Cost Containment
August 17, 2022

Benefits of Cost Containment for Everyone

3 minute read


As the cost of healthcare continues to increase, like an avalanche, it overtakes everything in its path including all parties involved in the healthcare reimbursement process. After 2021 saw a 6.3% rise in costs, a further increase of 4.4% is expected in 2022, according to Mercer’s global benefits consultants. In addition, trends show those costs increase even more drastically among small employers, who shouldered a 2021 rate hike of 9.6%.

More troubling is the number of employees that are enrolled in high-deductible health plans, which increased by a staggering 40%. It’s easy to see how many parties are feeling the squeeze of ballooning healthcare costs. When employees enroll in high deductible plans so that they can afford their monthly premiums, they are clearly looking for cost containment options. 

However, there are significantly better cost containment options than paying a high deductible. In fact, every single party—from brokers and TPAs to employers and employees—can enjoy the benefits of cost containment. Let’s take a look at exactly how and why a good cost containment solution can be a boon to all. 

Benefits of cost containment

What exactly is cost containment in healthcare? Broadly speaking, cost containment can be defined as reducing the rate of increase in healthcare costs. However, this definition is a bit too general to be useful. 

Cost containment in healthcare is a comprehensive strategy that involves using non-traditional initiatives to address the specific causes of rising healthcare costs.

The benefits of a good cost containment strategy include:

  • Driving profitability by mitigating price increases
  • Insight into the causes behind rising organizational costs 
  • Greater transparency in healthcare spending
  • Long-term sustainability

Beyond this macro-level explanation, however, are benefits of cost containment that affect each party uniquely.

Employers and Employees

Healthcare is vital to businesses and individuals alike. Employers count on employees to be productive and efficient to keep their businesses running. Without the power of employees and their labor, an employer is unable to provide the goods or services to keep customers and clients happy.

In essence, healthcare is a symbiotic linchpin between employers and their employees–a mutually beneficial service that ensures the safety and health of employees while also granting employers access to efficient labor.

Retention and Big Savings for Employers

According to the Bureau of Labor Statistics, employers typically pay around 80% of traditional employer-sponsored healthcare plans on behalf of employees. Given this kind of expense, an effective cost containment strategy could significantly lower the amount employers spend on employee healthcare.

Ensuring that employees have access to quality healthcare can produce additional benefits for employers:

  • Increased employee retention
  • Less absenteeism
  • Greater employee satisfaction 
  • Improved desirability for recruiting
  • Increased revenue

Employers with a comprehensive cost-reduction strategy will see increased revenue due to both the direct cost-saving practices as well as the increase in employee productivity. Healthy employees are more likely to provide consistently valuable labor to keep operations running effectively.

Savings and Access to Quality Health for Employees

Employees who put off healthcare treatment due to increased costs will have poorer health and miss work more often. In addition, they may seek employment elsewhere if their employer is not providing access to quality healthcare. As the 2016 Aflac WorkForces Report states, out of 5,000 U.S. workers surveyed, 60% would take a job with lower pay but better healthcare benefits.

Not only does quality healthcare attract talented employees, but it can also help companies retain them. A 2018 report by the Society for Human Resources Management notes that because healthcare is so important to employees, they are more likely to stay with an employer if they are both satisfied with their healthcare and able to afford it.

Client Satisfaction and Retention for TPAs and Brokers

For third-party administrators (TPAs) and brokers, providing effective cost containment solutions to employers will give them a significant advantage over competitors that only offer traditional healthcare coverage without prioritizing cost containment measures. 

By offering comprehensive cost containment solutions, TPAs and brokers can ensure huge savings and productivity gains for employers to foster longstanding relationships between both parties. Moreover, since 2008, the TPAs that have seen the most growth are those that have implemented effective cost containment solutions such as reference-based pricing.

6 Degrees Health Offers Effective Cost Containment Solutions

Now that you know the benefits of cost containment, you’ll need to know the best cost containment solutions for your needs. 6 Degrees Health offers solutions that reduce costs significantly and also promote transparency and integrity. 

We work directly with TPAs and brokers to manage costs for employers and promote plan access and flexibility for employees. Our reference-based pricing solution is an objective, data-driven approach backed by our powerful medical benchmarking software to compare costs and negotiate prices.

Our goal is to help bring affordable healthcare back to the forefront of American industry and the employees that power it. With our reference-based pricing solution, employers can lower their healthcare spending by up to 40%. 


Want to know more about the benefits of cost containment?  Speak to a representative today to find out how our reference-based pricing model can help you realize the true benefits of healthcare.



Looking To Lower Your Company Healthcare Coverage Cost?

As a service-first cost containment company, 6 Degrees Health is here to help employers and employees navigate a historically opaque healthcare system to pay only what is fair.

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