Healthcare costs can often feel overwhelming, but there are strategies you can employ to spend less while maintaining quality care. Many businesses have used only a handful of things to combat rising healthcare costs passing costs on to employees through plan change or increased contributions, absorbing the cost as a general business expense, or offer more restrictive care. In this blog post, we will explore five effective ways to reduce healthcare expenses. By implementing these strategies, you can take control of your healthcare choices, promote transparency, and maximize the value you receive from your healthcare investments. When using these services in combination we’ve found plans will lower their costs in a range of 20-40%
1) High Performance Plan Design:
One way to spend less on healthcare is through high-performance plan design. These plans focus on optimizing healthcare delivery and outcomes while minimizing costs. They often include incentives when patients use higher quality providers, primary care or nurse navigated care, and for things that can effectively be sourced for less money and there’s little quality variance (like labs, imaging, many prescription drugs, supplies, and durable medical equipment). For example, we have some clients that have plans with $0 primary care, $0 Deductible, and $0 coinsurance when care is directed through a Direct Primary Care Physician or nurse advocate.
2) Value-Based & Direct Primary Care
Value-based care models and direct primary care (DPC) arrangements offer cost-effective alternatives to traditional fee-for-service healthcare. Further having an effective independent physician that can integrate with a high-performance plan helps wield dramatic improvements in your ability to you’re your employees navigate to more cost-effective and higher quality providers. There’s simply no perverse incentive to direct care within a system. Value-based and Direct Primary care involves a direct financial relationship between patients and primary care providers, cutting out intermediaries, insurance red-tape, and perverse incentives. As a result, these doctors have fewer patients, spend more time with their patients, and can deliver more patient centric and attentive care.
3) Transparent TPA, PBM, & Partner Relationships:
The unfortunate part of healthcare is that there are essentially four commercial providers of health plan services. The majority of these insurance providers are for-profit companies. If you look at the stock performance of each of these companies from the passage of the Affordable Care Act (March 23, 2010) to now you’ll see that they’ve performed between 5-10 times better than the S&P 500. Part of the performance comes from a significant services that are now come from claims, either by owning doctor groups, pharmacy benefit managements services, or owning healthcare solutions that become part of your contract.
Using third-party administrators (TPAs) and pharmacy benefit managers (PBMs) often play crucial roles in healthcare management quite simply because their economic incentive is tied to your business and your plan performance. As a result, you can more easily customize your plan. Further, integrating best-in-class providers becomes much easier for you and your team. As an example, we typically see a 30-40% reduction in costs when using independent pharmacy benefit managers when compared to the top-4 national PBM’s.
4) Making Quality Doctors and Hospitals Easier to Find
Hospitals have a profit incentive to keep information from consumers about complications, infections, and doctor quality. First, hospitals are businesses and are fantastic marketers. Think about the ones in your area and the billboards you see. Every major hospital system has a broad range of capable doctors and specialties, some are fantastic and some rank in the bottom 10 percent nationally. Do you think they want you to know that they have good and back doctors within their facility? No, it’s bad for business and most hospitals build their reputation around a marker of quality as a system rather than to help individuals to identify only those especially gifted for their ailment. Second, hospitals get paid more when there are complications as patients are in the hospital longer and with those complications many times comes significantly higher payment from your plan. As much as we need hospitals in our community the unfortunate reality is that they have perverse incentives and many of those drive significant revenue.
One way to combat this is to make the best doctors and hospitals easier to find and go to those that have better outcomes for your specific need. In some cases this could mean providing an incentive for patients to have care delivered away from their community. The great thing about your plan is that it is yours and you have the ability to create incentives for folks to seek better care through plan design and in many cases have a team of advocates that can help get them there. You can create an unfair advantage for your team by doing this.
5) Access to Your Data
Access to your data empowers you and your partners to make informed decisions and to help your people when they’re most vulnerable. Having this information at your fingertips enables you to actively manage your plan. Many advisors simply use health data to report back to employers the relative sickness of the employee population. By having better access to data, you can transform your sick reporting to active management, meaning you can empower your team to engage before, during, and after key health moments and assist with resources to help.
Conclusion
Taking control of your healthcare choices is vital when it comes to managing costs. By implementing these five strategies – high-performance plan design, value-based and direct primary care, transparent TPA and PBM relationships, finding quality doctors and hospitals, and accessing your data – you can make informed decisions, reduce unnecessary expenses, and optimize the value you receive from your healthcare investment. Remember, becoming an informed healthcare consumer is an essential step towards spending less while ensuring high-quality care.