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Health Care
Jul 1, 2015

Network Changes Can Reduce Health Care Costs

Sponsored Content provided by Jeff James - Chief Executive Officer, Wilmington Health

Let’s face it; we can’t keep up with everything that’s going on in a fast-paced business environment. We all struggle to find enough time to sell, buy, manage and evaluate the various elements of our businesses to keep us profitable and growing.
Purchasing health care is no different as we strive to find real value in the plans we purchase for ourselves and our employees.

So a quick recap of what we’ve discussed in our series on health care cost reductions: How Do You Reduce Health Plan Costs Without Sacrificing Quality Of Care? and Making An Impact on Health Insurance Costs. These first two articles dealt with why you’re going to be able to make an impact on health care expense and some broad categories of how to go about making change.

Today’s article digs into the “how” part of really changing your organization’s health care costs by evaluating the network of providers you use. Developing a health care network that is optimized can have a tremendous impact on premium cost without sacrificing a quality health care service or experience. You can work with your insurance broker, health care providers, or benefits and human resources staff to evaluate these key areas:

  1. Site of service
  2. High-performance/narrow networks
  3. Use of centers of excellence
  4. Payment methodologies that hold providers accountable
  5. Pharmacy management
Let’s discuss these in a little more detail.
  • Site of service. Moving health care delivery out of the hospital and into the office setting has proven to make a huge impact on both quality and cost. And for the first time, you have a real chance to review the differences thanks to a more transparent health care system. Probably one of the easiest tools to use is the BC/BS Health Care Cost Estimator tool. This resource can provide you with actual cost comparisons on a variety of health care services from providers throughout the region. Using tools like this and working with your insurance carrier can help you make better decisions as to where the care you receive should be delivered and aid in trimming premium expense.
  • High-performance/narrow networks. In a free market, having fewer options generally drives up cost. In health care it can actually work in the reverse. By being more selective in choosing provider networks that are higher performing on quality and cost measures, you can actually reduce premiums without compromising your employees’ care. Commercial insurers have already begun this process by providing more selective networks options, such as the BC/BS Blue Value plan.
  • Centers of excellence. Centers of excellence typically focus on providing a certain type of care: breast health, heart and vascular, or orthopedics. These centers have done all of the heavy lifting in terms of evaluating best practices; offering the best technologies; and through their improved outcomes and more efficient use of time and resources, having the best costs. Identifying and guiding your employees to centers of excellence can provide cost savings to you and your employees and a better health care outcome for the patient.
  • Provider accountability through performance payments. Accountable Care Organizations (ACOs) assist their providers in keeping their patients healthy and out of the hospital more than those who don't. By working with ACOs, you have healthier employees who access their health care less because they are healthier and in turn create lower health insurance premiums. Wilmington Health created an ACO in 2013, Physicians Healthcare Collaborative, to hold our own providers more accountable for delivering a higher quality health care service while reining in costs. Implementation of this effort has had a great impact on the health care system, saving the Medicare system alone more than $530,000 in its first year. 
  • Pharmacy management. Prescription medications are a major component in managing many diseases and keeping us from developing more severe health conditions that often require higher cost procedures or hospital stays. But you can effectively manage those costs by evaluating pharmacy networks and provider-based medication usage. Every pharmacy charges differently for medications. A simple review of a sampling of individual medication charges from a variety of pharmacies can easily determine where some cost savings can be found by changing pharmacies. In addition, identifying doctors who have equivalent patient outcomes, but different medication choices (for example, generics versus brands), can be another avenue to effectively manage pharmaceutical costs. If Doctor A can keep you just as healthy as Doctor B using a less expensive medication, why shouldn’t you choose Doctor A? An evaluation of both the pharmacy and health care practitioners in your health plan can have a significant impact on your premiums.
Each of these network optimization tips rely on the focus of the service provider to deliver high-quality health care in the right place and at the right time. We’ve spent a great deal of time focusing on these issues for our own self-funded plan and welcome the opportunity to put our experience to work to help you. Feel free to contact us at [email protected] to set up an appointment for network review of your health plan. We’ll provide insight and ideas to help you optimize your service providers to deliver a health benefit that provides both quality and value to your employees and your business.

Jeff James is the chief executive officer at Wilmington Health and part of the team of providers and staff driving change in the health care system to reduce cost, improve quality and enhance the patient experience. Since 1971, Wilmington Health has been committed to the care and health of its community in Wilmington as well as all of southeastern North Carolina. Wilmington Health is structured as a multispecialty clinic with primary care providers integrated into the system. In this way, Wilmington Health is able to provide a comprehensive and coordinated approach to the care of all its patients. For more information go to

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