Cost Containment

A healthcare cost containment solution is a digital platform enabling medical organizations to lower operating costs. The cost containment process in healthcare consists of several strategies to identify the processes that incur the highest costs and highlight ways of reducing them without compromising the quality of care. Healthcare spending in the United States topped $4 trillion, bigger than the economies of all but three countries. In light of this, medical cost management solutions have been gaining momentum among all the stakeholders involved.    

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Cost Containment in Healthcare

Whether it’s a smaller ambulatory clinic or a large hospital, some operations will drive the cost upwards. These might include both clinical and administrative processes involved in care. Using a medical cost management platform helps organizations in healthcare to identify which parts of everyday operations are responsible for high costs of care.  

This insight provides the first step necessary for containing the growing costs. Subsequently, provider organizations can examine the reasons for the high costs and try to address the problems. OSP can develop cost-containment solutions to enable hospitals to know the workflows that garner high costs before solutions can be conceived.   

Reimbursement by payers for healthcare services forms the biggest part of revenues for providers. However, not all claims are approved. The ongoing reimbursement model encourages providers to offer as many services as possible, sometimes even redundant ones. This routinely drives the costs upwards. But there has been a growing push for a more value-based approach to reimbursements which focuses on the medical outcomes instead of the number of medical services.  

Solutions for cost management in healthcare are increasingly being adopted to incentivize value-based care. These platforms help assess the existing reimbursement strategies and deliver insights to the relevant stakeholders for a shift towards a value-based approach to reimbursement.   

Assessing claims forms a major part of the operations at payer organizations. Claims contain coded information about the medical services provided to patients. But not all claims might warrant approval. OSP can build platforms for medical cost management that include modules for auditing claims to determine if the amount specified is valid.  

Auditing past and present claims reveals payers’ insights to find patterns in their reimbursement policies and address overpayment issues. Implementing this process goes a long way in helping payers adapt their reimbursements to enable medical cost containment.   

Healthcare cost solutions leverage data analytics to assess the information generated from operations and claims. The process of reviews is accelerated significantly through automated data analysis. It reveals patterns in claims and other workflows responsible for driving up care costs. This insight generated from using health cost solutions enables providers and payers to pinpoint the reasons for the high costs involved in the care and address them.   

Automation functionality minimizes the need for human intervention and any chances of errors. As a result, a large quantity of data generated from innumerable claims can be processed within a short period for accurate insights.  

Knowing the estimated costs of care enables payers to identify if certain claims contain unnecessary costs for services that might be deemed redundant or excessive. OSP can design and build software solutions for healthcare cost containment that process historical information from previous claims and can accurately predict how much it might cost for members to have certain medical procedures or treatments done.  

Cost overruns for medical services are a major problem that plagues the healthcare industry, and using cost management solutions provides a first step toward addressing this problem. Knowing how much care services are likely to cost in advance will go a long way in containing costs.  

Adjudicating claims is one of the payers’ most important and resource-intensive parts of everyday operations. OSP has the experience and know-how to develop customized healthcare cost solutions to streamline the entire process of claim management. Automating a large part of the workflow against established baselines of acceptable and projected costs, anomalous claims that deviate from these parameters can be flagged for review.  

This process not only boosts the efficiency and productivity of payer operations but also optimizes cost management by preventing overruns. In other words, using such cost-containment healthcare software benefits all stakeholders since they help establish standards of claim management.   


The biggest and most obvious benefit of using health cost solutions is that they lower the costs involved in providing care. Needless to point out, this goes on to benefit the providers, patients as well as payers. OSP can design a solution centered around existing provider workflows to identify the areas that drive up the costs and enable administrators to address the causes. Such an approach helps reduce operating expenses for providers.

Healthcare organizations often have entire or parts of workflows that struggle with inefficiencies. These activities often incur high costs that end up driving up the overall costs involved in healthcare services. But OSP can build healthcare cost containment solutions that assess operational data and point out inefficient processes. This enables administrators to implement measures for addressing the problems' causes and better serve patients.

The management of clinical and financial workflows is an integral part of operations at healthcare organizations. But managing the growing cost invariably involves oversight over both clinical and financial aspects of healthcare. OSP can develop solutions for medical cost management that enable administrators to integrate processes from the two key departments to reduce operating overhead. This also has the added benefit of streamlining day-to-day governance.

