Employer Strategies To Reduce Healthcare Costs
Let’s face it, healthcare costs are out of control for everyone. This is especially true for employers who provide important healthcare benefits to their employees. According to AON, the average cost of employer-sponsored healthcare in the US is expected to rise by more than 6.5% in 2023.
That means per-employee costs are expected to reach about $13,800 on average, an increase that nearly doubles the percentage from last year.
If it sounds like we are ringing the figurative alarm bells, that’s because we are! Now is the time to take action. There are many ways you can mitigate price increases and protect your organization from the ballooning cost of healthcare coverage.
Continue reading to learn more about the best strategies to reduce healthcare costs and how a cost containment solution could be the missing piece.
The Best Strategies to Reduce Healthcare Costs
Healthcare benefits are extremely important for employers and employees alike. Happy, healthy employees are typically more productive and have longer tenures with companies. Moreover, benefits are a crucial recruitment tool for attracting new talent.
It’s no surprise that a decision to make cuts to these benefits to reduce healthcare costs is a bit of a double-edged sword—and quite a gamble for employers.
Luckily, there are ways to reduce costs that don’t involve sacrificing the quality of employee benefits. Some of the best strategies to reduce healthcare costs include:
- Offering integrated well-being programs. By implementing various well-being programs and events to promote a healthy culture, like company marathons, health competitions, and increased access to healthy food and drink alternatives, health problems may decrease with support from a culture of exercise and good dietary habits. Not only is this a simple strategy to roll out, but it will also reduce the need for medical services by promoting a culture of health from within. The results speak for themselves.
- Using telemedicine. Technology like telemedicine allows healthcare providers to evaluate, diagnose, and even treat patients over the phone or via videoconference. This can drastically reduce medical costs by eliminating the need for employees to take costly trips to medical centers, emergency rooms, or urgent-care clinics. In addition, employees will appreciate the convenience of 24/7 access to provider care without changing their schedules.
- Evaluating the real medical needs of employees. While it’s understandable that employees want the best medical plan that covers the widest variety of medical concerns, such comprehensive coverage may not be the best fit. If employees are enrolled in plans that exceed their realistic medical needs, they and their employers may be drastically overspending on things like annual premiums. Consider surveying your employees to evaluate their general medical needs more accurately. For example, younger employees’ needs may more closely align with an HMO plan than a top-of-the-line PPO.
- Implementing advanced pharmacy strategies. Skyrocketing pharmacy costs are yet another factor in the increasing price of healthcare benefits. Employees may be prescribed expensive, name-brand specialty medications with much cheaper biosimilar alternatives that can drive down pharmacy costs exponentially. In a study from the American Journal of Managed Care, researchers found that the aggressive use of biosimilar drugs could generate national savings as large as $125.5 billion from 2021-2025.
- Analyzing workforce data to rule out wasteful plans or procedures. An in-depth analysis of employee claims data may help employers identify benefit results and determine whether or not specific plans or claims are necessary. This could cut spending on wasteful plans or unnecessary procedures.
- Changing to or integrating a self-funded healthcare model. Switching to a self-funded healthcare model, such as one equipped with reference-based pricing, can significantly lower bills for costly medical services. This is done using a database of payments for similar medical services and taking the lowest reference points to negotiate lower medical costs before payments are sent to providers. The employer pays for these services out of pocket and avoids paying costly premiums, co-pays, and coinsurance to a health insurance company.
While these strategies to reduce healthcare costs are each effective on their own, some will be more difficult to implement than others. The downside is that many employers do not have the bandwidth to effectively mine workforce data, evaluate employees’ medical needs or evaluate pharmacy strategies.
Some—like switching to a self-funded healthcare model—are simple to enact. However, organizations can help ensure success by partnering with cost containment experts who have a proven savings record with a self-funded model, as well as strong relationships with brokers and third-party administrators (TPAs) that do have the expertise and capacity to facilitate some of the aforementioned cost-reduction strategies.
6 Degrees Provides The Secret Ingredient to Cost Containment
At 6 Degrees Health, we do not sell health insurance. Instead, we were founded by industry veterans with a clear vision to combat rapidly growing healthcare costs and help employers provide better, more affordable care for employees.
We do this with a variety of cost-containment solutions like our reference-based pricing model and clean claim reviews, both of which are backed by our cutting-edge MediVI software. This data-driven approach has a proven record of success in lowering costs for employers without sacrificing the level of care for employees. By partnering with brokers and TPAs, we lower healthcare costs and provide access to experts in rolling out effective strategies to reduce your costs.
That’s the 6 Degrees Health difference, and it means you can expect to save up to 40% on your healthcare spend.
Interested in learning about more strategies to reduce healthcare costs? Speak to a representative today to find out how our reference-based pricing model can help you realize the true benefits of healthcare.
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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.