As healthcare costs continue to rise, many HR directors need help reviewing their benefits programs. However, this often involves reducing the benefits they offer, which can compromise their ability to attract and retain talent. Thankfully, some innovative approaches can help HR directors control their healthcare spending without hurting employee morale or recruitment efforts.
Here’s a closer look at some valuable strategies for achieving this goal.
Understand What Is Behind Higher Healthcare Costs
Before jumping into solutions, it’s essential to identify what is driving your healthcare costs upward. Start by analyzing claims data to identify high-cost areas. These might be specific conditions, prescription medications, or service utilization patterns. The results of this analysis can form the basis for targeted interventions, which get much better results than a broad-brush approach that might inadvertently impact valuable benefits.
Think Carefully About Your Plan Design
Instead of reducing coverage across the board, consider restructuring your healthcare plans based on recent utilization data. Suppose you determine that your workforce rarely uses certain specialized services but frequently needs preventive care. In that case, choose a plan that emphasizes the latter while maintaining reasonable access to the former. This helps to establish that resources are allocated where they will provide the most value to your workforce’s specific needs.
Consider Alternative Funding Models
Two good options worth considering are self-funding and level-funding, as they offer notable savings over traditional fully insured plans. Not only can these models provide greater insight into your healthcare spending, but they can also provide savings in terms of the profit margins that insurance carriers build into their premiums.
Although these methods may require more active management on the part of the organization, the potential cost savings and greater flexibility they offer make them worth exploring, especially for mid-sized and larger companies.
Invest in Preventive Health Strategies
Preventive care is widely considered one of the most cost-effective investments in healthcare. You can reduce long-term healthcare costs by investing in thorough wellness programs with health screenings, smoking cessation programs, and fitness incentives that can help reduce the likelihood of developing chronic conditions. These programs also show your employees that your company is committed to their well-being, which can enhance their satisfaction and loyalty.
Take Advantage of Technology
Telemedicine services, health management apps, and digital healthcare platforms can reduce costs while improving access to care. There are numerous benefits to using the latest technology in healthcare.
For example, virtual consultations eliminate transportation costs and reduce employees’ time away from work. Digital tools can help employees better manage chronic conditions, leading to fewer complications and hospitalizations. These technologies are convenient and cost-effective alternatives to traditional healthcare delivery models.
Implement Reference-Based Pricing
HR directors should also consider adopting reference-based pricing, which sets fixed allowable amounts for specific procedures based on a percentage of Medicare rates or other cost benchmarks. This can help control costs for common procedures, where pricing can vary dramatically between providers without any differences in quality. This approach encourages employees to seek care from cost-effective providers while preserving their freedom of choice.
Improve Pharmacy Benefit Management
Prescription drugs make up a significant and rapidly growing portion of healthcare spending. Reviewing your pharmacy benefits management strategy to secure you’re receiving the most favorable pricing and rebates is helpful. Consider introducing step therapy programs for certain medications, promoting generic alternatives, and exploring specialty pharmacy management programs for high-cost medications.
Improve Healthcare Consumerism Through Education
Many employees lack the knowledge needed to make cost-effective healthcare decisions. Therefore, it can be worthwhile to provide thorough education programs that help them understand how their benefits work, how to compare providers based on quality and cost, and when to use different care settings. Informed employees make better healthcare decisions, which reduces their costs and yours.
Negotiate Directly with Providers
Some businesses find that negotiating directly with healthcare systems or providers for high-cost procedures can help them secure much better rates. This keeps expenses down and establishes that employees receive high-quality care from reliable providers. Consider looking for direct contracting opportunities for some of the services that are commonly used by your workforce.
Consider a Healthcare Purchasing Coalition
Healthcare purchasing coalitions work by grouping together the buying power of several employers to negotiate better terms with insurers and providers. This approach can be especially beneficial to smaller businesses that might lack the leverage they need to secure competitive rates independently.
The Long-Term Approach
Reducing healthcare costs without cutting benefits requires a strategic approach guided by the underlying factors driving costs upward. By implementing these strategies, HR directors can develop effective healthcare programs that provide valuable benefits while keeping expenses under control.
Partner With Business Benefits Group
Are you ready to transform your healthcare cost management strategy? Business Benefits Group (BBG) specializes in helping HR directors implement innovative solutions to decrease healthcare costs while enhancing employee benefits. With nearly three decades of experience, we offer a personalized approach designed to suit your needs and budget. Contact BBG today to learn how we can help you set your business up for greater success.