11 Ways to Save On Employee Health Care Costs (Without Hurting Employees)
July 27, 2015
How to save on health care costs without costing your employees.

How to save on health care costs without costing your employees.

Despite the passage of the Affordable Care Act, escalating employee health care costs continue to pose challenges to employers nationwide. Employers have responded by increasingly shifting more and more of the burden for health insurance costs on the backs of employees. Obviously, this doesn’t enhance a company’s value proposition to workers, and may hurt morale and retention as well.

 

Employers can only push cost shifting so far. But some forward-thinking HR managers and benefit experts are finding creative ways to reduce health care costs by increasing efficiency and leveraging new technologies and innovations – without necessarily slashing meaningful employee benefits.

1. Embrace Telemedicine. No doubt, some things need the in-person expertise of a trained physician. Medical observation is a skill, and there’s no substitute for it. But some routine maintenance or other limited physician engagements can be done just fine over a two-way video connection – at significantly lower costs.

How much lower? According to Mary Modall, the Chief Medical Officer for a company

called Amwell, the typical total cost for an in-person visit in an emergency care clinic is $49 through her service, versus between $95 and $140 for a visit to an urgent care clinic, and $750 for an ER visit. Modall also claims other benefits, such as reduced time away from work.

The innovation isn’t limited to just establishing a video link between a patient and doctor. Skype can do that. Telemedicine also leverages other technologies like wearable medical devices and other mobile technologies to enhance communication, diagnostic accuracy and even implement early intervention, should a wearable device record a deteriorating medical condition.

Currently, about 20 percent of employers offer telemedicine as part of their benefit package, but those numbers are increasing fast.

2. Engage Pharmacy Benefit Management. Pharmacy benefit managers seek to save employers money by trying to increase the efficiency with which workers and their families access medical benefits. Left to their own devices and isolated from the cost, workers often make little effort to seek the lowest-cost pharmacy providers. Often they’ll get drugs from the hospital pharmacy, for example, where a mail order pharmacy would provide the same drugs at a fraction of the cost.

Pharmacy benefit managers seek to route beneficiary drug orders through lower cost channels and take advantage of economies of scale – without adversely impacting quality of care. Examples include the use of mail order, including the use of insulated packaging where appropriate (some medications lose their effectiveness if exposed to temperature extremes during shipping), the use of electronic prescribing, maximizing the use of pharmacy discount cards, and formulary management.

3. Implement an Employee Wellness Program. Companies have reported substantial long-term savings in health insurance premiums, absenteeism and presenteeism costs simply by starting a robust employee wellness program. In one well-known example, Johnson & Johnson reported that their wellness programs cumulatively saved them $250 million in health care costs over a single decade, and that their wellness program generated an ROI of $2.71 for every dollar they invested – making their wellness program one of their most profitable initiatives. The industry journal Health Affairs also detailed the tremendously successful wellness programs at Navstar, which reported that medical costs fall by about $3.27 for every dollar spent on wellness programs… and absenteeism costs fall by about $2.73 for every dollar spent.

cigarettes-83571_1280

Blech.

These are larger companies that have the advantage of some serious economies of scale: They could appoint one program manager and leverage the benefits over thousands of workers. But the Journal of Occupational & Environmental Medicine reported that there are some substantial gains in productivity to be had as well – simply in the reduced productivity loss of non-smokers compared to smokers:

The adjusted model indicated that participants who continued to smoke over 2 years had significantly greater overall workplace productivity loss compared to those who remained non-smokers during the same timeframe (9.8% vs 2.5% productivity loss, p=0.031).

Best Practices

The problem with many of these large-scale case studies is that they may not reflect the likely experiences of companies with very young or very old work forces, with fewer employees (under 1,000, and often under 50), and in different industries. However, to round out our list of ideas, we were able to collect some best practices from successful companies of varying sizes who were able to think outside the box to reduce costs, improve wellness and boost morale and loyalty.

4. Open wellness programs to family members.

5. Involve senior management. The ‘suits’ must lead the way!

6. Bonus or otherwise provide incentives to non-smoking workers – and offer smokers a chance to qualify by completing an employer-subsidized smoking cessation program.

7. Provide incentives to workers who meet height-weight or body fat objectives

8. Put managerial ‘oomph’ behind the communications effort. Use multiple media to advertise the employee wellness initiative.

9. Negotiate discounted gym/fitness club memberships

10. Consider having wellness classes on site – especially for common ailments like weight management, diabetes management, etc.

11. Improve screening and early diagnosis by contracting with a mobile medical clinic, nurse or physician to visit the worksite every so often and meet confidentially with workers.