With the U.S. inflation rate still higher than its long-term average, it seems like no sector is safe from rising costs—especially healthcare.
The fact of the matter is that these costs are projected to continue rising and continue to put a tremendous financial strain on both employers and employees.
Many employees are now facing higher deductibles, copays, and other out-of-pocket expenses, which puts unnecessary financial strain on their budget.
In addition to the financial burden, there are concerns about the healthcare quality people receive. This is because many employers are forced to cut back on benefits, resulting in lower-quality healthcare—and that’s nothing to brush off. Lower-quality healthcare is also a concern for employers because it could lead to decreased productivity, high turnover, increased absenteeism, and higher healthcare costs in the long-term.
As costs continue to rise, it’s become vital for small business owners to implement cost containment strategies to provide their employees with quality healthcare benefits while keeping savings in mind.
In this post, we’ll explore the various strategies that businesses can use today to reduce healthcare costs for themselves and their employees.
One of the more seemingly impossible challenges of the business world is providing their employees with comprehensive healthcare while keeping costs from eating into their bottom line.
Business owners and employers must prioritize balancing the need to provide quality health benefits while keeping costs low. Fortunately, there are numerous strategies for cost containment in healthcare, a few of which will be outlined here, that can be used to reduce healthcare costs in the long-term.
Implementing Wellness Programs
Implementing wellness programs can be an effective strategy to help reduce overall healthcare costs and promote employee health and morale. Wellness programs can help the employees that actively participate lead healthier lives and reduce the risk of chronic disease.
Promoting a healthy lifestyle, like stress management, regular exercise, and healthy eating, can help employers reap the benefits of lower costs in the long-term. A well-thought-out wellness program should be comprehensive and designed to encourage healthy behaviors. However, the key to a successful wellness program is considering the needs of your employees first and foremost.
One of the more effective strategies for designing these programs is to conduct a needs assessment. This way, you can determine your employees’ health needs without having to rely on inaccurate assumptions.
A needs assessment can involve conducting a survey as well as analyzing health data to determine where extra efforts are needed.
Once you’ve identified your employees’ health needs, you can decide whether you want to provide perks such as on-site exercise equipment and healthy snacks or if you want to offer incentives for consistent health behaviors.
For example, you could offer cash incentives for participating in a 5k or offer non-financial incentives such as a gym membership if they reach a certain milestone.
Additionally, the needs assessment assists in promoting healthy behaviors and reducing the need for costly medical treatments. For example, healthy eating programs and fitness challenges can help your employees adopt healthy behaviors that could potentially nip chronic diseases in the bud.
Wellness programs are designed to go beyond promoting healthy behaviors. With active participation, these programs naturally promote a healthy and positive work environment. They also help businesses attract and retain talent by offering comprehensive health and wellness benefits.
However, wellness programs aren’t a “set and forget” type of cost containment strategy. Be sure to regularly evaluate how effective the current program is and make adjustments as needed. This can be done by conducting routine surveys or tracking employee participation rates.
Negotiating with Healthcare Providers
Another highly effective strategy for dealing with rising healthcare costs is to negotiate with health insurance providers. Negotiating with providers can help drastically reduce the cost of services and improve the quality of care your employees receive.
Research, Research, Research
As you shop around the marketplace, you may have noticed just how much healthcare costs can vary from one provider to the next. So before sitting down to negotiate, it’s important that you do your research and understand the market and the market rates for a variety of healthcare services.
Researching the market can involve doing a deep dive into the various services in your local area and comparing the rates of different providers to determine which one offers the best value for the money.
Once you develop a solid understanding of the current healthcare market, you can begin negotiating rates on services such as:
- Prescription drugs
- Hospital stays
- Medical procedure costs
Another negotiation strategy is to establish a network of preferred providers. This is key in bringing costs down because preferred providers are healthcare providers who have already agreed to provide services at a contracted or discounted rate. However, these prices are only for members of that specific plan or network in question.
Lastly, you can also decide to negotiate directly with the providers themselves to reduce the cost of services. However, this can quickly turn into a time-consuming task.
Value-Based Payment Model
If you decide to negotiate with providers directly, you may want to consider implementing a value-based payment model.
Most traditional payment models incentivize healthcare providers to perform more medical procedures and services than necessary. Unlike traditional payment models, a value-based payment model incentivizes providers to deliver high-quality care that improves health outcomes and reduces the need for costly medical treatments.
There are many forms of this model, including the following:
- Pay for performance
- Shared savings
- Bundled payments
Pay-for-performance models involve paying the providers based on their performance, which is usually measured by the patient outcome and patient satisfaction.
Shared savings models involve sharing the savings that come from reducing healthcare costs. It operates by giving a provider a financial target that, if achieved, can be shared between the provider and employer.
One of the main benefits of a shared savings model is that it encourages providers to deliver proactive preventive care and focus on keeping their patients healthy long-term.
Promoting Employee Health Literacy
Employee health literacy plays an important factor in reducing healthcare costs. But what is it, exactly?
Health literacy refers to a person’s ability to understand health information and to use that information to make informed decisions regarding their health.
By promoting health literacy, businesses can help their employees make better-informed health decisions, which can ultimately lower healthcare costs.
An effective way to promote health literacy is to provide your employees with educational materials on different health topics. These materials can include brochures, mini-books, and pamphlets. The key is that each material provides substantial information on topics like stress management, healthy eating, and exercise.
Suppose the reading material isn’t taken too well. In that case, businesses can also offer workshops or seminars to help their employees better navigate the complex healthcare system and learn more about their health.
