The cost of health care for employers is rising at an average annual rate of 12 percent and, for many businesses, health care is the No. 2 or No. 3 budgetary issue stressing their bottom line.
But there are steps employers can take to keep those costs in check, with annual increases of 4 percent or less, says Mark Haegele, director, sales and account management at HealthLink.
“The average annual trend in overall costs, which includes administrative fees, fixed costs, plan costs and pharmacy costs, is about 12 percent,” says Haegele. “That clearly has an impact on a business’s bottom line, as anything more than 3 percent has a detrimental impact on a company’s ability to offer products and services. But there are a number of things an employer can do to get those costs in line.”
Smart Business learned more from Haegele about how employers can control health care costs and boost their bottom line.
Why should employers be concerned about rising health care costs?
Unsustainable increases in health care costs, over time, will impede an employer’s ability to continue to offer services in its local market, having a profound impact on communities and the country as a whole.
How can employers lessen the burden of health care costs?
Typically, employers can implement several initiatives around wellness, health improvement and risk management. And there are a number of pilot programs that are trying to redefine how to finance health care on behalf of employers. You have to look at plan design, wellness strategies and a company’s financial structure in order to beat the street and do better than typical cost increases. Employers can structure programs specifically for their employees’ needs and design a plan that fits that particular group of employees better than a standard plan would and that also addresses aberrant cost increases. There are a number of flaws in the system that need to be addressed and a number of challenges. There are underutilized cost containment strategies related to health care, and if an employer is just paying for a base plan, it is not incorporating these specific strategies.
What areas offer potential cost savings for employers?
Areas such as specialty pharmacy should be addressed. This is an area where there are 650 biometric drugs in the pipeline, and specialty drugs represent 20 percent of that pipeline, and although just 2 percent of the population, represent 18 percent of the prescription drug cost. That is certainly an area that can be managed.
Cancer drugs are another category that is not traditionally aggressively managed. There are programs available that employers can use to get the lowest cost out of their providers via aggressive case management. These programs work with members to get home health treatment with cancer drugs and look at different ways to procure those drugs outside of the traditional system that is so expensive.
The typical path with injectable drugs is that a patient goes to the doctor, who sends the member to the hospital and gets that person on a program, charging up to 800 percent above Medicare costs. If, instead, the patient goes through a specialty pharmacy and uses a home health nurse to inject those drugs at home, that can cut costs by up to 70 percent.
Too many employers simply pay the premium and don’t think about these things, when doing so could have a significant impact on their business and their bottom line.
