How to Control Healthcare Cost Trends

Austerity ≠ Deleveraging. Cost-Cutting ≠ Cost Containment. Ray Dalio insightfully argued that austerity alone cannot solve a debt crisis—it shrinks income faster than it reduces debt, worsening the underlying problem. As a public health physician and health economist, I see a parallel in healthcare financing. Too often, cost containment is mistaken for cost cutting. Cutting staff, capping budgets, or limiting services may bring short-term relief—but like austerity, these measures often backfire. They erode system capacity, delay care, and lead to higher costs in the long run. What, then, is true cost containment? Here are six smarter, sustainable strategies: 1. Invest in prevention and early intervention Catching conditions early—especially chronic diseases—reduces costly downstream complications. 2. Redesign payment systems Transition from fee-for-service to value-based models that incentivize outcomes, not volume. 3. Strengthen primary care Empowering primary care reduces fragmentation, improves continuity, and lowers reliance on hospitals. 4. Leverage data and technology Use predictive analytics and AI to manage risk, personalize care, and streamline operations. 5. Right-site care Shift services to lower-cost settings (e.g., ambulatory, community, or home care) when clinically appropriate. 6. Engage patients as partners Informed patients make better choices, adhere to treatments, and often choose less intensive care when properly supported. Deleveraging requires growth, not just cuts. Sustainable healthcare requires value creation, not just budget reduction. The challenge is not merely to spend less—but to spend smarter. What strategies have you seen work in your systems or regions? #HealthcareEconomics #RayDalio #HealthPolicy #CostContainment #ValueBasedCare #PublicHealth #SystemsThinking #SustainableHealthcare

Healthcare Is Drowning in Waste—But It Doesn’t Have to Be 30% of healthcare costs? They come from waste, not care. Lean Six Sigma isn’t a buzzword—it’s a roadmap to rescue healthcare. Here’s exactly how to implement 5 life-saving strategies: 1. Map the Patient Journey—Then Eliminate the Friction 🔍 The Problem: Redundant steps drain time and trust. How to Fix It: Step 1: Assemble a cross-functional team (clinicians, admins, patients). Step 2: Use Value Stream Mapping to document every touchpoint—from scheduling to discharge. Step 3: Identify bottlenecks (e.g., duplicate data entry, delayed consults). Step 4: Redesign workflows by cutting non-value-added steps. 2. Standardize High-Risk Processes with DMAIC 📊 The Problem: Variability in critical processes kills consistency. How to Fix It: Define: Target a high-risk area (e.g., medication reconciliation). Measure: Collect baseline error rates and process times. Analyze: Use root-cause analysis (e.g., Fishbone Diagram) to identify failure points. Improve: Pilot standardized checklists or digital verification tools. Control: Embed changes into training and audit compliance monthly. 3. Tackle “Hidden” Waste in Supply Chains 🧰 The Problem: Mismanaged inventory wastes billions annually. How to Fix It: Sort: Audit supplies—discard expired stock and consolidate duplicates. Set: Designate labeled storage zones for critical items (e.g., PPE, surgical tools). Shine: Implement daily 5-minute cleanups to maintain organization. Standardize: Create visual guides (e.g., floor markings, QR inventory trackers). Sustain: Assign “5S champions” to audit and reinforce habits. 4. Empower Frontline Staff as Problem-Solvers 💡 The Problem: Frontline teams see inefficiencies but lack agency to act. How to Fix It: Step 1: Host weekly Kaizen Blitz sessions with nurses, techs, and pharmacists. Step 2: Prioritize pain points (e.g., paperwork bottlenecks, equipment delays). Step 3: Prototype solutions in 72 hours (e.g., a mobile app for supply requests). Step 4: Scale successes and celebrate team contributions publicly. 5. Leverage Data to Predict—Not Just React 📉 The Problem: Reactive care drives avoidable readmissions and costs. How to Fix It: Step 1: Use Six Sigma tools (e.g., Pareto Charts) to identify top risk factors (e.g., sepsis, COPD). Step 2: Build predictive models with EHR data (e.g., flag high-risk patients via ML algorithms). Step 3: Train teams to act on alerts (e.g., proactive post-discharge check-ins). Step 4: Monitor outcomes and refine models quarterly. Lean Six Sigma isn’t about cost-cutting—it’s about reinvesting saved time and money into: Hiring more bedside staff. Retaining burnt-out teams. Expanding access for marginalized communities. Which strategy will you implement this quarter? What’s your #1 barrier to eliminating waste?  Let’s problem-solve in the comments. ♻️ Repost to save healthcare Follow Sivanandan N. --- #Healthcare #Leadership #LeanSixSigma #HealthTech #Management

