If you’ve been watching our show for any length of time or checked out Greedy Bastards, you know that we are major advocates of hot-spotting: a problem solving technique that targets the most expensive problems or in-need people by allocating resources to specific problem areas as revealed by data.
Like many good ideas, this is one that’s starting to spread. On The Dylan Ratigan Show, we had the chance to hear how the use of hot-spotting has helped identify major cost savings for the Local 49ers, a union representing thousands of engineers in Minnesota and the Dakotas.
First, a quick introduction if you’re not familiar with hot-spotting. We’ve shown how it has been applied to to dramatically lower crime rates in tough neighborhoods, as William Bratton did during his tenure as LAPD police chief and NYPD commissioner. Criminologist David Kennedy has used hot-spotting to identify the five to ten percent of street criminals who are causing the most violence on the streets, and getting them to “stop shooting.”
Another way to think about hot-spotting is as the “eighty twenty” rule. This is a rule of thumb that says that eighty percent of the output of any system comes from twenty percent of the input. (For example, twenty percent of the people do eighty percent of the work, or twenty percent of the kids in a school cause eighty percent of the problems.)
So, hot-spotting doesn’t only work in fighting crime — it’s a theory that can be applied to almost any issue in any sector. Imagine if you could identify a small number of patients who end up eating up most health care dollars. Let’s say you could focus resources just on them, improve their health outcomes, while also cutting the overall amount of health care spending dramatically. This wouldn’t be a question of how much, but how. That’s exactly what Dr. Jeffrey Brenner did in Camden, NJ.
Back to the Local 49ers — the group discovered that just 17% of its members accounted for 83% of their annual health care costs for their 33,000 participating union members and their dependents. In response, they developed a two-pronged approach to cut costs, and offer better care:
1) Free preventative checkups, meaning that problems are caught before fixing them gets more expensive.
2) Use a data-based program to get plan participants in to see the right doctors and specialists with proven records of success.
Watch as Dylan hears from Martha LaFave, one of the health fund coordinators of the International Union of Operating Engineers Local 49, and Jim Hansen, a Local 49ers Health and Welfare Trustee.
– Meg Robertson is a digital producer for DylanRatigan.com.