Executives 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.
In an effort to rein in costs, employee healthcare deductibles and contributions are at an all-time high as employers shift more of the burden onto their workers.
After annual attempts to shop for better rates or cut benefits with a goal of keeping premiums stable, often the solution becomes “Let’s just finish the healthcare renewal and move on.” Managing healthcare benefits by throwing in the towel or accepting the smallest cost INCREASE is what happens when they 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 have known 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 rich healthcare plan.
The cherry on top is that companies may likely end up with an even better plan than what is already being offered 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.
The PricewaterhouseCoopers and the Institute of Medicine reports indicate for every $1 that is spent on American healthcare, $0.33-$0.50 of those dollars don’t lead to improved health due to waste and inefficiencies.
Somewhere close to half of the dollars that you spend on the care of your employees and dependents are wasted.
But how does an employer begin to manage something so complex as the healthcare market in an effort to optimize cost management in healthcare benefits spending?
The answer is self-funding, which gives the employer control over their healthcare costs. Once the employer has the ability to contain this expense, one of the lowest-hanging pieces of fruit for controlling costs consists of addressing that 33-50% of healthcare that’s wasted.
Pinpointing Areas of Medical Waste
According to studies, the key components comprising waste in healthcare dollars rest in the following areas:
- Complex insurance payment administration
- Lack of wellness and preventive care
- Lack of integration within the healthcare system
- Failure to sufficiently adopt information technology
Annually, the biggest areas of waste are attributed to defensive medicine ($210 billion annually), inefficient claims processing (up to $210 billion annually), and care spent on preventable conditions related to overweight and obese individuals ($200 billion annually).
Moreover, 86% of consumers surveyed by PricewaterhouseCoopers’ Health Research Institute agreed that patients going to emergency rooms for non-emergency care drives up healthcare costs. Two-thirds of individuals surveyed said that they personally had received excessive medical testing.
And addressing these areas of waste is exactly where Direct Primary Care comes into play.
Self-Funding and the Direct Primary Care Model offer Cost Management in Healthcare Benefits Spending
In addressing the 33-50% waste in the healthcare system, employers who don’t already utilize self-funded plans need to realize that self-funding is part of the 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.
COST MANAGEMENT COMPARISON
Traditional Healthcare Waste
DPC Cost Controls
Complex insurance payment administration
DPC allows you to prepay for enhanced primary care that will never bill your insurance company. DPC also reduces utilization of other parts of the healthcare system (specialists, imaging, hospitalization) that would lead to more insurance based bills.
Lack of wellness and 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 accept change to achieve wellness or follow-up for preventive care. DPC’s hallmarks are the amount of time that is spent with the patient and the accessibility which leads to more touches within a given time period vs insurance-based healthcare.
Lack of integration 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.
Failure to sufficiently adopt information 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 attention to preventable conditions related to overweight and obese individuals
There is no one size fits all path to weight loss and weight control. Each person will need help understanding that change is possible and then will need help as they perceive barriers to reaching their particular goal. A DPC doc that has the upfront time to explain how to implement sustainable change and the same doctor being available when the barriers arise is a big step towards reversing this epidemic.
DPC and Care Coordination Saves Money
Coordinating care is basically the process of reducing inefficiency in healthcare and inefficiency exists at every turn in modern healthcare.
Often patients don’t know the names of the medications that they take and don’t carry a list. If a specialist prescribes a medication that has a major interaction with one of the patient’s existing chronic medications an opportunity for care coordination exists.
Likewise, other 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 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 issues in the bud. 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, guidance and hand-holding, fewer dollars make their way to more expensive downstream healthcare environments, such as imaging facilities, specialists offices, the ER and the hospital- potentially saving $0.33-$0.50 of every $1 spent along the way.
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