Business owners across the board struggle with how to approach cost management in healthcare benefits spending. Healthcare benefits, after all, are one of the largest corporate expenses and executives have been left with only blunt tools to fight against yearly increases.
Employee healthcare deductibles and contributions are at an all-time high as employers shift more of the burden onto their workers in an effort to rein in costs.
Annual attempts to shop for better rates or at least keep premiums stable often end with an exasperated, “Let’s just finish the healthcare renewal and move on.” Managing healthcare benefits by throwing in the towel or looking for the smallest possible cost increase is what happens when business owners don’t understand what’s inside the black box that is “Your Group Healthcare Plan.”
The good news is that there is an array of group health insurance options that you may not know are available to you. By understanding how and why they work, empowered employers can take a proactive approach to cost management in healthcare benefits with the goal of reducing the healthcare spend while still offering a generous healthcare plan.
The cherry on top is that companies may end up with a better plan while saving money at the same time.
How to Grab a Vine Out of the Quicksand of Ever-Rising Costs
Employers with healthcare solution fatigue should realize that they’ll have to pull themselves out of the quicksand of rising healthcare costs and dwindling benefits by obtaining control of their healthcare plan and then wringing out the waste and inefficiency.
A 2019 study published in the Journal of the American Medical Association (JAMA) indicated that for every dollar Americans spend on healthcare, approximately 25 cents doesn’t lead to improved health outcomes due to waste and inefficiencies. In other words, around 25% of what you spend on your employees’ health is wasted.
But how does an employer begin to manage something as complex as the healthcare market in an effort to optimize cost management in healthcare benefits spending?
The answer is self-funding, which gives employers control over their healthcare costs. Once employers take charge of these, one of the lowest-hanging pieces of fruit for controlling overall business costs consists of addressing the 25% of healthcare expenses that don’t contribute to better health.
Pinpointing Areas of Medical Waste
According to experts, these are the key areas contributing to waste of healthcare dollars:
- Complex administration needs of insurance-based care
- Failure to utilize available technology
- Lack of preventive care
- Lack of integration and coordination within the healthcare system
The annual costs of waste are staggering. The JAMA study estimated that the U.S.’s losses amounted to up to $935 billion a year, with $266 billion stemming from administrative complexity alone.
Addressing the most common areas of medical waste is exactly where self-funded healthcare, and especially the model known as Direct Primary Care, come into play.
Self-Funding and the Direct Primary Care Model Offer Cost Management in Healthcare Benefits Spending
In addressing the 25% waste in the healthcare system, employers who don’t already utilize self-funded plans need to realize that self-funding is a key to managing costs. Just like other parts of your business, if you can’t find out where the overpayments and inefficiencies lie, then you can’t fix the problem.
Incorporating Direct Primary Care (DPC) into the self-funded healthcare plan will go a long way in reducing the wasteful expenditures that contribute to ever-rising healthcare costs. This is because Direct Primary Care offers employers a “healthcare insider” to guide them and their employees away from the inefficiencies of the healthcare system.
| Area of Healthcare Waste | The DPC Solution |
|---|---|
| Complex administration needs of insurance-based care | DPC allows you to prepay for enhanced primary care without billing your insurance company. DPC also reduces utilization of other parts of the healthcare system (specialists, imaging, hospitals) that would lead to more insurance-based bills. |
| Failure to utilize available technology | DPC physicians are available 24/7 by phone, email, secure text, and video conference, as well as using electronic medical records that focus on the doctor-patient interaction and not billing the insurance company |
| Lack of preventive care | Wellness and prevention require education. Education takes time and, sometimes, it takes many different points of contact between doctor and patient before the patient is ready to change their behavior. DPC’s hallmarks are the amount of time that is spent with the patient and the accessibility that leads to more contact |
| Lack of integration and coordination within the healthcare system | DPC doctors are charged with coordinating care for their patients and making certain that there is no duplication of imaging, labs, or tests just because the specialist doesn’t have the previous study in their hands when it is needed. |
DPC and Care Coordination Saves Money
Coordinating care is basically the process of reducing inefficiency in healthcare by making sure the sharing of information between primary care physician, specialists, and patients is as seamless as possible. Unfortunately, inefficiency exists at every turn in modern, insurance-based healthcare.
Opportunities for increased efficiency exist when information—like imaging studies, lab results, and test results (such as a stress test)—is siloed and not available to the doctor caring for the patient at the moment. A costly duplication of processes or a delay in treatment are two common result.
Often patients don’t know the names of the medications that they take and don’t carry a list. If a specialist is considering prescribing a medication that has a major interaction with one of the patient’s existing prescriptions, care coordination is not only cost-effective but potentially life-saving.
A DPC doctor has the time to coordinate care and the incentive to do so.
In the Direct Primary Care business model, the DPC physician operates from a position of accountability to both patients and to the employer. Taking a long view, this means that DPC doctors are incentivized to help keep patients well, to manage chronic health conditions, and to nip new health issues in the bud before they become more difficult and costly to treat. DPC physicians steer their patients away from wasteful medical spending by providing their patients with more time, more immediate support, by guiding them to the most affordable labs and medications, by offering patients 24/7 accessibility, and much more. With this kind of oversight and guidance, fewer dollars make their way to more expensive downstream healthcare environments, such as imaging facilities, specialists offices, the ER and the hospital.
Are you interested in learning more about how you can benefit from a self-funded health plan that incorporates Direct Primary Care? Contact Euphora Health and we’d be happy to answer any questions you might have.