Why Health Plans Are Missing One of Their Most Costly Care Categories

Why It Matters

Addressing the overuse of preference‑sensitive surgeries can save billions in avoidable costs while improving safety and satisfaction for members, directly boosting health‑plan profitability and reputation.

Key Takeaways

• Preference‑sensitive surgeries account for ~30% of health‑plan spend.
• 30% of these procedures are medically inappropriate, costing billions annually.
• Upstream shared‑decision tools can reduce unnecessary surgery demand by 35%.
• Post‑operative complications affect up to 15% of surgical patients.
• Combining upstream education with downstream management cuts costs and improves outcomes.

Pulse Analysis

The surge in preference‑sensitive surgeries—procedures where multiple treatment paths exist—has become a hidden cost driver for insurers. Spine fusions, cataract removals and hip replacements are expanding at double‑digit rates, collectively consuming a third of medical expenditures. Because payers traditionally track these operations within specialty silos, they miss the broader utilization patterns that reveal overuse, with studies showing up to one‑third of knee replacements and more than half of lumbar spine surgeries are unnecessary. This fragmented view inflates spend, especially for commercial and Medicare Advantage plans that face tens of millions in avoidable claims each year.

Compounding the financial strain is a pervasive health‑literacy gap: nearly nine in ten Americans lack the knowledge to evaluate surgical options fully. When patients cannot weigh risks, benefits, and alternatives, they are more likely to consent to procedures that may not align with their goals, leading to higher complication rates—up to 15% post‑operative—and regret. Emerging evidence demonstrates that structured shared‑decision‑support programs, which deliver clear, personalized information before a procedure is scheduled, can reduce demand for non‑essential surgeries by roughly 35% and improve postoperative outcomes. These tools empower members to engage in meaningful conversations with clinicians, aligning treatment choices with personal risk tolerance and lifestyle aspirations.

For health‑plan executives, the strategic imperative is clear: shift from reactive, downstream controls like prior authorizations to proactive, upstream education. Integrating digital decision‑support platforms—such as Paradigm’s My Surgery solution—into member outreach can close the literacy gap, curb overuse, and lower complication costs. When paired with traditional utilization management, this hybrid approach creates a holistic surgery strategy that delivers measurable savings, enhances member satisfaction, and positions insurers as partners in high‑value care rather than gatekeepers.