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Healthcare Payer Trends: Strategies to Offset the Anticipated 7% Cost Increase in 2024

Authored by: Angie Adams

The past few years have ushered in higher costs for many services, and healthcare is no exception. Forecasts predict that healthcare expenses will increase an additional 7% during 2024; this increase will be fueled by labor shortages, payer and provider contract negotiations, supply chain issues, and more. 

 

“Many of the cost increases are traced back to the care being provided,” says Angie Adams, vice president of product management at i3 Healthcare Solutions. “Payers are at the back end of that, but still have opportunities to improve their internal processes to help manage rising costs.”   

 

Of course, challenges such as labor shortages or supply chain issues aren’t simple to fix. However, payers can create targeted strategies to offset healthcare payer trends related to rising costs and help weather future increases.  

Healthcare cost trends: Five strategies to manage rising expenses 

You can’t control many of the variables contributing to rising healthcare costs, such as increased labor or medical supplies expenses. But what you can control is internal processes, efficiency, and workflows. Much of your power lies in targeting these areas to manage upcoming cost increases. Here are a few strategies to consider:  

  • Evaluate and reduce the administrative burden. A study found that administrative waste makes up 15% to 20% of healthcare spending. And while not all spending is wasteful, up to half is likely spent on ineffective areas. Evaluate your organization to determine your administrative burden and consider implementing workflow improvements and technologies to reduce that burden, create greater efficiency, and lower costs.  
  • Consider leveraging interactive voice response (IVR). Many of your members already use IVR in their personal lives (“Alexa … where’s my Amazon package?”). Payers can adopt IVR, allowing members to ask questions such as “How much is left on my deductible?” and “What are my out-of-pocket costs for this type of service?” Asking these questions using IVR versus speaking with staff members helps reduce expenses and free up time for them to work on higher-level tasks.  
  • Expedite prior authorizations. Many payers have already reduced prior authorization requirements, but they could further improve their processes by leveraging algorithms and technology. “A payer could use technology to say, ‘under these specific conditions, this would be the pathway for approval,’ which could speed up processes and reduce the required resources,” says Adams.  
  • Reduce technical debt. Legacy applications often waste time, money, and resources. Many don’t “play nice” with newer technologies, creating time-consuming processes and employee workarounds. Plus, they’re expensive to maintain. As a result, retiring these applications is an effective strategy for recapturing lost resources.  
  • Enable self-serve technology. Many payers are already dabbling with self-service technology, but younger generations will demand more options as demographics change. “If you aren’t already, give members the ability to self-serve more robustly – looking up benefits, checking the status of claims, filing appeals, and more,” says Adams. “Push them to your member portal to save time and resources.”  

When considering healthcare payer trends, interoperability is also vital, according to Adams. It allows payers to more easily share information and create a single source of truth while reducing workflow repetition and creating better and more efficient member experiences.  

Healthcare cost trends 2023 and beyond: Creating more collaborative experiences  

Providers and payers are in a similar situation: They are navigating increased costs and patient expectations. Yes, you can make changes internally to help manage these costs, such as investing in automation, creating more self-serve options, and targeting administrative waste. But perhaps one of the most significant opportunities is for payers and providers to join forces and collaborate to create mutually beneficial solutions that are more cost-effective and better serve the patient.  

 

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