In a world where the only thing constant is change, one factor continues to change on a relentless upward trajectory—the price of healthcare. Early projections indicate a 7% medical cost trend in 2024. Healthcare inflation and clinical workforce shortages continue to put pressure on the system. Now, more than ever, the spotlight is on HR leaders to identify and select benefits that curb costs for employees.
What HR leaders need to know about healthcare costs
- It’s all about price, even when utilization is down. A dip in healthcare utilization does not always equate to cost savings. On the contrary, healthcare costs increase year after year because prices are increasing. Routine checkups, diagnostic tests, and treatments continue to reflect a higher price tag. It is critical for HR leaders to track the cost of medical procedures and negotiate premiums, coverage options, and cost-sharing arrangements with payers. Likewise, HR leaders should negotiate healthcare networks. They should create a network of preferred providers that ensure employees have timely access to high-quality healthcare.
Other innovations that allow employers increased pricing visibility and control include direct-primary care, reference based pricing, and value-based care. Direct primary care allows employers to negotiate directly with primary care providers. Reference-based pricing ties the prices to benchmarks. Value-based care arrangements (bundled pricing for services like joint replacements or labor and delivery) encourage stakeholders to negotiate better prices.
- Employee healthcare costs fluctuate year to year. Employees’ health conditions change over time. One year, even with the most effective wellness program in place, some employees will require more healthcare resources. Chronic conditions, events such as pregnancy, unexpected illness, or a pandemic can cause a spike in healthcare utilization, and cost. HR leaders must be cognizant of cost fluctuations and agile in their benefits strategy. A personalized approach focused on selecting benefits with individual employee needs that address a broad array of conditions is key.
Personalized healthcare ensures that employees get to the right healthcare provider and interventions for their unique medical needs. Most individuals with high-costs one year return to a more normal pattern of utilization the following year. Different employees will replace them, as they experience an emerging condition. This means that in order to truly impact costs, it’s critical to engage employees early in their clinical journey. Additionally, providing support as they are choosing doctors and treatment plans. - Averages obscure what’s really happening in healthcare. Averages in healthcare are misleading, especially when it comes to healthcare costs. Within every average are outliers—the high-cost claims from a few employees skew the average. It’s this phenomenon that drives the 80/20 rule in healthcare. Eighty percent of costs are incurred by only 20% of the claims. At the very top, costs are even further concentrated: 30% of cost is attributable to only 1% of the population. Even within a high-cost condition, such as cancer, the 80/20 applies. Most cancer cases have moderate costs, but a handful of extraordinary cases extend averages.
To address deceptive averages, HR leaders must delve deeper into the data. They must look at cost and price ranges, understanding the specific care pathways driving utilization, and adapt benefits strategies accordingly. A data-driven approach ensures that HR leaders are positioned to negotiate with payers and providers. Also, they should evaluate the capacity of various vendors to cost-savings with their employee population.
A solution with no out-of-pocket costs
The cost of healthcare and employee benefits continues to grow, and the number of health solutions continues to proliferate. HR and benefits leaders must be increasingly selective in the benefits they offer. Summus offers a more effective approach that provides faster access and answers. All while reducing cost and administrative burdens on payers and employers.
Summus supports employees and achieves engagement among diverse workforces. We provide answers for any health condition or concern, at no cost to the employee. When an employee is faced with a high-cost choice, such as a diagnostic or surgery, they turn to Summus.
