A case for thinking big: Driving breakthrough cost savings

By: John Reynolds, Senior Vice President, Optum

This is the 1st blog of our eight part series “Bending the Cost Curve with Comprehensive Sourcing.”

As a payer seeking sustainable growth, you need to lower your total costs to fund your future. But here’s a simple, if uncomfortable truth: You likely need to think bigger, broader and deeper to drive breakthrough cost savings.

Research conducted with the Everest Group sought to understand what kinds of sourcing approaches could achieve the level of cost savings that would make real disruption worth the effort. The findings were surprising yet actionable. This blog series explores those research findings and the factors that drive them —starting with, perhaps, the most essential driver: engagement.

How can you achieve better engagement?

In aggregate, payers have to focus on getting more people to be engaged in taking care of their health so the population as a whole can be healthier. That is a practical reality. What will it take? Health plans have started to get much more creative in this. Providing incentives. Enhancing benefits. Sharing risk. These are all increasingly important strategies to drive down cost. Consumers can expect to see certain health goals — blood pressure, for example — clearly tied to incentives

How can you create easier online tools to make health cost data more accessible?

Plans and providers have extensive data between them and some purposeful sharing is taking place. But in this era of health care consumerism, people expect (and will demand) better health care cost transparency to drive provider choice.

How can you leverage data and technology to improve care quality?

There was a time when cost reduction meant putting more contract pressure on providers. Now, payers are increasingly incenting risk sharing to reward physicians for avoiding readmissions, preventing unnecessary utilization and achieving better health outcomes. In short, providers are being compelled to embrace value-based care. But, as noted above, that requires triangulating the efforts of payer, provider and consumers to encourage consumers to seek care from higher-performing providers through cost sharing and tiered network design.

The key challenge

To bend the cost curve down, payers need to attract and retain members by creating optimal consumer experiences and quickly move away from fee for service to value-based care. And they need to do this with a clear understanding of their total cost of care so they can identify and maximize their key value drivers. That’s the key challenge: Addressing total cost of care requires factoring both medical and operational expenses — both sides of the equation that impact value across the health ecosystem.

The largest payers have the internal resources and capacity to identify and drive significant savings. Others are evaluating comprehensive sourcing approaches to help them yield breakthrough results — as much as 7x more — that can be achieved in today’s dynamic marketplace.

At Optum, we partner with payers like you to provide the solutions and guidance to unlock your ideal cost-saving value drivers.  Learn more in this blog series and the resources below.


Read the Everest White Paper

Addressing Payer Costs through a Comprehensive Model: A Blueprint for Achieving Breakthrough Cost Savings

Watch Jimit Arora, Partner, Everest Group

Identifying the Most Optimal Sourcing Model from a TCO Perspective

View the Everest Infographic

Payers Can Save Up to 7x More through a Comprehensive Model

Connect with Optum to modernize your health care ecosystem


Catch up now on the articles you’ve missed in our “Bending the Cost Curve with Comprehensive Sourcing” series:

Part 1: A case for thinking big: Driving breakthrough cost savings 

Part 2: Beyond the back office: Why medical cost is so often overlooked

Part 3: Enabling success: The importance of IT infrastructure

Part 4: Beyond BPO: The next evolution to yield greater cost savings

Part 5: Reducing Total Cost of Ownership: Business intelligence is the differentiator

Part 6: Barriers to best-in-class: The case for articulating your full value

Part 7: Gaining traction: How to discuss comprehensive sourcing with stakeholders

Part 8: Achieve breakthrough cost savings: Five first steps


About the Author:

John Reynolds, Senior Vice President, Optum

John Reynolds joined Optum after a successful term as president and chief executive officer of Cielostar. John has more than 30 years of health care, banking, benefit consulting and payment technology experience. He holds a bachelor’s degree in economics from the University of Minnesota. Additionally, he holds a master’s degree in management and administration and a PhD in organization and management. He is on the faculty at St. Catherine University where he teaches health economics and policy within their graduate school of business. A frequent speaker at health care and financial services conferences, he has published numerous articles and co-authored the book Overdose: Your Health, My Money, cracking the code on the ACA and its ramifications.

One thought on “A case for thinking big: Driving breakthrough cost savings

  1. I am excited to learn that Optum is moving in a direction and introducing different methods to change the delivery model of patient care to increase efficiency in Health care. We need to be careful as the other two parameters in healthcare delivery namely Quality and Safety “can” be inversely proportional to Efficiency in a non-trivial number of settings. The entire onus was on the patient in the medieval times to maintain good health, which has shifted onto the society and later on to what we see are hybrid models of sharing the economic burden. Standardized Patient education is a new concept in modern medicine. A simple task of our life is running, which is one of the most natural things that human beings can do. But we will be amazed to know that a large number of regular runners are oblivious of the correct technique of running: A clear example of Lack of Standardized Education…

    The solutions in Medical delivery is thus complicated and exhaustive as we attempt to modify the natural history of disease process and we ought to do it taking into account human pain and suffering. I think economic models proposed thus far at the best only will be considered as experiments that are less than mediocre. Putting “time lines” is not a comprehensive approach as we are trying to combine “Period of Care and Point of Care”

    “Objective Analytics” of both Patient groups and Individual patients is an approach that we need to consider going forward. A simple example is how a simple app like tracking Heart rate for High school students Physical Education scoring is creating ripples as students need to perform physical activity to keep the HR at the level determined. A simple log of the “time of exercise” does not hold merit anymore.

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