedules.

Wellness certainly remains a key part of reducing medical expenses. But rethinking wellness to emphasize your understanding of your risks – and the steps you can take to reduce or manage them – should lead to greater savings than by simply adopting healthier habits.