How does population health impact health care costs?

By Sophia Bernazzani

The concept of population health is an increasingly important topic to consider when discussing the cost of health care; however, a recent article produced by MHA@GW, the online master of health administration offered through the Milken Institute School of Public Health at the George Washington University, pointed out that it is a relatively new concept that is not yet universally understood. Along with the original definition of population health proposed by David Kindig and Greg Stoddart in 2003, “the health outcomes of a group of individuals, including the distribution of such outcomes within the group,” “What is Population Health?” included thoughts from 37 leaders in health care that are an ideal platform to begin a discussion about the relationship between population health and health care costs.

One theme running through these reflections on population health was the Triple Aim, which suggests improving the US health care system requires (1) improving patient experience of health care, (2) improving the health of populations, and (3) reducing the per capita cost of health care. Research supports the notion that improving population health can have an impact on health care costs. For example, a recent study of workplace wellness conducted by the RAND Corporation found that participation in a workplace wellness program continuously over a seven-year period was associated with an average reduction of $30 in monthly health care costs per employee. Further, the researchers estimated that much of the cost savings was attributed to a 29% reduction in hospital admissions associated with disease management. What’s more, investing in programs that reach larger populations may yield a greater return on investment in terms of influencing positive health outcomes in many people.

However, many health care leaders point out that important questions still remain about population health that should be considered; in particular, the notion of responsibility for health outcomes in a population. Are health care providers solely responsible for a population’s health or should the accountability lie primarily with the behavior of those within the population? Moreover, how does the conceptualization of responsibility affect the association between population health and health care costs? While investing in population-level health interventions has the potential for great returns in public health, such programs may also come at a greater cost to health care consumers. Thus, it is increasingly important to ensure professionals in health care at all levels – direct service providers, health administrators, public health professionals, etc. – engage in a conversation about how population health can effectively improve health care costs for consumers.

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Sophia Bernazzani is the community relations manager for the online master of health administration (MHA@GW) and online master of public health (MPH@GW) offered by the Milken Institute School of Public Health at the George Washington University. She’s passionate about global health, nutrition, and sustainability. Follow her on Twitter.