In Part 1 we learned that one of the easiest things that self-funded employers can do to lower their costs and improve their benefits is to take an active role in managing advanced imaging. We looked at a midwestern school district that was burning $1M a year on imaging alone.
Today we will look at some more cash burn that your standard reporting probably won’t help you uncover. And unfortunately the results are just as shocking. (WARNING: You can do this today, this tactic will substantially lower your costs and your employees may really start to like you)
2) DIRECT CONTRACT FOR OUTPATIENT SURGERY: I am willing to bet a lot of money (or even the kids in the picture above) that nobody reading this article is insuring the lightbulbs in their house. You never know exactly what lightbulb will burn out but you know some will and nobody willingly pays a premium to insure against the things in life that are 100% predictable. Well, unless we are talking healthcare.
The interesting thing is surgery is just as predictable as those lightbulbs burning out and the only thing you can’t predict is who exactly is going to need surgery from one year to the next. If you want to know how predictable it is you can play around here in the H-CUP database (PRO TIP: you can get all this data for free but act now while net neutrality still exists) and you can even see the top 25 surgeries and the actual frequency. For the purpose of today’s lesson we will look at 2 really common and really overpriced procedures to show how big the impact really is. These don’t happen nearly as frequently as things like MRIs and CT scans but we are talking real money now.
An analysis of 192 laparoscopic cholecystectomies (fancy way to say gallbladder removal) showed the average payment was $10,799, after the discount. You should only be paying around $5,600. That is savings of 48% on average. Cost at the 90th percentile? How about $14,407 so you may be overpaying as much as $9,000 per surgery. The highest cost we saw after the network discount? How about $65,829.
An analysis of 71 laparoscopic hysterectomies showed the average payment was $15,771, after the discount. You should only be paying $8,000. That is savings of 49% on average. Cost at the 90th percentile? How about $23,9611 so you may be overpaying as much as $15,000 per surgery. The record here? How about $46,960.
One smaller employer in our Colorado market actually overpaid $184,331 in just one year on those 2 procedures alone. Keep in mind they only had 13 of these in total so they were paying what amounted to $15,000 cover charge every time someone needed one of these.
The total cost of overpaying for outpatient surgery in that same small employer? $1,019,345. That is over $1M that could be saved by focusing just on outpatient surgery, getting the right contracts in place and making it FREE for your employees when they need surgery.