Research helps benefits professionals understand how employees use Compass Healthcare Navigation services. Recently, a client question prompted us to take a look at data in light of some important “life rules” – most specifically the 80/20 Rule.
Important Life “Rules”
There are several life rules that people should know – and can help you make better decisions in the workplace. These include:
- The Golden Rule: “Treat others as you would like to be treated.” Or more cynically, “He who has the gold makes the rules.”
- Majority Rule: “Whatever decision receives the majority of the votes, goes.”
- The 80/20 Rule: “80 percent of the effects come from 20 percent of the causes.”
The 80/20 Rule is also called the Pareto Principle. In the 1800s, Italian economist Vilfredo Pareto observed that 80 percent of land in Italy was owned by 20 percent of the population AND that 80 percent of the peas in his garden came from only 20 percent of the pea pods.
If this rule describes land ownership and peas, it probably also applies to other areas, such as… Healthcare Costs.
Sure enough: 80 percent of the dollars spent in an employer’s health plan is typically generated by 20 percent of the plan’s members.80% of the dollars spent in an employer’s health plan is typically generated by 20% of the plan’s members. Click To Tweet
Compass Research Goes Further
We know the 80/20 Rule applies to health plan spending, but what about healthcare savings?
The Compass Analytics Department evaluated our savings data to determine if the 80/20 Rule also applies to Compass users and their healthcare cost savings.
We analyzed the number of employees that added up to 80 percent of the healthcare cost savings. Savings came from:
- Using lower cost doctors, hospitals and facilities in their area for care (i.e., price-transparency)
- Using lower cost prescription medications
- Resolving incorrect bills
- Navigating the healthcare system more efficiently (e.g., using a primary care physician rather than a specialist for a minor injury or illness, using an in-network urgent care center rather than an out-of-network emergency room for urgent care, etc.)
Compass assessed these employees as a percent of overall Compass users for that employer group. The results are below:
The X-axis on this graph is the percent of employee households that used Compass in a 12-month period (i.e. ‘Activation’).
The Y-axis is the percent of employees that comprised 80 percent of the savings for the employer group.
Each dot represents an employer client.
Let’s take 20 percent activation as an example. We can see that at 20 percent activation, 4 percent of the employees drive 80 percent of the savings. 20 percent of those employee households that used Compass drove 80 percent of Compass savings.
To learn more about how Compass Navigator simplifies healthcare navigation and helps employers and their employees save money on healthcare, click HERE.
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