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How Data Integration Is Reducing Healthcare Waste

Healthcare Simplified - Episode 5

August 14, 2017

HCMS Group is a health information service company, which exists to help self-insured employers, health and disability insurance plans, and health service providers. Their cloud-based data solutions are changing the population health management game to the benefit of both individuals and organizations.

Our Healthcare Simplified podcast guest this week was Mick Simon from HCMS Group. Mick spoke with us in detail on the "how" and "why" behind the HCMS mission to reduce healthcare waste, while improving individual health and employer profitability.

What is healthcare waste

Mick explains that healthcare waste, in this context, is that gap that exists between employers’ health care spending and the rate at which their employees find health. This gap is most likely due to lack of information transparency and what Mick calls “information asymmetry.”

Information asymmetry occurs when the players who are consuming services have incomplete information, while the players providing services don’t have full information (often dealing with uninformed buyers). Healthcare waste happens in these gaps of information.

HCMS Group wants to bridge these gaps by providing transparency to consumers, not just in price, but also in the different configurations of applicable services that best suit them. Timely and comprehensive information delivery is critical to improving medical services and reducing waste on both sides.

Data collection and transparency

Reducing waste all comes down to information delivery and data transparency so collecting and consolidating data is one of the core services HCMS Group provides to their clients. Data is used to identify and reduce risk, bringing costs down for employers, while improving health and medical care for their employees.

Since cost and risk are found throughout all aspects of the health care system, HCMS starts by reviewing and collating data from medical and drug claims. This is pretty standard for their industry, so where they diverge from the norm is that HCMS also takes in worker’s compensation, as well as short and long term disability cases as part of their data model.

Another unique set of data HCMS uses comes from HR systems, specifically compensation data. They look at how an employee is compensated, not just for wages/bonuses, but also time spent off of work and any disability pay.

HCMS are uniquely structured to accept data in any form, with the idea that the more data that can be gathered, the better able they will be to provide relevant consumption data, risk management, intervention data, and population characteristics to assess what is the driving risk and how to intervene, often in real time.

Why data matters

HCMS are numbers people and for good reason.

While the numbers may vary, they are pretty indicative of the population health climate of the US, so HCMS likes to keep an eye on the numbers in order to interpret data in light of these trends.

There are three sets of numbers that represent the current health trends: 5/50, 30/30, and 10/2.

The “5/50” number refers to the maldistribution of risk; a small percentage (5%) of individuals using a large percentage (50%+) of all US health care services/costs. This makes risk management and early prevention a big percentage of what HCMS provide their clients.

The “30/30” number refers to the fact that the US spends 30% more than any other country on health care and get 30% less outcomes on a variety of measures. Any study that has been released recently shows that, by and far, the US exceeds any other industrialized nation in health care spending, but isn’t keeping up with corresponding quality of life metrics.

The “30” number is also important as it can be argued 30% of spending is due to waste from over-utilization and over-treatment. Individuals agree to treatments not knowing the true cost or not having to pay the full cost. It’s the big picture of what healthcare waste looks like in context.

Lastly, the “10/2” number articulates that healthcare costs are rising (on average around 10% every year), but wage growth has been widely reported as being stunted at 2% or less. Fundamentally, money wasted on healthcare is money that’s not being put toward compensation. It’s a problem for both businesses and consumers.

The HCMS Group Clinical care initiative

While it seems obvious that there’s a need for organizations like HCMS, who are consolidating data and actively working to reduce waste, it might surprise you that they have also branched out with their own clinical care initiative.

KnovaSolutions consults with the 5% high-risk group in an effort to help see that number change and provide assistance to individuals who need a high level of care. The typical person in that 5% group often has 10-12 different diagnoses, 10 or more prescription drugs, 40-50 tests per year, and sees between 8-12 providers--more than any one person could keep up with.

They also focus on what the predictors are for individuals to fall into that group and how to reach them before they become a liability, by providing critical decision making resources.

This initiative is unique in that it’s a cognitive service, meaning they are trying to help individuals and their families make their own decisions. It’s an information and education support service that focuses on providing health information that’s essential for decision making.

There’s a big focus on pharmaceutical education and how certain drugs interact or impact productivity. The US has a huge problem with narcotic and opioid addiction and this program is uniquely positioned to provide individuals with the tools to work through such issues and to take control of their health care decision making.

Healthcare waste can be a costly part of doing business, but your company and your employees don’t have to fall into the industry statistics. Organizations like the HCMS Group exist to integrate and consolidate the data you already have to help you identify high-cost risks and mitigate them before they become a liability.


Whether you’re a self-insured employer of 100 or 30,000, HCMS can work with you either directly or through one of their trusted distribution partners. Visit their website if you’d like to reach for more information.

This post is based on a podcast interview with Mick Simon from HCMS Group. To hear this episode, and many more like it, you can subscribe to Healthcare Simplified. If you don’t use iTunes, you can listen to every episode by clicking here.

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