These workshops and seminars can cover much more material than what can fit into a pamphlet, so they’re better suited to cover more complex topics such as:
- Navigating the healthcare system
- Managing chronic conditions
- Learning how to choose the right healthcare provider
- And more
Another effective strategy is to provide your employees with access to health advocates or coaches. These professionals specialize in providing personalized support on a variety of topics and may be best for employees who need that extra push.
Finally, employers can promote health literacy by encouraging open communication. This means encouraging employees to engage in conversations about their health and creating a health-oriented culture within the workplace.
Analyzing and Optimizing Employee Health Plan Utilization
Like the other cost containment strategies listed in this post, analyzing and optimizing employee health plan utilization can help reduce costs and improve healthcare quality.
This is because analyzing health plan utilization data can help identify areas where costs can be cut and provide an opportunity to develop a strategy to continue optimizing the plan’s utilization.
One way to effectively analyze health plan utilization is to track the plan members’ health behaviors to identify patterns. This can include analyzing claims and prescription drug data, as well as other data points, to determine which services are most used and which services are driving up costs.
Once a pattern has been identified, employers can develop strategies to optimize the plan utilization. Oftentimes, this involves promoting the use of preventive care services, encouraging cost-effective services, and reducing the frequency of unnecessary medical procedures and services.
Promoting preventive care services, like annual check-ups, colonoscopies, and mammograms, can help employees identify health problems early on before they become seriously costly issues.
Reducing unnecessary healthcare services includes encouraging employees to use generic brands over brand-name drugs or to always seek out in-network providers whenever possible.
Lastly, its important to encourage the use of cost-effective services such as promoting free or low-cost virtual care and telemedicine services.
Virtual care is about more than seeing your primary care physician for fifteen minutes. It typically includes other benefits such as well-being coaching, mental health services, and chronic disease support.
Virtual care involves using readily available technology to connect with healthcare providers remotely, typically through video conferencing platforms.
This allows employees the freedom to receive medical care from the comfort of their own homes, car, or wherever they may be.
One of the main benefits of virtual care is that it reduces healthcare costs by drastically reducing the need for costly in-person visits. By offering virtual care services, employers can provide their employees with access to care without reducing productivity or increasing absenteeism.
Additionally, virtual care opens the door to allow better access to care for those that live in rural or remote areas.
With virtual care, those that live in rural or remote areas can readily see a provider without having to take days off of work or pay for costly gas expenses to meet their doctor’s appointments.
Additionally, widely available virtual care ensures that employees receive care in time, which can reduce the need for costly medical interventions at a later time.
Designing Employee Benefits Packages
A properly designed employee benefits package is an important way to reduce healthcare costs while also providing employees with comprehensive healthcare coverage.
Additionally, designing a well-thought-out and planned benefits package plays a key factor in attracting and retaining top talent. This is because comprehensive healthcare coverage at a low price is typically only available through an employer.
Balancing Satisfaction and Cost
However, when designing a benefits package, it’s crucial to balance employee satisfaction and cost. Employers must provide their employees with quality benefits while keeping costs manageable for the business.
One way to strike this balance is to offer a range of healthcare services that meet the diverse needs of your employees.
This can involve presenting a mix of traditional services, such as medical, dental, and vision, as well as more modern services, such as health coaching and telemedicine.
Employers can also design benefits packages to incentivize employees to take charge of their health and wellness. For example, you may want to include financial or non-financial incentives for those who achieve certain health milestones or participate in wellness programs.
You may also want to consider including access to comprehensive care coordination services, also known as care advocacy. It’s no secret how complex and migraine-inducing the healthcare system can be.
Why not provide access to a point of contact to help them make better-informed healthcare decisions?
One of the main benefits of care advocacy is that it can help prevent medical errors and improve the overall quality of care that members receive.
The care advocates are there to help members understand their diagnosis and the available treatment options. They also help find the most appropriate high-quality providers and facilities available in the plan.
By helping members make informed decisions about their health, these care advocates ultimately help prevent unnecessary lab work, tests, and even surgeries.
Well-Being and Work-Life Balance
In addition to the actual benefits, you can consider designing the benefits package to promote a sense of well-being and to promote a better work-life balance.
When employees feel supported in their personal and professional lives, they tend to be more engaged and productive at work. One of the more effective strategies for promoting work-life balance and well-being is to offer flexible work arrangements.
This includes remote work options, flex schedules, and job-sharing arrangements.
Another strategy to promote well-being is to offer employee assistance programs. These programs provide employees with confidential counseling for a range of issues, such as:
- Relationship issues
- Financial problems
- Stress management
- General counseling
- Work-related stress
You may also want to consider reevaluating your paid time off and flexible leave policies. By offering these policies, employers can show their commitment to their employees’ well-being, which can lead to improved satisfaction and retention.
Ultimately, when designing employee benefits packages, it’s important to consider the needs of your employee demographics.
For example, younger employees may be more interested in modern services such as telemedicine and flex scheduling, while older employees may be more interested in retaining traditional benefits. Ask or survey your employees to get an idea of what benefits they are looking for.
Save Money on Your Employee Health Benefits with Redirect Health
With costs on the rise, implementing cost containment strategies in healthcare has never been more important. By implementing the following, employers can reduce their healthcare costs in the long-term:
- Implementing wellness programs
- Negotiating with healthcare providers
- Promoting employee health literacy
- Analyzing and optimizing employee health plan utilization
- Designing effective benefits packages
At Redirect Health, we offer comprehensive, cost-effective healthcare solutions that can help employers save money.
For example, just one of the effective strategies we have in place for saving money on employee health benefits is offering our telemedicine services. We offer a telemedicine platform that allows employees to meet with qualified healthcare providers at no cost.
We understand the challenges employers face in providing quality healthcare benefits while keeping costs low, and we’re committed to helping employers meet these challenges head-on.
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