{"id":129,"date":"2020-10-09T10:29:00","date_gmt":"2020-10-09T10:29:00","guid":{"rendered":"https:\/\/wellai.health\/blog\/?p=129"},"modified":"2022-01-03T00:52:02","modified_gmt":"2022-01-03T00:52:02","slug":"wellais-health-cost-savings-calculator","status":"publish","type":"post","link":"https:\/\/wellai.health\/blog\/wellais-health-cost-savings-calculator\/","title":{"rendered":"WellAI\u2019s Health Cost Savings Calculator \u2013 How Do We Measure Costs Savings?"},"content":{"rendered":"

 <\/p>\n

This is part 1 of the series on the WellAI\u2019s health cost savings calculator for CEOs, CFOs and heads of HR.\u00a0 When we talk to a CEO or a CFO and tell them we have the greatest technology ever and that every employee should have this cool new app, their response is either \u201cYeah, right\u201d or they just hang up the phone.\u00a0 Company executives are willing to listen, albeit with skepticism, a little longer if you talk about money savings.\u00a0 They usually hang up in the end anyway, but at least they are willing to listen.<\/p>\n

Thus, we believe it\u2019s important to demonstrate that the 34% to 45% in health cost savings<\/strong> that affect the bottom line of a company are numbers based on research and are not just imaginary.\u00a0 As quants, we prefer percent<\/em> for this exercise.\u00a0 However, sometimes it\u2019s good to know a dollar number.\u00a0 For most companies we are talking to, these 34% to 45% translate to millions or tens of millions of dollars per year<\/strong>.\u00a0 We are always amazed: If you are a CEO or a CFO, why would ever leave this money on the table?\u00a0 Don\u2019t you have fiduciary duty to act in the best interests of your clients and your shareholders?<\/p>\n

Let\u2019s now talk about specifics of the WellAI health cost savings calculator<\/strong>.\u00a0 The number one goal of building a health cost savings calculator is to have an intelligent base estimate.\u00a0 Without knowing much about a particular company, the best estimate of the health cost savings of the company is the estimate of the cost savings of a \u2018typical\u2019 company, or an industry average.\u00a0 We start with this base estimate.\u00a0 A CEO, a CFO, or any senior manager in a company could either take this industry average as an approximation of the company\u2019s own health cost savings, or, if desired, could enter a more specific information pertinent to the company, such as employee age distribution, percent of salaried vs hourly employees, percent of employees using various types of health insurance plans: HMO (Health Maintenance Organization) vs PPO (Preferred Provider Organization) vs HDHP (High Deductible Health Plan) vs other.<\/p>\n

Another assumption of the model is regarding the goal (target variable) of the model.\u00a0 Some studies use dollar cost savings per employee.\u00a0 Others use various cost effectiveness ratios, such as (incremental) cost per (incremental) health quality.<\/p>\n

We use overall employer health cost savings percent<\/em><\/strong> as a target variable (versus other alternative measures) for the following reasons:<\/p>\n

    \n
  1. Health costs change year after year. The biggest reason for this change is healthcare inflation.\u00a0 Savings of $1,000 ten years ago have a very different impact than savings of $1,000 now.\u00a0 Hence, using dollar number as a target variable doesn\u2019t seem appropriate.<\/li>\n
  2. Cost effectiveness ratio is a very useful measure in general. However, in this study, our goal is not only to show savings for employers in a clearest possible way, but to have empirical support for these estimates.\u00a0 Outside of telemedicine, in the literature of economic implications of health and medicine, we have not found many studies that use cost effectiveness ratios as a way to demonstrate cost savings for employers.<\/li>\n
  3. Another ratio some studies are using as a target variable to evaluate a wellness program, or a digital health platform is Return of Investment (ROI). It\u2019s a very useful financial measure.\u00a0 However, it\u2019s not as useful in this study for the following reasons.\u00a0 Some papers don\u2019t specify what the denominator (and sometimes the numerator) are.\u00a0 Clearly, if we don\u2019t know those pieces, we can\u2019t evaluate what the WellAI health digital assistant\u2019s ROI would be.\u00a0 In addition, ROI by itself (say, 1.5) wouldn\u2019t generally indicate how much an employers would save.\u00a0 ROI does demonstrate how effective a particular tool is.\u00a0 However, this is not the question we are asking in this study.<\/li>\n
  4. Cost savings percent<\/em> is useful because it is generally indifferent to definition of health costs. Some studies define health costs as those medical and Rx bills paid by an employee.\u00a0 Others define health costs as those paid by an employer.\u00a0 Yet others define health those as overall charges from medical providers.\u00a0 Regardless of definition, generally if an employee has fewer visits to a doctor and the employee medical bills are lower by X%, the amount employer pays would also generally be lower by X%.<\/li>\n<\/ol>\n

    The WellAI app called Doc In Pock is now available on your smartphone.\u00a0 If you are an employer and would like an app that makes your employees healthier and happier, and save 34% to 45% on your healthcare costs, please visit https:\/\/wellai.health<\/a><\/span> to sign up for 1-on-1 demo<\/strong>.<\/p>\n

    Please follow WellAI on LinkedIn<\/a><\/span>, Twitter<\/a><\/span>, Facebook<\/a><\/span>, Instagram<\/a><\/span>, Telegram<\/a><\/span> and YouTube<\/a><\/span> for news and updates.<\/p>\n","protected":false},"excerpt":{"rendered":"

    This is part 1 of the series on the WellAI\u2019s health cost savings calculator for CEOs, CFOs and heads of HR.\u00a0 When we talk to a CEO or a CFO and tell them we have the greatest technology ever and that every employee should have this cool new app, their response is either \u201cYeah, right\u201d or they just hang up the phone.<\/p>\n","protected":false},"author":3,"featured_media":130,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[129],"tags":[5,127,8,7,22],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/wellai.health\/blog\/wp-content\/uploads\/2020\/10\/health-cost-savings-for-social-media-min-e1602585133492.png?fit=693%2C400&ssl=1","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/posts\/129"}],"collection":[{"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/comments?post=129"}],"version-history":[{"count":5,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/posts\/129\/revisions"}],"predecessor-version":[{"id":556,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/posts\/129\/revisions\/556"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/media\/130"}],"wp:attachment":[{"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/media?parent=129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/categories?post=129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wellai.health\/blog\/wp-json\/wp\/v2\/tags?post=129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}