In 2023, direct spending within orthopedics, oncology, cardiology, women’s health, behavioral health and nephrology made up 38% of all total medical spending, and 68% of total commercial and Medicare spending, according to a July 22 report from consulting firm McKinsey & Co.
Here is how Medicare and commercial spending changed from 2020 to 2023, by specialty:
| Total Medicare and commercial spending | |||
| Specialty | 2020 spending (in billions) | 2023 spending (in billions) | Compound annual growth rate |
| Orthopedics | $189 | $245 | 9.1% |
| Oncology | $147 | $190 | 9.1% |
| Cardiology | $83 | $104 | 7.7% |
| Women’s health | $49 | $76 | 16.0% |
| Behavioral health | $49 | $75 | 15.0% |
| Nephrology | $39 | $34 | -4.3% |
| All other spending | $960 | $1,171 | 6.8% |
The healthcare industry has the potential to save $100 billion per year by utilizing value-based care models within specialty care, the report said.
Here are the potential savings associated with value-based care, by specialty:
| 2023 Total cost of care and potential savings | |||
| Specialty | Total cost of specialty care (in billions) | Other spending for same patients (in billions) | Potential annual savings (in billions) |
| Orthopedics | $245 | $655 | $35-$45 |
| Oncology | $190 | $335 | $50-$60 |
| Cardiology | $104 | $467 | $15-$20 |
| Women’s health | $76 | $129 | $5-$10 |
| Behavioral health | $75 | $224 | $10-$15 |
| Nephrology | $34 | $141 | $30-$40 |
Currently, value-based-care models cover about 28% of patients in nephrology, 20% in orthopedics, and 5% or less in cardiology, oncology, women’s health and behavioral health.
The report identified four “levers” for potential savings while maintaining high-quality care and favorable outcomes:
- Consistent, effective and timely diagnostics
- Cost-effective therapeutic alternatives
- Lower-cost sites of care when clinically appropriate
- Prevention of complications from procedures or acute events through clinical best practices and follow-ups
The report also identified four industry “archetypes” that can be employed to influence care value:
- Site-agnostic wraparound services
- Outpatient-focused integrated care
- Treatment pathway navigator
- Digital health innovator
Read the full report here.
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