6 Ways to Curb Employee Hospitalization and ER Costs

According to Deloitte , three out of every four employers view employee hospitalization as the leading driver of health care system costs. A recent PricewaterhouseCoopers (PwC) report bears this out. Inpatient and outpatient costs are projected to make up nearly 50 percent of employer health benefit costs in 2017. Add physicians to the mix and that number jumps to 79 percent. Fortunately, there are six ways your employees can stem unnecessary hospital and emergency room visits and reduce the associated costs.


Cut Hospitalization Costs


1. Avoid ER visits for non-emergency conditions

Just letting employees know that there are alternatives to an emergency room visit—such as accessing an urgent or convenient care center—can result in big savings. CareFirst of Maryland compared the costs of treatment for several common ailments, ranging from the flu to urinary tract infections. Care from urgent or convenience care centers resulted in savings between 74 and 94 percent when compared to treatment at an emergency room.

2. Chronic disease management

By putting into effect any number of disease management programs—such as risk assessments, health coaching, and value-based benefit design—you can help your employees better cope with their chronic conditions, and even mitigate costly hospital and ER visits. In fact, 87 percent of employers’ health care cost savings have come from disease management programs.


3. Evidence-based treatments

Nearly 1 in 4 employees report experiencing low-back pain, costing employers $51,400 annually per 100 employees in lost productivity and medical treatments, such as surgery. But surgery is rarely the answer for relief. Kaiser Permanente’s evidence-based approach to the treatment of low-back pain resulted in a 40 percent reduction in the cost of care when compared to other providers.1

4. Shared decision-making

Kaiser Permanente involves its members* in shared decision-making. This includes in-person, doctor-patient conversations and decision-making aids for 15 health conditions in six specialty areas, from back pain to cardiac care. When patients are better informed of the pros and cons of treatment options, they often will choose more conservative, less costly care. In fact, for people with knee or hip arthritis at Kaiser Permanente who used treatment decision tools, rates of joint replacement surgeries dropped sharply by 38 and 26 percent respectively over 6 months.2

5. Hospitalization management

Avoidable hospital readmissions add more than $17 billion a year to health care costs, and hospital patients who are readmitted experience longer stays compared to other patients. Health plans that offer transition management—from hospital to another care setting—can help limit or eliminate hospital readmissions. A pilot study at Kaiser Permanente (then Group Health) showed, that after one year, improvements in transition management saved $51 million.3

6. Quality care, not just affordable plans

Ideally, employers should seek health plans that balance care cost and quality. But how can you compare the effectiveness of care? HEDIS® (Healthcare Effectiveness Data and Information Set) is used by more than 90 percent of America’s health plans to measure clinical performance. You can view Group Health’s (now Kaiser Permanente) HEDIS scores here.



*Who receive care at Group Health Medical Centers (now Kaiser Permanente medical offices)

  1. Milliman analysis of Group Health low back pain population (2008), October 2010. Total resource use.
  2. Health Affairs, September 2012, no. 9, 2094–2104.
  3. Group Health Inpatient Savings Report, 2010.
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