We think that you, the HR leader, hold much more power in healthcare than you may realize.
Just ask Marshall Allen. As an award-winning former ProPublica journalist and author of “Never Pay the First Bill,” Marshall is an expert in healthcare spend. And he often refers to employers as the “sleeping giant” of the healthcare system.
“I think employers have been slumbering while the healthcare costs rise... Because if you look over the past couple decades, the costs have been going up and up. And what we've seen employers doing is passing more of that cost onto the employees.”
But we can’t keep that up forever. Small to midsize businesses are feeling the heaviest impacts of rising healthcare costs. In 2021 alone, SMBs saw an average cost increase of 9.6% (compared to 5% among larger employers).
It’s about time to wake the giant.
Read on for six expert tips to reduce your company’s healthcare spend.
1. Cut out mark-ups in your healthcare plans
The average small-to-midsize business’ healthcare plan contains as much as 20-30% in unnecessary mark-ups — and most don’t even realize it. These extra costs can come in the form of carrier profit mark-ups, prescription drug mark-ups, or excessive broker commissions.
But thanks to new legislation called the Consolidations Appropriations Act (CAA), brokers are now required to offer transparency around their costs, compensation, and services.
Our advice to you: leverage the CAA to get a closer look into your healthcare cost structures (and snuff out those hidden mark-ups.) Schedule a free benefits audit with our team to get an expert perspective on your current offering.
2. Reduce waste in plan utilization
“Waste [in healthcare] is really a commentary on value,” Marcus Osborne, former SVP of Walmart Health and Nava Advisor, explained in a recent fireside chat. “It is a situation in which you are not getting the value that you deserve... Waste exists where there is inappropriate or unnecessary care. Waste exists where there is low quality care being provided.”
Not only does waste impact your employees’ health outcomes — it also drives up costs significantly. It’s estimated that waste takes up roughly one quarter of all U.S. healthcare spending.
So how do you reduce waste? You help your employees find high-quality care through reliable providers.
In recent years, there’s been a boom of new benefits vendors aiming to connect individuals with great providers. Whether it’s through care management, healthcare navigation, or even direct primary care, there are hundreds of tools and vendors ready to help your employees access quality care at an affordable price.
(Unsure which vendor is best for your employer’s needs? Check out the Nava Benefits Search Engine to explore 600+ vendors across 28 benefits categories, read reviews from real HR leaders, and get a quote for free.)
3. Offer your employees price comparison tools
Most folks are unaware that the costs of healthcare can vary wildly depending on the provider.
“People don't realize that you can get the same MRI or CT scan or blood work, or even knee replacement in the same town for exponentially different prices,” Marshall explained. “You might get a CT scan at a hospital. They might charge you $2,000 for that scan. You could go to an independent imaging center that's within a mile of that same hospital and pay $300, same type of scan.”
Maybe you can’t tell your employees where to go for their care, but you can give them the tools they need to find good prices without sacrificing quality. Using healthcare price comparison tools, employees can shop around for a certain kind of treatment or care, compare prices offered by providers in their area, and make more informed choices.
4. Educate your employees on how to tackle their high medical bills
It can take a village to tackle high healthcare costs — and there’s no village like the employee-employer dream team.
After all, the way they use (and pay for) medical care impacts your employer’s overall utilization, and that utilization adds up fast.
It’ll benefit both of you to give your employees some tips to manage their medical spend. Try hosting an info session, including savings tips in your internal newsletter, or highlighting best practices as part of open enrollment.
Not sure where to start? Here’s a guide to share with your employees to help them lower their healthcare bills.
5. Explore alternative funding strategies
If you’re a small-to-midsize business, you’re probably on a fully insured plan. In other words, you pay a set premium to a carrier every month, and they provide coverage to your employees.
Most employers are in the same boat. But it’s worth seeing what else is out there — because that strategy might be holding you back.
“If you're going with a fully insured plan... you don't have as much control and you don't have as much insight into what you're spending,” Marshall explained. “So you you can't hold the insurance company accountable when they come to you the next year and say they wanna raise your rates.”
Moving to an alternative funding strategy — like self-funding or gap funding — may unlock new capabilities for your business, like cost savings or more freedom to design plans around your employees’ needs.
So consider this your invitation to explore new funding strategies.
6. Find benefits partners who prioritize your goals
As they say, “If you want to go far, go together.”
Building a high-quality, affordable healthcare offering is a team effort — and you want to be sure that your teammates are running towards the same goals. Whether it’s your broker, carrier, or PBM, the right partner can make or break your plans’ cost and quality.
“What's been missing from this entire system is accountability and employers have not demanded it and they haven't been getting it. And so I think that's what needs to change for the employer and the employee.”
Unsure whether your broker is looking out for your needs? All you have to do is ask. Under the CAA, brokers are now legally required to disclose key info about your working relationship, including all kickbacks and bonuses they receive from carriers.
(Psst... not to make this about us, but transparent pricing and cost savings without sacrifice are kind of our whole deal here at Nava Benefits. And we’d be happy to chat about how we can help your company save on benefits.)
How about some personalized guidance on reducing healthcare spend (without sacrificing quality)? Contact us for a free benefits audit: