After the past couple of years, we’re all much too familiar with inflation. Cars, clothing, milk, and bread. Everything’s costing more. Yet, when it comes to healthcare, inflation isn't just something to complain about; it’s a bona fide menace, one that can decimate a business’s bottom line and cast a long shadow on employee well-being.
Every year, it seems, businesses across the country are being squeezed by relentlessly increasing healthcare premiums. Meanwhile, the quality of care delivered to employees often fails to live up to expectations.
But not all hope is lost. Far from it. If you're a business owner looking for ways to beat healthcare inflation without compromising employee health, there are ways to fight back. Here are seven:
1. Consider Self-Funding Plans
In a self-funded or self-insured plan, instead of paying a fixed premium to an insurance carrier, you, as the employer, pay for claims out-of-pocket as they're presented instead of paying a predetermined premium to an insurance carrier.
This approach has several potential advantages. First, you have more control over your healthcare plan’s structure, allowing you to tailor it to the specific needs of your workforce. Second, you only pay for actual claims incurred, which could be less than the cost of traditional insurance premiums, especially if your employees are generally healthy.
Free Download: Making the Shift to Self-Funding
Moreover, self-funding can provide access to detailed claims data, giving you insight into the specific health needs and risks within your employee population. This information (more on this below) can be invaluable in designing wellness programs or other initiatives to improve employee health and control costs.
2. Use Transparent Pharmacy Benefit Managers (PBMs)
Pharmacy Benefit Managers (PBMs) are third-party administrators that handle the drug benefit component of health insurance plans. They negotiate prices with drug manufacturers, process prescriptions for insurance companies, and can influence which drugs are covered by insurance.
However, not all PBMs operate with equal transparency. Some take a portion of the discounts and rebates they negotiate from drug manufacturers as profit, contributing to higher overall costs for plan sponsors and members. These opaque practices can make it challenging to see where your healthcare dollars are going and to manage your prescription drug spending effectively.
In contrast, transparent PBMs pass along all discounts and rebates to the plan sponsor (in this case, your business) and charge a straightforward administrative fee for their services. This approach can result in significant savings on prescription drug costs, a primary driver of healthcare inflation.
Furthermore, transparent PBMs can provide data about drug usage and costs, giving you insights to make informed decisions about your drug benefit plan design. They can help identify less costly therapeutic alternatives or opportunities to encourage the use of generic drugs over brand names.
3. Leverage Claims Data
Claims data can be a gold mine of information that can help you understand your employees’ healthcare needs and spending patterns. These data provide details about the types of medical services your employees are using, the cost of these services, and even health trends within your workforce.
By analyzing claims data, you can identify areas where your health plan dollars are being spent. For instance, are a significant number of your employees seeking care for chronic conditions like diabetes or heart disease? Is there a high utilization of emergency room services that could potentially be treated in a less expensive urgent care setting?
Once you have this understanding, you can target these areas with specific cost-control strategies. For example, if you discover that a high number of employees are struggling with diabetes, you could implement a disease management program to help them better manage their condition, which could lead to fewer hospital visits and lower costs over time.
Claims data can also be useful in negotiations with health insurers or healthcare providers. For instance, if you can demonstrate that your employees are generally healthy or are successfully managing their health conditions, you may be able to negotiate lower premiums or more favorable contract terms.
4. Explore Direct Primary Care
In Direct Primary Care arrangements, businesses pay a fixed, monthly fee to a physician or medical practice for a range of primary care services. These services often include regular check-ups, preventative care, urgent care, chronic disease management, and sometimes even basic lab tests and procedures.
In the DPC model, physicians typically have fewer patients, which often means shorter wait times, longer appointment durations, and more personalized care. Some DPC practices even offer same-day or next-day appointments, virtual visits, and direct communication with doctors via email or text – greatly improving the accessibility of care.
5. Promote Usage of Preventive Care Services
Preventive care, including regular check-ups and screenings, can detect health issues before they become serious — and expensive. Undiagnosed or mismanaged chronic illnesses are responsible for most of the claims in employer health plans, so make sure your employees are aware of the preventive services covered under your plan and encourage them to utilize these services. An ounce of prevention truly is worth a pound of cure, and this proactive approach can help keep costs down in the long run.
6. Invest in Employee Wellness Programs
Wellness programs can be a cost-effective method for reducing healthcare costs. Such programs often involve aspects like fitness incentives, mental health resources, smoking cessation programs, and nutritional guidance. By promoting healthy habits, these programs can decrease the likelihood of chronic illnesses among your workforce, leading to lower healthcare claims and thus, lower premiums.
7. Implement Telemedicine Services
Telemedicine can decrease healthcare costs by minimizing the need for ER visits and providing a more efficient way to manage routine check-ups or minor health issues. Moreover, it offers employees an easy and convenient way to access healthcare services, improving the overall care experience.
In conclusion, beating healthcare inflation is not an insurmountable task. By understanding the factors driving your healthcare costs and implementing proactive, strategic measures, you can ensure that your business is resilient to rising healthcare costs and your employees have access to the care they deserve.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. An employee-owned organization, we’ve been providing our clients with the confidence to face whatever lies ahead for more than 100 years. For more information, contact us online or call 877-440-3304.