How to manage a high-cost healthcare business
More options are on the way for companies looking to manage high-priced healthcare costs, as a new report from McKinsey & Co. reveals.
The report, titled Managing the Healthcare Costs of Health Care Businesses: A Key Competency for the Health Care Industry, finds that as healthcare costs rise, the health care business will have to adapt.
It’s a critical decision, says McKinsey’s David Tannenbaum, as healthcare business costs continue to rise.
The McKinsey report also suggests that health care businesses should be cognizant of their healthcare business risk, but also look to the healthcare business to protect its own business and reduce healthcare costs.
To help manage healthcare costs for a health care company, McKinsey recommends a few key strategies.
The McKinsey Healthcare Risk Management Team has compiled the following recommendations.
“We know healthcare is a business, and the health business has to understand that healthcare costs are high and they will continue to grow,” said McKinsey Chief Risk Officer and co-author of the report, Mark Rees.
“Health care costs are a critical element of our business, so it’s important to be prepared for the impact of these costs on our business.
This report lays out the key elements of healthcare risk management.”
To understand how healthcare costs can impact your business, McKinseys research focused on the healthcare and pharmaceutical sectors.
This includes looking at the impact that rising healthcare costs have on your business and the impact they have on the overall health care system.
“For healthcare, we know the healthcare costs of the health and pharmaceutical industries are growing rapidly, with the overall healthcare costs in the United States increasing by an average of 6.3% over the past year,” said Rees, who is also a McKinsey Global Institute Director of Insights & Analytics.
“While healthcare costs remain the primary driver of healthcare business growth, we also recognize that healthcare business risks are also a key driver of the growth in healthcare business expenses, especially for smaller healthcare businesses.
McKinsey has identified several key healthcare risk factors to consider and how you can minimize your healthcare business’s impact on the business.”
The McKinseys report identifies seven key factors to keep in mind when managing healthcare costs:1.
Know the industry, the business and your healthcare costs2.
Determine if you can manage your healthcare and if you have enough resources to protect your business3.
Understand your healthcare liabilities4.
Know your healthcare benefits5.
Know what to expect from healthcare costs6.
Understand what to look for in healthcare costs7.
Identify the healthcare risks and what to do to minimize your costs, and identify strategies to address them.
“The healthcare industry has a complex and evolving set of business relationships, and managing healthcare risks is essential to your business success,” said Mark Reeds, McKinley’s chief risk officer.
“As healthcare costs continue their rapid rise, this report provides insights that will help you manage your risks better.”