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Healthcare Cost Containment Services


Optimum Assessment of Expenses with Cost Management Solutions

  • Assessment of administrative processes of non-clinical healthcare companies
  • Assessment of processes of healthcare provider organizations
  • Identify high-cost areas in day-to-day operations
  • Provides necessary measures to control high-costs
  • Manage workflows to control rising costs

Claims Audit and Management with Cost Management Solutions

  • Audit claims to keep tab on claim amounts
  • Monitor past and current patterns of reimbursements to track overpayment problems
  • Deploy automation technology to streamline claims workflows
  • Improve the efficiency of payers’ claim-related operations
  • Maintains a standardized claims management process for quick turnaround

Analytics and Cost Prediction with Cost Management Solutions

  • Leverage the advantages of analytics and reporting to contain costs
  • Identify and assess redundant and unnecessary services
  • Track and analyze previous claims to gather insights
  • Harness insights to predict costs of services or cost for members
  • Strategize to control high costs

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Frequently Asked Questions

Cost containment in healthcare is the process of assessing and reducing the costs of services and operations to a constant level. With healthcare cost containment software, stakeholders can limit overpayment, redundant services and other rising cost-related issues to ensure profits. Healthcare stakeholders often reduce existing costs and control future costs too. Moreover, the global cost containment approach has a lasting impact and is much better for healthcare organizations.

Hospitals, independent clinics and other healthcare organizations have been severely impacted by economic downturns and the repercussions of the Covid-19 pandemic. Besides, the changing patient demands, the shift in care delivery and evolving risks are also putting pressure on healthcare providers and other stakeholders. So, health care cost containment has never been more required. With the deployment of cost containment solutions, healthcare stakeholders can mitigate these issues and sustain despite economic and financial fluctuations.

Cost Containment in healthcare refers to the process of maintaining expense levels across operations and preventing unnecessary spending or strategically reducing costs. By implementing cost containment strategies, healthcare stakeholders can manage and control costs and generate profits. The current trending cost containment strategy is virtual care. This strategy is effective for medical cost management. Virtual care helps patients and employees avoid expensive care modalities. Other strategies are tech-based, as technology automates manual processes, reducing turnaround time and control costs. These cost containment strategies can effectively limit rising costs and ensure better profits for healthcare companies.

Typical cost containment examples in healthcare are reference-based pricing and clean claims reviews. RBP is a method of determining a certain payment to providers by using the database of aggregate prices of services rendered. Take for example, if a hospital charges a patient with traditional insurance $5000 for a CT scan procedure but the scan only costs them $1000 to perform, one can observe the upsurge. Perhaps, if we knew that Medicare pays only $1500 for the same test, using RBP a better price could be negotiated with the hospital. Clean claims review is also a pre-payment method that runs another review of billed claims to find anomalies or questionable charges. This way several charges are avoided and the payment process becomes more transparent.

Cost containment in hospitals is a grave concern especially due to the pandemic and economic downturns. It’s extremely important for hospitals because some hospital leaders either discuss costs by referring to them as price or reimbursement. Hospitals must have a uniform cost containment strategy that will reduce the cost of care without affecting the quality. Further, these strategies must be long-term to ensure the hospital’s financial status is unhindered. And for effective cost containment in hospitals, there must be effective communication across all departments.

Cost management in healthcare can truly make a difference with effective strategies. Leveraging telehealth and remote patient monitoring technologies can cut down costs and impact outcomes. However, healthcare cost containment, especially when using RPM or telehealth must also adopt these strategies- reducing wasteful spending and shifting from quantity-based to quality-based care. With these cost-containment healthcare strategies, stakeholders can effectively control costs and deliver enhance care.

Cost containment in insurance is the process the insurance company devises to reduce the benefit payments or the overall cost of a health plan. This means payers no longer wish to pay the entire billing amount charged by the medical providers. As care costs are increasing every day, cost management solutions aim to reduce the total amount paid on a claim. It can be through customary reductions, discounts, penalties and pre-authorizations services.

A cost containment strategy is best effective only when the organizations perform a cost analysis. It’s essential for companies to identify needless expenses rather than randomly making cuts. Moreover, reevaluating processes and resources for cheaper options that don’t affect the quality is also a great way to ensure cost management. After the cost analysis, companies can move on to make strategies to control costs and ensure profit generation. These cost containment strategies will depend majorly on the existing operations and customer demands.

Cost containment in healthcare follows 2 major principles- traditional insurance cost containment and managed care cost containment. In traditional insurance, cost containment is possible via copayments, coinsurance and deductibles. While copayments are a set amount patient pays on using specific services, the coinsurance and deductibles work together. Deductibles are the amount patient is supposed to pay after which insurance companies will pay the coinsurance amounts. Take for example, a procedure that costs $5000 and the patient’s deductible is $500 with 60%- 40% copayment plan. So, the patient will pay $500 + $1800 = $2300. And the insurance company will pay 60% of $4500, which is $2700. Managed care cost containment principles include PPO and HMO.

The 6 methods of cost containment are sharing services among a group of people at decreased costs, outpatient services, mass purchasing of resources, early intervention or preventive care services, energy conservation, and diagnostic-related groups. Well, these DRGs tell doctors how long a patient needs to stay in the hospital for a test or treatment. Implementing these 6 methods of cost containment in healthcare can truly help stakeholders cut down on increasing expenditures and boost profitability.

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