In America we have created the best healthcare system in the history of the world. But this “best” system faces some difficult challenges. Employers need to rethink their healthcare focus from just buying an insurance policy to a managred, data-driven healthcare strategy.
As cost goes up, employers either shift it to employees or absorb the cost themselves. This strategy is used by many employers and promoted by most benefit agents and brokers as a way to give employers a financial number they can live with. It’s financially painful for both employer and employee but easy to implement and embraced by many human resources professionals. But as premiums go up more and more, cost is shifted to employees through higher premium contributions and higher deductibles and co-pays when they use medical services.
Another issue is that employers monitor discounts (price) but not utilization. This is like monitoring how much natural gas costs to heat your house but not how much natural gas you use. By spending a little more on insulation you save a lot on natural gas. By spending a little on prevention you could save a lot on healthcare.
Employers receive claims data reports, which is helpful, but without a plan to effect an outcome it’s all just data. Unfortunately, healthcare is one of the few things in life we purchase without having a clue what it will cost, although that same quality health service can vary by hundreds and even thousands of dollars from one provider to another.
Employers also tend to focus solely on large claims, which is akin to looking in a rearview mirror. There is no effort or strategy in place to keep healthy employees healthy so they can avoid some of those large claims all together.
While employer-sponsored health fairs and wellness screens are nice events with plenty of good information, employers I’ve spoken with tell me they get low participation and it does little to engage employees to change behavior. So, what is the solution?
Here are nine employer strategies we are sure to see in 2015:
- Employers will be directly involved in helping manage the healthcare delivery system. This will educate their employees on where they can get high quality care at the best price and will reward employees that are good consumers.
- Employers will closely monitor utilization patterns and cost of the 25% of the population driving 90% of the cost. They will use this information to steer care away from high-cost emergency rooms to lower-cost care options through education and plan design.
- Employers will receive Executive Reports analyzing trends, demographics, actionable clinical information, chronic disease reports, healthcare index factors, etc. This information will help employers provide benefits that are customized to provide better preventive care and lower cost.
- Employers will focus on Healthcare Provider Process Improvement Programs and know the value of specific providers. They will look for business partners who can be a resource to their employees to help them avoid health risk rather than wait for poor health and pay for it.
- Employers will know the healthcare index of their population and focus on large claim prevention. Providing tools like health risk assessments and wellness coaches for employees to avoid health risk before it becomes disease puts up a strong defense against large claims.
- Employers will implement chronic disease management programs, predictive analysis, nurse navigators, nurse practitioners and wellness coaches.
- Employers will focus on managing the 80-90% of their health benefit cost which is claims rather than just the 10-20% that is administrative cost.
- Employers will look to partner with advisors who can help them manage employee health and safety risk on and off the job instead of just selling them another insurance policy.
- Employers who make effective positive changes to the way they manage their healthcare will be rewarded with healthier, more productive employees and lower costs for them and their employees.
For the healthcare system in the United States to remain the best in the world it is imperative for employers to develop and implement plans to better manage their healthcare benefit costs without further shifting costs to employees. The time is right for employers to redirect their focus from the 10-20% administrative cost of their healthcare by just bidding and quoting their insurance to the 80-90% claim cost where they can not only enjoy lower cost but also employees that are healthier, happier and more productive.
Randy Boss is a Certified Risk Architect at Ottawa Kent in Jenison, MI. As a Risk Architect he designs, builds and implements risk management and insurance plans for middle market companies in the areas of human resources, property/casualty & benefits. He has 35 years experience and has been at Ottawa Kent for 31 years. He is a lead instructor for the Institute of Benefit & Wellness Advisors, training agents how to bring risk management to benefits. Randy can be reached at [email protected].
