A Canadian healthcare organization was losing money on a fixed-price disability case management contract with no clear understanding of why. We investigated, uncovered four hidden cost drivers, and helped them recover costs and restore profitability.
A Canadian healthcare organization managing disability cases had negotiated a fixed-price contract with a major client — a structure that assumed predictable costs per case. Over time, however, the contract became a source of serious financial strain. Costs were consistently exceeding the contracted revenue per case, and leadership had no clear explanation for why. Despite careful contract design and established internal processes, the losses continued.
The organization’s COO and CFO engaged us to investigate. They provided us with full access to their operational data and internal processes.
We identified that the organization’s case management workflow operated across three escalating tiers based on complexity:
Initial case assessment, triage and entry into the system
Handling of standard cases through to resolution
Specialist oversight for complex cases requiring healthcare professional involvement
Our analysis of case flow showed that most cases were resolving at the Case Manager level as intended. However, a subset of complex cases escalated to the Care Manager tier — and it was here that we observed costs spiking abnormally.
Through deeper investigation we identified four specific cost drivers:
Care Managers were spending significantly more time per case than the process design anticipated. This was controllable but had gone unmonitored.
A number of cases that should have been covered by insurance were being absorbed and managed internally due to ambiguity in classification criteria — costs the organization was entitled to recover.
A disproportionate share of Care Manager time was being spent revisiting and reworking cases already in progress rather than advancing new intake, creating a compounding backlog effect that inflated costs across the board.
Insufficient guidance at the Intake stage was allowing cases to enter the system without adequate classification, contributing to unnecessary escalations and rework further up the chain.
Armed with a clear picture of where and why costs were leaking, we worked with the organization to take targeted action. Leadership met directly with Care Managers to address time overruns at that level. Case Managers were guided on rework patterns and escalation criteria. Intake staff were retrained on classification standards to reduce avoidable complexity downstream.
The result: significant cost reductions across the case management workflow, recovery of costs from insurance for cases that had previously been misclassified and absorbed internally — and what had been the organization’s most loss-bearing contract was transformed into one of its most profitable engagements.