The recent warning that even Malaysia’s T20 households are turning to public hospitals because private insurance is “too expensive” is a red flag. It signals not only financial strain on families but also the risk of overwhelming an already stretched public healthcare system. While calls for capping insurance premium hikes are understandable, they miss the root problem: rising medical costs. Premiums are only the symptom; the disease is medical inflation. Insurance premiums rise because claims costs rise. When hospitalisation, specialist fees, drugs and diagnostics increase 12–15% annually, insurers must reflect this in premiums to stay solvent. Artificially capping premiums does not reduce the underlying cost of care. Instead, it creates hidden risks: insurers may withdraw products, reduce coverage, or in extreme cases exit the market altogether. This narrows consumer choice and weakens the sustainability of the system. Other countries offer valuable lessons. Singapore did not cap premiums; instead, it tackled costs at source by publishing fee benchmarks for procedures and enforcing hospital billing transparency. Australia subsidises a portion of premiums while negotiating with providers to keep costs reasonable. South Korea tightly regulates hospital and physician fees, ensuring affordability across its national insurance scheme. The UK uses public–private integration, directing NHS patients to private hospitals at controlled rates to balance capacity. Malaysia has begun to address some of these challenges, such as setting fee schedules for certain procedures and exploring targeted subsidies to cushion households. However, these efforts remain fragmented and insufficient to counteract runaway medical inflation. Much more needs to be done. For example, provider charges should be comprehensively regulated through national fee benchmarks with strict enforcement against overcharging, and transparent itemised billing must become the norm rather than the exception. Drug prices also need tighter control through bulk procurement and caps on hospital mark-ups. The government should go further by using its purchasing power to negotiate strategically with private providers, ensuring affordability across both public and private systems. Preventive care, too, must be strengthened by embedding screenings and wellness into insurance packages to reduce costly late-stage treatment. Finally, subsidies should be refined to ensure they keep middle-income households insured, rather than blunt premium caps that could destabilise insurers and reduce consumer choice. Malaysia’s challenge is clear: without addressing medical cost inflation, premiums will continue to rise regardless of regulatory caps. If left unchecked, more families will abandon private insurance and flood into government hospitals, threatening quality and access for all. The solution lies not in suppressing premiums, but in attacking the root cause — the rising cost of healthcare itself.

A patient told me last month he'd dropped his family's health insurance to make rent. Then he asked if we could push his colonoscopy another year. He's not an outlier. Bloomberg just reported that younger, healthier workers are walking away from employer plans because the premiums feel impossible. One nurse was paying $585 every two weeks for family coverage. That's not a benefit. That's a second mortgage with a deductible. Here's what I see in clinic every week. Screening colonoscopies pushed out two more years. PPIs split in half to stretch the bottle. Fatty liver that becomes cirrhosis because the follow-up kept getting deferred. By the time we actually engage, the cost is ten times what early intervention would have been. That's the real driver of healthcare spend. Not that people are sick. That we built a system that waits until people are expensive before it shows up for them. Prevention still gets treated as optional. Metabolic risk still lives somewhere in the indefinite future. Gut health, liver, glucose, weight, sleep, inflammation, cancer screening: patients experience all of this as one body, while the system carves it into silos with separate copays and separate prior auths. If you want to lower spend, you have to stop the major illness before it shows up on the claims report. Catch the adenoma at 45, not the Stage III at 52. Reverse the prediabetes, not manage the insulin. Treat the fatty liver, not the transplant workup. The employers who lean into this earlier, more personalized, more biologically informed will be the ones whose people actually stay healthy. And whose costs actually come down. https://lnkd.in/eDUCF24s

A hip replacement can cost $20,597 at one facility and $98,638 at another – all in the exact same city! But it's not a 5x difference in outcomes. How can we make sure patients go to the high-value provider? Most efforts to fix this mess rely on price transparency tools that patients rarely use. But here's the obvious solution: since physicians are the ones making referral decisions, why not create incentives for docs to steer to the high-value providers? In our new NEJM Catalyst study, my colleagues and I tested a multipronged intervention to shift physician referral patterns toward high-value settings. Here’s what we tried: Individualized goals, meaningful financial incentives, personalized coaching, and monthly performance feedback. The results varied by service type, but were striking where they worked. We increased high-value referrals by 19% for radiology and achieved 23% cost savings for orthopedic procedures – an average of $2,590 saved per referral. The intervention worked because we targeted the decision-makers: the physicians who actually control where patients receive care. This shows that even modest changes in physician behavior can generate substantial savings when price variation is this extreme. Check out the full study in the comments below. #HealthcareOnLinkedIn #HealthcareAffordability #PriceTransparency

