See the slide below to understand the concept. It’s diagnosis-specific and quantifies price and quality.
Did you know that when providers are ranked by efficiency by diagnosis that price disparities roughly double with each succeeding quartile ?
Slide 5 here
What this means is that the paid price for the same type of diagnosis (including similar comorbidities) roughly double between the first quartile to the second to the third to the fourth. Why ? Because the most efficient providers have a narrow price band reflecting efficiencies, scale and avoidance of unnecessary resources. They generally treat the same types of patients repeatedly; they’re experienced “focused factories” not involved in defensive medicine, over-prescribing, medical errors, excessive utilization, ineptitude, fraud, waste and abuse. And every successive quartile is less efficient with wider price disparities become more expensive at an increasing rate. With this price disparity “amplification” effect, a change of just 1 in 5 patients going to a more efficient provider in the 1st and 2nd quartiles yield a 30% savings on your total plan spending. Yes, 20% change = 30% savings; and your members get better quality care.
The biggest potential solution to our nation’s health care cost crisis is OPTIMIZATION to receive better quality at a lesser price by directing patients to the most efficient, highest quality providers.
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