Managing Costs
Health care costs continue to be a challenge for the large majority of small employers in the 50-1,000 employee space. While COVID-19 has abated costs over the last year due to lower health system usage, the larger fear is what comes next? Indeed, the lower usage of health care this past year may well lead to fewer early diagnoses which will result in higher health care bills to follow. So, how do we decrease the cost of healthcare?
The tools to not only contain but dramatically reduce health care costs exist today via health care coalitions. One such coalition in Massachusetts has achieved consistent savings 27% below average market costs. And early results from a coalition in Michigan have already seen an average savings of 17% in the first year with more to come.
The real “magic” of building a coalition is getting to the numbers that employers in the 50-1,000 employee market do not typically enjoy. The Massachusetts coalition has over 30,000 employees. Here in Michigan, we are approaching the 1,500-employee mark and growing rapidly. As we grow the coalition, we see cost results normally enjoyed by much larger employers. This includes the ability to purchase resources at costs normally enjoyed by those larger employers including wellness programs, Rx services and much more.
The largest part of this savings has occurred due to the application of several different technology tools and strategies that have come online in the last 5-7 years, including Population Health Management and Rx Management.
It’s true that 20% of your employees drive 80% of your health care costs. Population Health Management is a technology that addresses the drivers of health care costs and identifies the biggest cost drivers within a given population. That is then further enhanced by working with Nurse Managers to address those costs both individually as well as aggregately.
Likewise, Rx costs are and will continue to be the single largest cost driver as new and very expensive drugs come on the market to solve a plethora of health issues. Rx Management includes using resources such as clinical management, manufacturer’s assistance and other sourcing, international sourcing, and specialty drug management. Through active management of Rx, we are better able to achieve strong results at a greatly reduced cost to the employer and employee.
Most companies today recognize there are two important factors that can help drive a competitive advantage – driving improvements in technology and attracting top talent to their organization. By cutting health care waste they can achieve both. They can free up cash flow to better invest in technology resources AND have a more attractive benefit package to offer their employees at the same time! All of this without the continued increases in employee deductibles as well as contributions from the employee’s paycheck.
Health care costs will continue to go up for most employers. By combining technology with active plan management, we are seeing results most employers can only dream about. This is the best way to reduce your costs and make both of these objectives happen
Kristen Cetin is an Associate Professor and Associate Chair for Faculty and Academic Staff Development in the Department of Civil and Environmental Engineering at Michigan State University. She is also the Director of the US Department of Energy Industrial Training and Assessment Center. She is a licensed Professional Engineer and a LEED AP, and her research involves the use of building energy and daylight modeling and smart technologies to improve building energy performance and reduce peak loads, while maintaining occupant comfort. Her work has been funded by the National Science Foundation, DOE, ARPA-E, Sloan Foundation, ASHRAE, ACRP, and various industry partners. She is an active member and Research Subcommittee Chair of ASHRAE Technical Committee 7.5 - Smart Building Systems and MTG.OBB - Occupant Behavior in Buildings. She is also the Chief Editor for the ASCE Journal of Architectural Engineering, a Mentor for the ASCE ExCEEd Teaching Workshop, and the Vice Chair of the ASHRAE Conferences and Expositions Committee.