18-20% annual increase - that's the rate at which healthcare costs are rising. It's a number that should make every business leader pause and think. This surge in healthcare expenses isn't making headlines, yet it's a critical issue that's slowly eroding the value of our employee health insurance plans. If we're not increasing our Group Health Insurance (GHI) coverage every three years, we're effectively reducing our employees' health protection. Here's why: ➤ Technological Leap: The medical field is transforming. We've moved from X-rays to MRIs in what feels like a blink, and each leap brings better care but at a premium. ➤ Facility Upgrades: Even smaller hospitals now feature cutting-edge equipment, driving up expenses. ➤ Pharmaceutical Costs: New, life-saving drugs enter the market at high prices due to extensive R&D investments. ➤ Operational Expenses: Rising real estate costs for medical facilities and competitive salaries for healthcare professionals contribute to overall cost increases. The math is simple. Over three years, we're looking at a 50-60% increase in healthcare costs. Our GHI plans need to keep pace, or we're shortchanging our teams. I've seen the consequences firsthand: Employees facing crippling medical debts. Delayed treatments due to coverage gaps. Stress that impacts not just health, but productivity and loyalty. The solution isn't complex, but it requires commitment: ➤ Audit your GHI plans annually. ➤ Increase coverage limits every three years, aiming for at least a 50% bump. ➤ Educate your team on their coverage – awareness is half the battle. ➤ Partner with insurers who understand this new landscape. As leaders, we don't just manage businesses – we safeguard our people. In this era of skyrocketing healthcare costs, that means taking a hard look at our GHI plans and making sure they're not just good on paper, but good in practice. It's about that woman in operations who beat cancer without bankrupting her family, or the guy in IT whose child got the specialty care they needed. The companies that act now will set the standard for employee care in the years to come. The question is: Will you be one of them? #PolicybazaarforBusiness #HealthcareCrisis #Employeebenefit #grouphealthinsurance

There's a growing force that's impacting the growth of the workforce this year, and it isn't AI or interest rates. It's the cost of small group healthcare premiums, and it's hitting businesses with less than 50 employees extra hard right now. In 2025, the average premium per employee was ~$18,000/year, with employers covering ~$12,000 and employees covering ~$6,000 through payroll deductions. Now it's getting worse. The median proposed premium increase for small group health insurance in 2026 is 11% across 318 insurers in all 50 states and the District of Columbia. But that’s just the median. About 10% of insurers are requesting premium increases of 20% or more. For a 20-person company contributing ~$12,000 per employee annually that's $240,000 spent on providing health insurance. An 11% increase means an additional $26,400 in health insurance costs. A 20% increase? That’s $48,000 more per year, money that could have helped to fund an additional hire. On the employee side, their ~$6,000/year contribution would jump $660-$1,200/year in the same circumstances. Welcome to the 2026 small group health insurance renewal crisis. If you find yourself sweating these costs as a leader, there's a couple of common options to consider if you haven't already. Option 1: Use a PEO (Professional Employer Organizations) PEOs aggregate multiple small businesses into large pools, giving you access to enterprise-level rates and plan options. How PEOs handle renewals differently: PEOs spread risk over a large number of employees among many clients and can offer better health insurance plans at lower costs compared to options available in the open market. They also provide higher levels of predictability and flatten the renewal curve. Option 2: Individual Coverage Health Reimbursement Arrangements (ICHRA) Instead of offering traditional group coverage, you provide employees with a tax-advantaged stipend to purchase individual marketplace plans. Why this is gaining traction in 2026: ACA premiums in some regions now closely mirror employer-sponsored plan costs. While the overall coverage is typically stronger with a PEO, the ICHRA model is useful for businesses who want a fixed costs that won't fluctuate with the market, and for employees who want more flexibility to suit their individual situation. How it works: - The employer sets a monthly allowance per employee (e.g., $500/month) - Employees shop for individual marketplace plans - You reimburse employees tax-free for their premiums - The employee can choose to put any underutilization of the monthly allowance towards other health and wellness costs. Through a bunch of conversations with leaders on this topic lately, I've found that there's a significant disparity in knowledge in this area, and it's not surprising. For a lot of leaders focused on growth, these details have been an afterthought beyond the traditional "we need to offer good benefits" conversation. I think that's starting to change.

