Reducing hospital use and expenditures through utilization review. Findings from an outcome evaluation

Utilization review (UR) has become a prominent approach to cost containment now used by almost 65% of private group insurance plans. Although insurers have increasingly relied on UR to contain health care costs, until recently little was known about the effects of this cost containment approach. This article reviews some of the key findings of a UR evaluation, based on analysis of claims data on 223 insured groups for the years 1984 through 1986. The evaluation found that UR reduced admissions by 12%, inpatient expenditures by 8%, and total expenditures by 6%. It was estimated that UR generated net savings of $115 per employee per year. Groups adopting UR with high baseline rates of hospital use had larger expenditure reductions and greater net savings. It appears that UR can play an important role in private cost containment and help improve medical care resource consumption.