Benefits of Utilization Management

Utilization Management is an integral part of the US healthcare ecosystem used by health insurers or Pharmacy Benefit Managers (PBMs) to evaluate the appropriateness, medical necessity, and efficiency of healthcare services rendered to patients.

Utilization Management aims to:

  • Improve the quality of service at the right cost, in the right setting
  • Address the clinical activities of in-patient admissions based on case analysis.
  • For health plans, it is used to evaluate the appropriateness and medical necessities of health care services, procedures, and facilities according to evidence-based criteria or guidelines.

UM activities evaluate many aspects of patient care, such as

  • The timeliness of services
  • The amount of medication prescribed
  • The number of bed days used in a hospital
  • Patient recovery time

How does UM benefit patients, payers and providers?


  • Improves patient satisfaction by automating prior auth process that reduces the TAT on the procedures requested by providers thus reducing LoS
  • Improves the quality of care by inculcating evidence-based clinical decisions
  • Improves patient-centered care by focusing more on patient care than the administration
  • Eases the discharge planning process


  • Reduce utilization management administration costs, increase productivity and capture better data faster.
  • Improve member, patient and provider experiences for greater customer retention
  • Improve the quality of care and avoid instances of fraud and abuse through evidence-based care and multiple reviews during care provisioning
  • Achieve a comprehensive view of individual members and patient populations derived from all UM programs by eliminating data silos.


  • Enhance consistency and quality of care by providing medically necessary treatment to patients after risk stratification and timely interventions.
  • Better care coordination through care pathways, treatment protocols, medical and surgical interventions for patients.
  • Reducing the Length of Stay (LOS) resulting in higher patient turnover leading to incremental profits and higher capacity.
  • Tangible cost savings by adhering to evidence-based clinical guidelines and periodic utilization reviews.

Utilization Management focusing on the judicious use of resources while ensuring the quality of care starts at the beginning of patient care (admission). Eligibility verification ensures that the patient is covered under a health plan and that coverage is primary. The health plan is checked to verify if the requested service is a covered benefit under the health plan and whether it requires preauthorization. Clinical information is gathered to determine if the criteria are met for the medical necessity of the service and level of care.


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Shridhar Purohit

Shridhar Purohit

Shridhar Purohit is a Healthcare IT consultant with extensive experience in developing product strategy, consulting and implementation of health care business solutions.
Shridhar Purohit

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