Here's how we built a customized drug trend benchmark to be used in value-based contracts and showed the true value of a company’s programs. --- Benchmarking is a critical tool for any company aiming to improve its performance or maintain a competitive edge. How can you evaluate your performance without relevant comparisons? Approaches to benchmarking can vary but are typically things like your pricing compared to Medicare, utilization or unit cost compared to a national average in the same line of business, or enrollment/spending trends. While broad industry benchmarking is valuable by itself, there are many companies that could benefit from a customized benchmark, particularly in #ValueBasedCare (VBC). --- Business problem: your company has dialed in the process for managing #DrugCosts for diabetes, but you don't think you're getting full credit for the value of your services because your VBC contracts compare you to national level drug trends for all drugs. For many employers, antidiabetics represent the fastest growing drug category, so you want the contract to compare your trends only to antidiabetic trends, or potentially only to trends for specific drug classes like GLP-1s and SGLT2 inhibitors. The complexity of your problem is compounded by offsetting trends even within the antidiabetic drug category because of dropping insulin list prices and rising GLP-1 utilization and rebates. --- The project: build a customized drug trend #benchmark for diabetes drug spending to be used in VBC contracting. We used Medi-Span to identify all the drugs in the antidiabetics GPI and built a drug trend model using the 90 million commercially insured lives available in Milliman’s data assets (this could also be done with Medicare or Medicaid lives). Rebates were estimated using SSR Health data, which helped smooth out the big changes in insulin list prices (from the AMP cap removal) and GLP-1 net prices (as more competition enters the market). Most employers care about net costs, not gross costs before rebates, so the inclusion of estimated rebates was vital for the benchmark. This could be further customized to specific regions of the US if the client wanted to get extra detailed in their benchmarks for a big contract. --- Armed with a customized benchmark that highlights the true value of their business, the VBC company can accurately price their services based on that value. Plus, their customers can more easily see the drops in diabetes trends (that the VBC company can actually control) instead of a slightly lower overall drug trend that could be due to several things that happened this year.

My company pays the first $100,000 of health insurance claims for every covered life. That’s not an exaggeration. That’s a decision we made to try and control premiums for our midsize businesses. Here’s what most people don’t realize: Insurance carriers set your rates based on how YOUR employees use the plan. Your company’s “loss ratio” = how much the carrier pays out vs. how much you paid in premiums. If you’re over 100%… get ready. Your rates are going up--sometimes 30%+. Carriers target a loss payout ratio <80%. So what drives a bad loss ratio? Unhealthy employees? You’ll get hammered. High ER usage for things that could’ve been handled with telemedicine or urgent care? You’ll get hammered. Avoidable procedures and misaligned care? You guessed it--hammered. At our company, we’ve had to rethink how we approach health care. Because when a single ER visit costs $8,000+… it affects everyone’s bottom line. That’s why we’re investing in: 1. Telehealth options that are fast, easy, and affordable 2. Mental health access on demand 3. Employee education on care options and cost 4. Stronger wellness initiatives Controlling healthcare costs isn’t just about shopping for better plans. It’s about helping our team use the plan better--so we can keep providing great benefits without breaking the bank. If you're a fellow business owner battling healthcare costs, I’d love to hear what’s working for you.

If you are serious about healthcare affordability, you need to recognize where most Americans actually get their insurance: More than 165 million people get coverage through their employer, and employers spend nearly $1 trillion annually to provide it. For three consecutive years, employers’ premiums have risen >6%, the first time that's happened in two decades. Early signs point to an even steeper climb in 2026. The cost curve continues to bend in the wrong direction. Employers absorb these annual increases and share the pain with their workers through lower wages, higher premiums, deductibles, and out-of-pocket costs. Yet, most employers have no way of knowing whether the prices they pay are competitive with other plans in the market. Whether the providers they cover are delivering high-quality care. And whether their vendors are effectively negotiating on their behalf. Last year, the Peterson Center on Healthcare funded a data demonstration project in which the Purchaser Business Group on Health (PBGH) worked with five major employers to combine price transparency data, employer claims data, and independent quality and safety ratings. The results were shocking. They found major price variations across providers and saw inflated rates in their networks. They identified markets in which popular, high-cost providers had the lowest quality and safety ratings. Every employer was able to identify savings opportunities. At Peterson Health Technology Institute (PHTI), we've seen what happens when employers have clear, independent evidence to guide their purchasing decisions: they make smarter decisions. Vendors respond. The market starts delivering better outcomes at lower costs. For years, employers have been asking for that same rigorous analysis to inform their medical benefit purchasing, which drives the bulk of spending.   That’s why I am so excited to share that Peterson Philanthropies has committed $50 million to launch Peterson Health Analytics (PHA), giving employers independent, actionable data they need to take greater control of their healthcare spending and purchase more affordable, higher quality care for millions of employees and their families. PHA’s work is a practical step toward improving affordability in U.S. healthcare. Creating change in employer benefits is hard. I am thrilled that the fearless Cora Opsahl will lead PHA and show all employers that better healthcare at lower costs is possible.   Peterson Health Analytics has been built with employers, for employers—without financial ties to health plans, health systems, or benefits consultants. That independence is exactly what employers have been missing. PHA is proud to partner with leading benefit coalitions PBGH and National Alliance of Healthcare Purchaser Coalitions. When employers have the right data, they can bend the cost curve and deliver better healthcare for all. Learn more at petersonanalytics.com