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Putting Healthcare’s Cost Cards on the Table

By Nate Murray

The price of US health insurance rose nearly nearly 30% from Sept. 2021 – Sept. 2022 – a sharper increase than nearly every other commodity tracked by the Consumer Price Index. And reports from Mercer and WTW suggest it’s not done climbing. According to these sources, employer healthcare costs will continue to tick up another 5-6% in 2023 and for several years beyond. While employers – already navigating widespread labor shortages and rising wages – will likely step up to absorb much of this increase, employees will feel the pain as higher healthcare costs eat into their wage increases and lead many to put off much needed care.

A cynical observer might point out that it’s become almost an annual rite to report on runaway healthcare costs, wringing our collective hands, and continuing with business as usual (because for the insurance industry that business has been so good!). And they wouldn’t be wrong. But in the face of particularly stiff headwinds, it’s as good a time as any – and well past the hour of urgency – to get things under control and rein in costs. The question of how to do so, however, takes both the will to act and a roadmap for the future.

The will can start with employers starting to demand, as one insurance analyst has suggested, “total cost transparency” and accountability from providers – two things in short supply in an industry loose with marketing claims and tight on proof. The way is fortunately under our noses: a proven approach that’s been around for decades, is well-studied, and cuts to the heart of healthcare spending: integrated, team-based primary care – focussed on outcomes.

Back to Basics

At Crossover, we believe that to inflect the total cost of care you have to fundamentally transform the way care is delivered — particularly primary care, which determines 80% of every downstream dollar spent in healthcare. A recent comprehensive report by The National Academies of Sciences, Engineering and Medicine (NASEM) found that primary care is the only place in healthcare where an increased supply translates into lower costs and more equitable outcomes. To put our own cards on the table and objectively evaluate the impact of our advanced primary care model on total medical cost – and the service areas where we can have the greatest impact and opportunity – we undertook a longitudinal study of five of our customers across seven markets.

With a firm commitment to data transparency in an industry awash in marketing claims, we applied the most robust statistical methodologies and engaged a third-party consulting firm, including members of the Society of Actuaries, to do an independent review of our methodology and findings prior to publishing. For the primary study methodology, we used a difference-in-difference (DID) regression with clients who provided claims data before and after the implementation of Crossover’s services. This allowed us to compare the cost of care, per member per month (PMPM), before and after engagement with our advanced primary care model between 2017-2021. The results were striking. We found that Crossover’s services managed to lower total cost of care by a significant 9% across a range of clients, geographies and time periods. In particular, we saw savings from reduced emergency care and lower specialist encounter costs. For clients where we were limited to post-implementation claims data, we leveraged a propensity score matched cohort study design. That analysis showed that total cost of care per user per month (PUPM) was 24% – 38% lower among employees attributed to Crossover Health for primary care than for employees in the community cohort.

How We Reduce the Cost of Care

With an eye toward continuously raising the bar on our performance, we are continuously evaluating which levers in our model lead to the greatest improvements for our employers and members. Our study demonstrates that we were particularly effective in removing costs associated with emergency care and specialist encounters – two of healthcare’s highest cost centers that our model targets aggressively. And based on prior peer-reviewed studies and extensive outside research, we are confident in singling out in our service model a few prime drivers of these cost savings.

Interdisciplinary team accountable for outcomes

A signature feature of Crossover that’s pivotal to managing costs and outcomes is our model of integrated, team-based care. By design, our teams bring together a mix of clinical disciplines (primary care, mental  health, physical medicine, and health coaching) and within disciplines a range of provider types. With the goal of achieving optimal health outcomes, clinicians regularly refer our members within disciplines (e.g., physical therapist to chiropractor) and between disciplines (e.g., primary care provider to psychologist), with 20% of our members seen by two or more disciplines. This approach saves cost by keeping more care within the team and reducing the number of outside specialist referrals. When a specialist referral is required, expert embedded care navigation (the 5th member of our integrated care team)  is another key factor in lowering costs and boosting patient satisfaction. With this model, we have reported lower specialist visit costs across the board, with some of the greatest savings coming from imaging (-8%), gastroenterology (-14%), and sleep medicine (-22%), and happier members who are skillfully guided through the system. 

