It’s no secret that healthcare costs are on the rise. Public discussions often focus on the difficulties for individuals bearing these costs, perhaps due to the surfeit of personal anecdotes, blogs, memes, and other social media posts about healthcare’s heavy toll—from basic access to quality of life. The larger discourse on U.S. healthcare presents a more complex, multifaceted issue that extends well beyond individual stories; however, the impact of rising costs on employers plays an overlooked—yet vital—role in this conversation.
Most employers recognize the importance of providing access to quality healthcare for employees. It not only maintains an employee’s health for their own sake but also ensures their peak performance as contributing team members. In addition, good healthcare benefits can help employers retain good employees. Good quality healthcare is a two-way street that benefits both parties.
The significant increase in healthcare costs over the last year complicates the issue, with a 6.3% jump in the cost of employer-sponsored health insurance. Speculation on reasons behind this historic increase—the largest since 2010—include deferred care returns, long-term COVID-19 related illnesses, and perhaps most importantly, an 8.5% US inflation rate reflected in healthcare prices. For employers, this means providing quality healthcare for employees can quickly cut into the company’s bottom line.
However, by implementing some healthcare cost-reduction strategies, you can significantly improve your company’s ability to provide quality healthcare to employees at reasonable costs. Applying these strategies can keep your team happy and healthy, and coupled with cost reduction, can also translate into better company performance and higher profits.
Healthcare Cost-Reduction Strategies for Employers
Just because costs are rising doesn’t mean employers are powerless to counteract them. Below are some of the best healthcare cost-reduction strategies employers can implement.
Use Reference-Based Pricing
Reference-based pricing is a cost-containment strategy that determines an allowable amount to pay a provider or facility for clinical services. Traditional network coverage often charges a markup that is significantly higher than an accepted Medicare rate—even with a discount. These charges are rarely questioned because insurance companies typically pay the bill, and charge the deductible to employers.
Instead, a reference-based pricing model negotiates directly with the provider to find a more reasonable price than typical charges. A database of aggregated prices for the same services sets the baseline for prices during negotiation, not unlike the use of comparables, or “comps,” in real estate transactions.
Promote a Healthy Culture
This strategy is pretty simple: when a company promotes and rewards employees for healthy habits, they’re less likely to experience healthcare problems. This preventative approach helps stop health problems before they can start by reinforcing good dietary, exercise, and mindfulness habits.
Building healthy habits in the workplace can start with simple changes, like making filtered water easily accessible on-site, or stocking vending machines with healthy snack choices and soft drink alternatives. Advanced offerings could include on-site/online yoga classes, group “walk breaks” (instead of “smoke breaks”), or regular events such as company walks or marathons. It’s not difficult or expensive to implement these kinds of cultural staples into your organization, but the results can be huge if they help decrease employee absences, increase overall performance, and promote team-building as well.
Use Stop-Loss Coverage
For any company looking to implement self-funded medical coverage, it’s also important to invest in stop-loss coverage. Stop-loss coverage, sometimes called excess insurance, provides protection against catastrophic losses. This measure is useful for employers with self-funded benefit plans (as opposed to traditional models) that want to mitigate their liability, rather than assume responsibility for all losses. There are two types of stop-loss coverage:
- Specific stop-loss coverage designates coverage for any individual
- Aggregate stop-loss coverage creates a threshold amount of eligible expenses that the employer pays during a specified period. The employer is then reimbursed for amounts paid beyond that threshold at the end of the contract period.
Reduce Costs with MediVI
By using our proprietary medical benchmarking software, MediVI, 6 Degrees Health is able to access industry-accepted public data from credible sources to identify reasonable costs for procedures. Medicare is our baseline and we integrate methodologies, benchmarks, and regulatory standards into our approach to guarantee the integrity of our costs.
MediVI also cross-references both hospital and patient information data with cost and Medicare benchmarks to generate advanced medical claim analysis. MediVI allows you to cut through industry inflation to get fair and transparent healthcare prices.
How 6 Degrees Health Can Help
Rather than offering insurance coverage, 6 Degrees Health works with Third-Party Administrators (TPAs) to manage provider costs and bring affordable healthcare to employers and employees. We work diligently not only to help lower healthcare spend, but also to help employers navigate the healthcare industry by cutting through ambiguities and providing clarity and transparency.
Our data-driven approach, spearheaded by MediVI, sets care free from antiquated models of traditional healthcare coverage and elaborate layers of outdated conventions. Our healthcare professionals have years of clinical expertise in the field and are dedicated to bringing healthcare cost reduction strategies to your organization.
As a service-first healthcare cost-containment company, 6 Degrees Health helps employers and employees navigate healthcare protocols to pay what is fair. Speak to a representative today to find out how our reference-based pricing model can help you realize the true benefits of healthcare.