When discussing health plans, much of the focus tends to be on the few large national insurers or on Kaiser or the Blue Cross Blue Shield organizations. But in a number of markets there are still independent, often provider-sponsored plans that offer strong local brand recognition and meaningful competition. An article from Sherlock Company examines the characteristics of the best performing of these plans. (Sherlock Article) The plans that had overall low costs had a low staffing ration per 10,000 members and this low staffing ratio explained the great majority of the difference in overall costs. The average staffing ratio among the best quartile of plans was 41% lower than that of the higher cost plans. These plans also had staffing costs per FTE that were about 10% lower than those for the other plans, although no geographic adjustment was made. Non-labor costs, particular per FTE were higher in these overall low-cost plans, which may reflect more investment in information technology. And the low-cost plans appeared to spend less overall for functions like claims and IS, so they appear to using more technology to lower labor costs and improve productivity. They also had lower Sales and Marketing expense and appeared to be more likely to use external distribution channels, as opposed to employed sales people. There may be some scale effects in the results, as the low overall cost plans were about 26% larger on average than the other plans. But the conclusions also suggest that there are some best practices in managing and operating a health plan that do lead to lower administrative costs.
✅ Subscribe via Email
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
Healthy Skeptic Podcast
This is an outstanding report on total global drug spending and trends, with projections out to 2025. It helps you understand this important area of health care, which does much...
June 1, 2021
MedPAC 2019 Report to Congress
June 18, 2019
It may be investors that need the redesign. They just keep pouring money into this digital health crap despite all the losses. Redesign Health claims that it makes money by...
September 16, 2022
In truth, this seems like more money down a rathole. Google’s parent and other investors are putting a billion dollars into Google’s health arm, Verily. Apparently want to compete with...
September 12, 2022
It is like investors have learned nothing from the past two years. Even supposedly smart investors like Morgan Health, which is making a $20 million contribution to LetsGetChecked, which supposedly...
September 12, 2022
Access ACO Care Management Chronic Disease Comparative Effectiveness Consumer Directed Health Consumers Devices Disease Management Drugs EHRs Elder Care End-of-Life Care FDA Financings Genomics Government Health Care Costs Health Care Quality Health Care Reform Health Insurance Health Insurance Exchange HIT HomeCare Hospital Hospital Readmissions Legislation M&A Malpractice Meaningful Use Medicaid Medical Care Medicare Medicare Advantage Mobile Pay For Performance Pharmaceutical Physicians Providers Regulation Repealing Reform Telehealth Telemedicine Wellness and Prevention Workplace