Total Cost Of Care
A total cost of care is generally used to refer to all direct and indirect costs associated with an episode of care for a period of health care coverage.
What is the Total Cost Of Care?
The total cost of care is an all-encompassing look at how healthcare is managed across conditions, providers, individual plan members, and entire employee populations. This metric provides a comprehensive view of healthcare spending, moving beyond individual service costs to include all expenses associated with a patient's care over a specific period.
It helps businesses understand the overall financial impact of healthcare on their operations and can be used to identify areas for cost savings, improve care coordination, and evaluate the effectiveness of different healthcare strategies. By analyzing the total cost of care, organizations can make more informed decisions to enhance health outcomes while managing financial resources effectively.
What is the difference between the Total Cost Of Care and Per Member Per Month (PMPM)?
Total Cost of Care is a holistic view of healthcare spending for an entire population, encompassing all expenses over a specific period. PMPM is a financial metric that represents the average cost of healthcare per member per month, focusing on the cost associated with individual plan members.
Total Cost of Care looks at healthcare management across conditions, providers, and entire employee populations, while Per Member Per Month (PMPM) is a metric for individual plan members.
Total Cost of Care provides a comprehensive view of all healthcare spending over a specific period, whereas PMPM is a more granular, time-based cost per individual.
Total Cost of Care helps identify areas for cost savings, improve care coordination, and evaluate healthcare strategies, while PMPM is a unit of measurement for financial impact on individual members.
What are examples of the Total Cost Of Care?
A company analyzes its healthcare spending and finds that employees with chronic conditions are driving up costs. They implement a new wellness program focused on chronic disease management to reduce the total cost of care for this population.
A healthcare provider group reviews the total cost of care for patients undergoing knee replacement surgery. They identify that patients receiving pre-operative physical therapy have lower post-operative complications and thus a lower overall cost, leading them to standardize this approach.
An insurance company offers a plan where members receive coordinated care from a primary care physician who manages all aspects of their health, including referrals to specialists and hospitalizations. This integrated approach aims to reduce fragmented care and, consequently, the total cost of care for its members.
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