Prevention offers value

March 1, 2010

It's intuitive that preventing a problem from happening is preferable to fixing it after the fact.

Health plans can improve members' quality of life-and simultaneously improve their own bottom lines-by focusing more on prevention. Studies have shown that investments in prevention pay dividends, and the industry's dire financial straits are proof that member health and healthy bottom lines can't be separated.

"Health plan executives need to be fully aware of the economics of prevention efforts," says Larry Cohen, founder and executive director of the Oakland, Calif.-based Prevention Institute.

"Economics are a reality in healthcare, and although managed care plans sometimes are criticized for it, saving money and reducing costs are good for everyone," he says. "That's one of the great things about prevention: Health plans can do well by doing good."

"If your plan is competing largely on price, your days are numbered. The market has changed," says Antonio Legorreta, MD, general manager of Payer Solutions with Health Benchmarks, a unit of consulting firm IMS Health. "The competition has shifted from simply trying to provide the lowest price to competition based on the kinds of clinical outcomes you provide. The main component to success as a health plan is to become a better health informatics company."

Dr. Legorreta says plans have an enormous amount of information in their claims systems, and they should do a better job of extracting value from it. That sophisticated type of data mining isn't an easy task, but the health plan that can best stratify its members based on risk has a powerful engine for its operations, he says. Identification of population and individual health-improvement opportunities through data mining can lead to cost savings.