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Financial Sustainability and Cost Control in Healthcare

Financial Sustainability and Cost Control in Healthcare

Financial Sustainability and Cost Control in Healthcare

For healthcare payers and managed care organizations, the concern for escalating healthcare costs has posed ongoing financial challenges and may lead to increased premiums and financial strain on insurance systems. Finding a delicate balance between cost control and preserving quality care is critical for these entities to manage financial risk and Medical Loss Ratio (MLR), maintain competitiveness, and uphold their commitment to providing comprehensive and effective healthcare coverage. Striking the right equilibrium ensures sustainable business operations while safeguarding the health and well-being of the individuals covered by these entities.

Understanding the Rising Healthcare Costs

Several factors contribute to the escalating healthcare costs, including:

  1. Technological Advances: The constant development of new technologies to support both clinical innovations and administrative efficiency comes with high integration and implementation costs. These costs are further exasperated by short product life cycles and the ever-changing regulatory landscape.
  2. Aging Population: As the population ages, there is an increased demand for healthcare services, particularly for chronic conditions and age-related illnesses. These populations tend to have a higher prevalence of comorbidities requiring higher degrees of managed care.
  3. Administrative Costs: Complex healthcare systems involve substantial administrative expenses and can be prone to inefficient workflows. This can also impact member experience causing costly membership turnover.
  4. Pharmacy Costs: Despite regulatory advances, the rising prices of prescription drugs and the introduction of new, expensive medications contribute significantly to overall healthcare expenditures. Pharmacy Benefit Managers (PBMs), pharmacy middlemen, are also out to raise profits often at the expense of the consumer and health plan.
  5. Chronic Disease Care: The increase in chronic diseases with their inherent complexities requires ongoing management and treatment, resulting in higher healthcare utilization and costs.
  6. Unnecessary Procedures: While there has been a shift towards value-based care and away from volume-based payments, network leakage and overuse/misuse of medical services continue to inflate costs without providing significant benefits to patient outcomes.
  7. Fragmentation of Care: Lack of coordination among healthcare providers, interoperable variability, and fragmented care delivery can lead to inefficiencies, redundant tests, and increased costs.

Addressing these factors requires a multifaceted approach involving adaptable technology, policy changes, workflow review, and ongoing innovation aimed at improving efficiency and reducing waste in the delivery of healthcare services.

The Need for Financial Sustainability in Healthcare

Healthcare costs have direct implications on the financial viability of healthcare organizations, impacting key metrics such as the Medical Loss Ratio (MLR), operating costs, and revenue margins. Unchecked costs can lead to a higher MLR, indicating a larger proportion of revenue spent on medical expenditures. This, in turn, reduces the organization's profitability and raises concerns about long-term financial viability. For government-sponsored programs, MLR is often stipulated at about 85%, making it crucial to strategically manage the remaining 15% for administrative expenses, profits, and benefit enrichment.  

Technology-Based Strategies for Cost Control in Healthcare

Jiva plays a crucial role in scrutinizing underlying causes of financial leakage within healthcare systems by providing comprehensive data analytics, and automated workflows powered by its configurable rules-based engine. These tools enable healthcare organizations to identify inefficiencies, streamline processes, and create cost-saving workflows by automating repetitive tasks, optimizing resource allocation, and facilitating data-driven decision-making, ultimately enhancing operational efficiency and financial sustainability.

Jiva’s enterprise solution platform includes the following best-practice-informed solutions to drive value-based care delivery:

  • Interoperability: Seamlessly share patient events and data, triggering the right notifications and workflow actions at the right time. This improves care coordination, reduces duplication of costly diagnostic tests, and enhances workflow efficiency while reducing touch points, ultimately contributing to cost control.
  • Clinical Content: Jiva’s expansive, evidence-based rules and assessment library identifies, stratifies, and addresses health trends and risks within specific patient populations. This enables proactive interventions, preventive care initiatives, and more efficient resource allocation.
  • Care Management: Configurable rules, templates, and automation triggers enhance care management workflows by applying NCQA, CMS, and URAC-compliant and proven clinical guidelines. This ensures precise and timely interventions while streamlining processes to reduce operational costs.
  • Utilization Management: Jiva workflows are designed to maintain regulatory compliance across multiple lines of business and promote high-quality care delivery while real-time utilization analytics deliver insights to detect leakage and prevent unneeded expenditure.
  • Social Care: Recognizing the impact of social determinants on health outcomes, the Jiva Social Care solution provides insights for targeted community intervention and automated workflows for collecting and addressing individual social risks contributing to the total cost of care.
  • Quality Management: The Jiva Care Quality Navigator supports HEDIS® performance monitoring and care gap outreach, which in turn ensures cost-saving preventative screenings and care gaps are addressed. Through improved quality performance, organizations can reduce costs and increase revenue.
  • Risk Adjustment: Accurate risk adjustment, especially for aging populations, allocates resources more efficiently by appropriately accounting for the health complexities of patient populations. The Jiva Risk Adjustment Navigator promotes risk score accuracy resulting in greater expense predictability and better reimbursement rates across the population.
  • Patient Education and Engagement: Empowering patients with education about their health conditions and encouraging active engagement in their care can lead to better adherence to treatment plans while reducing healthcare utilization. Jiva’s Member Engagement Navigator provides insights to optimize the efficacy of outreach campaigns and promote engagement.

Balancing Financial Sustainability and Quality Patient Care

Striking a balance between financial sustainability and patient care quality remains an important pursuit of agile organizations in the face of rising costs. Leveraging technology solutions, such as Jiva’s data analytics, interoperable systems, and rules-driven workflow automation can optimize operational efficiency, streamline processes, and enhance care coordination. This enables healthcare organizations to manage costs effectively while maintaining — and even improving — the quality of patient care. This technological integration aligns financial objectives with patient-centric goals, fostering a sustainable healthcare model that prioritizes both fiscal responsibility and optimal patient outcomes.