Ubiquitous access to care

We surround our members with care and give them choice. Sometimes  our health centers are onsite at member workplaces, and other times they are  methodically located at an ideal setting within their communities. We also have care available virtually and asynchronously, which uniquely positions us to deliver comprehensive preventive care – where, when and how our members need it. Studies have shown that locating employer-based clinics onsite lowers healthcare costs by easing access to preventive care, increasing screening and early detection, and forging trusting relationships between members and care teams. With the pandemic as catalyst, we evolved a hybrid model combining on-site with virtual and asynchronous care to even greater success. A peer-reviewed study we conducted over an 18-month period in 2020-2021 showed our members moving fluidly between in-person and virtual care, defining their own pathways to health based on clinical discipline and preference. By meeting our members where they are, with the care they need when and how they need it, we are able to deliver consistently better health outcomes at lower cost.

Proactive population health focus

Study after study has demonstrated the profound impact of screening and early detection on both health outcomes and downstream cost. And yet, less than 10% of US adults aged 35+ receive all of the high priority preventive services recommended for them. At Crossover, we prioritize a population health approach that combines proactive outreach, active care management, and a hybrid care model that’s proven to be more effective than either in-person-only or virtual-only models. With this hybrid model, we’ve managed to markedly improve screening rates over the course of the pandemic for everything from cancer to diabetes to behavioral health – putting us above the national average and in the 90th percentile for most preventive care and chronic disease management measures.

Setting a New Baseline

These total cost of care results are excellent and validating for Crossover’s model. They represent, however, just one part of the picture of how we evaluate our success. For many industry observers, total cost of care has become healthcare’s North Star – sometimes at the expense of other equally important indicators, such as patient experience, physician satisfaction, and overall health outcomes. To paint a more holistic picture of our impact on these measures, and continue to earn the trust of our members and clients, we are always pursuing new data to validate and refine our model.

More study is merited, for example, around the role of trusted patient-care team relationships in fostering deeper engagement to achieve longer-term health goals. In a survey fielded by the Primary Care Collaborative in 2020 at the peak of the pandemic, 83% of patients expressed their reliance on trusted relationships with primary care providers as an anchor to their wellbeing. As we at Crossover continue to find opportunities to drive down cost, we will be as focused on these other priorities for our members, customers, and caregivers as we are on the bottom line.

When the goal is to always set the highest standard, rigorous data-backed studies like this are essential both for establishing transparency and trust and for setting a baseline to improve upon. This is the roadmap for the future. Far from resting on our laurels, we will continue using our data to do better for our members and clients: better capture and address social determinants of health, more accurately predict when members will be hospitalized, and more effectively engage them when they are discharged. And, most importantly, build renewed belief and trust in what health should be.


Frequently Asked Questions

Why do healthcare costs keep increasing every year?

There are several factors driving the rise in healthcare costs each year, including expensive new technologies and treatments, waste and inefficiency in the system, high prices set by drug companies and hospitals, chronic diseases, and an aging population.

What were the main drivers behind Crossover Health’s reductions in cost of care?

Key factors included reduced emergency and specialist care, embedded care navigation, ubiquitous access through hybrid care models, a proactive population health approach, and trusted patient-provider relationships.

Beyond cost, what other measures of success does Crossover Health track?

In addition to the total cost of care, Crossover Health looks at patient experience, physician satisfaction, overall member health outcomes, rates of screening and prevention, and the ability to address social determinants of health.

How much more will employers’ healthcare costs increase in 2024?

According to reports, employers can expect healthcare costs to climb another 5-6% in 2024 on top of 2023’s spike. This will further strain budgets.

What percentage of my health insurance premium goes towards overhead and profits?

Estimates suggest up to 20-30% of premium dollars go towards insurer overhead and profits rather than direct care. The Affordable Care Act mandates at least 80% go to care.

Could changing my diet and lifestyle lower my potential healthcare costs?

Yes, studies show people with healthier diets, more physical activity, and who avoid smoking incur significantly lower healthcare costs over their lifetime. Preventative care is key.

Could mental health services help lower overall medical costs?

Yes. Issues like depression are linked to higher medical spending. Improving mental health can reduce hospital admissions and prescription drug use and promote better self-care. Some insurers now cover mental health therapy as primary care.