An Examination of Solutions Available for Companies to Combat the Rising Cost of Health Care
Medical expenses are the fastest growing expense in a company’s budget and corporations are struggling to cope with the rapidly rising cost of medical care for employees. The United States spent $2.85 trillion dollars – nearly 22 percent of gross domestic product – on health care in 2011, an increase of 8 percent from the previous year. Looking forward, companies are bracing for an additional 8.5 percent increase in medical costs for the 2012 fiscal year1,2. Health care costs are expected to continue on this upward trend and corporate board rooms are anticipating this increase in employee costs.
The medical community faces its own challenges searching for a delivery method that offers greater medical value for companies looking to control costs. The business of health, however, is brokered by the health care insurance industry. While medical providers, like any business, attempt to maximize their income, insurance companies try to determine how and where to best deploy assets to continue to leverage their network of “lives” and minimize costs. These costs, however, are primarily to those that provide medical care: doctors.
Balancing the competing business desires of corporations, the insurance industry, physicians and even commission-driven insurance brokers is no easy feat, but taking the necessary steps now to improve the health of your employees and use funds as efficiently as possible will save your business’ budget in the long-term.
- First, educate decision makers in your business about where your medical dollars are going; not all the dollars get to the classroom, in this case, not all company dollars contribute to the delivery of medical care. There are many administrative leaks in the system using up tremendous resources.
- Identify what medical conditions are costing your company the most money. This can be obtained through aggregate data of diagnosis coding to maintain confidentiality of the information. Handle this information with extreme privacy and use it to develop a company-wide wellness program without singling out employees.
- Develop a collaborative relationship with a medical provider that can help you evaluate preventative options you can deploy in the workplace, educational programming to better inform your employees about efficient access and implement best practices initiatives to ensure that the most common medical conditions receive consistent evidence-based care to reduce costs. As spending drops, predicting the total amount for medical care in budget becomes a more exact science with healthier employees.
- Monitor progress and modify your employee programs based on experience including employee satisfaction with their medical care access and quality.
- Construct a value-based arrangement directly with your medical provider partner that rewards outcomes, employee experience and cost reduction.
- Include employees as part of the solution. Through prudent medical service purchasing, commitment to an improvement in health behaviors and participating in the evaluation of satisfaction, allow employees to share in the success through a reduction in premium or other reinforcing incentives.
- Consider medical insurance as protection against catastrophic medical events rather than a method of purchasing care.
Examples of solutions in action
Wellness and disease management programs are two excellent examples that are both cost-efficient and effective for businesses, reducing a potential $3.1 trillion to be spent on medical care this fiscal year.
Wellness programs include:
- Executive health enrollment
- Smoking cessation
- Weight loss
- Screenings for cholesterol, high blood pressure or diabetes
- On-site fitness facilities or health club memberships
- Educational programs on nutrition or healthy living
Common disease management programs include:
- Back pain, cholesterol or blood pressure management
- Diabetes care, asthma or headache relief
Incentivizing wellness and management initiatives for employees, such as providing gift cards, lower premiums, merchandise, cash, travel and personal recognition for healthy results, can make a significant difference in the well-being of employees.
Select a medical provider partner willing to help you evaluate your situation, deliver educational programming regarding medical service access, put into place wellness programming with targeted disease management programs and then monitor progress and accept value-based pricing for services. By developing a strategic medical provider partnership you can lower your employees’ health risks, reduce employee demand on the system, achieve more consistent medical outcomes, improve employee satisfaction and have an invaluable medical advisor. You can do all this and save money at the same time. Just what the doctor ordered.
Written by James Lindberg M.D., Hoag Executive Health Chief of Service
 “Insights from Monthly National Health Expenditure Estimates Through January 2011”. Altarum Institute. 22 Mar. 2011. 12. May 2011.
 “Centers for Medicaid and Medicare Services. “National Healthcare Expenditure Projections 2009-2019”. The Office of the Actuary. Sept 2010. 12 May 2011.