5% of Texans Account for 55% of Healthcare Costs, Study Finds

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Five percent of Texans account for 55 percent of healthcare costs for Texas employers, according to a new study by HCMS Group, a healthcare reform company based in Cheyenne, Wyoming.

"We need to focus on people with the greatest need, and get the right service to the right person at the right time," said Dr. Hank Gardner, CEO of HCMS.

Five percent of Texans account for 55 percent of healthcare costs for Texas employers, according to a new study by HCMS Group, a healthcare reform company based in Cheyenne, Wyoming.

Annual expenses of caring for each person in the 5 percent group average $47,558, the study found. That is more than 20 times the average cost of $2,081 for the remaining 95 percent of Texans. At meetings of the Texas Business Group on Health this week in Houston and San Antonio, HCMS will discuss the role of Big Data in managing the 5 percent population and reducing waste in healthcare costs. The study was based on data covering more than 100,000 Texans covered by HCMS client employers.

This spotlights one of the biggest opportunities for employers to reduce healthcare costs while improving health, according to Dr. Hank Gardner, the chief executive officer and managing partner of HCMS. The study found that a fifth of those in the 5 percent group turn over each quarter, meaning that one out of five people regains health every three months. HCMS research and experience over more than a decade have proved that helping people in the high-cost group get better faster can substantially reduce benefit costs, Gardner said.

“We need to focus on people with the greatest need, and get the right service to the right person at the right time,” Gardner said. “Relying on averages in healthcare or anything else is very misleading, because nobody is average. You waste time and resources.”

This is important, Gardner said, because healthcare waste holds down wages in Texas and the rest of the country. Healthcare spending rises 10 percent every year while wages climb just 2 percent, barely matching inflation. It’s generally agreed that about 30 percent of healthcare spending is waste, amounting to almost $1 trillion a year in the U.S.

Addressing the needs of people in the highest-risk group is crucial to reducing healthcare waste. As much as 50 percent of spending on the high-cost group is waste, according to HCMS research. Texans in the high-risk 5 percent group have an average of 12 diagnoses, 12 healthcare providers and 12 prescription medications. This results in unnecessary or overlapping care, risky treatments and expensive over-testing, Gardner said.

The HCMS solution for employers and healthcare providers involves building a unique database integrating data from health plans, compensation policies, disability insurance and workers’ compensation. The company uses advanced data analytics and a patent-pending risk index to anonymously identify people in the 5 percent group as well as those whose risk scores signal a developing, complex healthcare situation. The HCMS clinical prevention service, KnovaSolutions, then offers people in that situation sophisticated, highly detailed support so that they can take control of their own health and recovery.

For more information, contact:
Robert L. Simison, HCMS Communications, (202) 210-7981 or bob_simison(at)hcmsgroup(dot)com
Justin Schaneman, HCMS Data Analytics, (307) 996-4233 or justin_schaneman(at)hcmsgroup(dot)com

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Robert L. Simison
HCMS Group LLC
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