Private sector contract analysis


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Milliman assists health insurers with the sophisticated data analysis needed to compare providers of varying size that serve differing patient populations. We have applied our broad expertise in this area to assignments in Europe, the United States and worldwide.

Our benchmarks help reduce costs and improve outcomes

We help clients employ contract performance analysis to reduce healthcare costs while maintaining quality of care. We excel in creating financial models designed to cross-compare providers on an equal basis, adjusting for differences in their services and patient populations. These models enable us to perform precise actuarial analysis and offer impartial advice based on statistical, rather than anecdotal, evidence. Our process enables us to isolate inefficiencies and quality problems as well as identify outstanding providers.

By developing appropriate financial strategies to reward quality and efficiency, insurers can increase the average quality of care and reduce costs. One common method is to employ the use of evidence-based best-practice protocols to ensure providers implement improved delivery systems that result in better clinical outcomes at less expense.

Our experts go beyond actuarial data analysis to advise on specific strategies for improving results, such as incentive programs to prompt providers to improve delivery systems. We are experienced in implementing evidence-based healthcare decision-making policies to produce more consistent and appropriate use of health services.

Quality models, improved efficiency

Our global expertise means we offer a unique perspective on industry best practices. We have extensive experience creating sophisticated financial models to compare differing providers on an equal basis. This process identifies both underperforming and outstanding providers. The highly detailed results point the way to possible strategies for improving efficiency and reducing cost. This analysis also provides vital information for future contract negotiations.

From this increased understanding, insurers can then develop strategies to target unjustified variations in practice patterns between contracted hospitals and physicians. By developing appropriate financial strategies to reward quality and efficiency, insurers can increase the average quality of care and reduce costs. One common method is to employ the use of evidence-based best-practice protocols to ensure providers implement improved delivery systems that result in better clinical outcomes at less expense.

Delivering better quality outcomes efficiently

Milliman assisted a start-up UK health insurer with a range of services, including contract analysis. We first analysed the proposed contracts and using our proprietary benchmarks, Milliman's Health Cost Guidelines™, to calculate likely utilisation and average prices for different healthcare procedures and services. Our consultants were then able to provide an opinion on the reasonableness of the proposed service prices and assist in developing appropriate length of stay guidelines to build into contracts.

As a result, the insurer was able to contract with providers on a basis which encouraged efficiencies in the healthcare delivery system. The client was also able to initiate a longer-term strategy to reward quality, ensuring better outcomes for members.

Next steps