7 Steps to Fixing Your Company’s Healthcare
Originally Published in RMP Advisor, May 2009We’re lucky to live in America, with access to the best healthcare services in the world if and when we need them. Yet, as last month’s newsletter reported, we’re not getting good value for our healthcare dollars. Why? Overuse, underuse, and misuse of healthcare services has escalated spending to unacceptably high levels. Wasteful spending, in fact, is estimated at 30%.
Healthcare providers make money by treating sick people, not maintaining health. And, the typical patient doesn’t have “skin in the game,” meaning consumers of healthcare services should have a greater financial stake in maintaining their own health.
What can you, the employer, do to improve this situation? Take these 7 key steps:
- Acknowledge the Problem. For many business owners, the status quo is OK. Accepting high premiums as a cost of doing business, they won’t reconsider their strategy, choice of carrier, plan offering(s), or anything else. “Let government fix the problem,” they say. If that sounds like you, read no farther.
- Obtain and Analyze Your Utilization Data. You can begin to quantify the problem within your organization by getting cost and utilization data (i.e., medical claims data) from your insurance carrier or administrator. The availability of data depends on the size of your organization. Without data, you’re literally searching in the dark for a solution to your problem.
- Prioritize Your Needs. There are tradeoffs between saving money on health benefits and the richness of the plan you offer to your employees. How competitive is your particular labor market? What role does health insurance play in your strategy to attract and retain employees?
- Assess Your Options. How competitive is your health insurance market? Who are the viable health insurers in your area, based on price, quality, and access? Don’t assume that the carrier you’re currently using is your only option. In order to better align incentives for your employees, consider consumer-driven (e.g., HSA, HRA) options as well. Evaluate your company’s contribution strategy and employee incentives to maintain their health.
- Develop a Multi-Year Strategy. Based on your priorities and options, develop a plan to reduce wasteful spending and align financial incentives around employee health and productivity. Then, make decisions accordingly about which carrier to offer, which plan or combination of plans to provide, and employer contribution levels.
- Manage Your Risk. Healthcare is a risk to manage, like in any other business and it impacts productivity. We encourage a focus on wellness and prevention programs, lifestyle incentives (e.g., smoking cessation, weight loss, exercise), more consumer education and involvement in decisions, and efforts to improve quality of care (leading to reduced costs).
- Seek and Evaluate Feedback. Continually seek and evaluate feedback about the health insurance programs that are in place. To prepare for the next renewal, review your claims data, assess your financial results, evaluate service and support activities and employee education programs, and make any necessary improvements.
Are We There Yet?
No – this process will take time, but starting now is essential. The private sector must do its part to show the government the right way to pay for healthcare services. Then, we’ll be in the strongest possible position to urge the government to do its part for healthcare reform without taking over the entire system.