The amount of money the U.S. spends on healthcare is so mind numbingly large, that AHIP created the “healthcare dollar” image to help us all out. The healthcare dollar takes the whole medical spending budget and puts it into a picture of a dollar bill, separated into sections of costs (see picture below). The breakdown is helpful because it provides a visual of how medical expenses are allocated, simplifying a large and complex system. The picture helps companies like RazorMetrics see how much of the budget can be managed more effectively with the right solutions.

The Healthcare Dollar

According to AHIP, here’s how each dollar in healthcare spending is distributed:

• Hospital Costs (40.7 cents)
  • Outpatient Care (19.9 cents): Costs cover physician and facility payments for treatments outside the emergency room.
  • Inpatient Care (17.6 cents): Cost of administering drugs during hospital stays, and payments to doctors and facilities.
  • Emergency Room (3.2 cents): Costs include ambulance services plus physician and facility payments for ER visits.
• Prescription Drugs (24.2 cents)
  Almost a ¼ of the dollar is spent on medications, both self-administered and those given in clinics or doctors’ offices. Note, the figure is spending after drug manufacturer rebates and does not include OTC meds.
• Doctor Visits (11.6 cents): Payments for non-drug-related services in doctors’ offices, clinics, and urgent care.
• Other Outpatient Services (7.1 cents): Costs include labs, ambulatory surgery, dialysis, and at-home care.
• Administrative and Overhead Costs (15.6 cents total):
  • Taxes and fees (3.4 cents)
  • Business expenses, including commissions and rebates (3.3 cents)
  • Profit for insurers (2.4 cents)
  • Cost containment (2.2 cents)
  • Quality improvement initiatives (0.8 cents)
  • General and administrative expenses (4.3 cents)

Focusing in on Prescription Costs

Nearly one-quarter of every healthcare dollar is spent on prescription drugs, making it the second-largest chunk of the healthcare dollar. It is represented by 24.4 cents, but the reality is that prescription drug costs are a heavy financial burden that frustrate employers and health plans alike, especially as drug prices continue to rise. The challenge for many organizations is finding a way to reduce the drug costs without compromising quality of care or access to necessary medications for the lives they cover.

Enter RazorMetrics

RazorMetrics offers a targeted approach to pharmacy cost containment. With innovative solutions like RxEdge and RxAdvocate, we help employers and health plans lower prescription drug spending while keeping members informed and engaged.

Here’s how RazorMetrics makes a difference:

• Formulary Optimization: By analyzing and optimizing prescription usage, RazorMetrics helps physicians prescribe less expensive, yet equally effective alternatives included on the formulary.
• Polypharmacy Management: Our programs ensure members are on the right medications for their conditions, reducing waste, and improving overall health.
• Transparency: RazorMetrics delivers actionable insights that empower employers and health plans to make informed decisions, optimize pharmacy benefit strategies, and achieve measurable cost savings without compromising care quality.

The Bottom Line

RazorMetrics focuses in on the 24.4 cents, making that the “Prescription dollar” picture. We help employers and health plans see where their money is going and offer a solution to reduce costs to maintain affordable access to care.

Now it’s time to take a closer look at your prescription dollar and see how RazorMetrics can help stretch it further. Contact us today.