Healthcare costs continue to be a severe pain for many businesses and as these costs rise, employers are looking for creative ways to get them under control. However, businesses are focusing mainly on infrequent big-ticket items like cancer, while neglecting the myriad smaller costs that add up and can be replaced by high-quality primary care.
According to Sun Life Financial, a firm that specializes in health benefits and stop-loss coverage, the number of employees with claims exceeding $1M rose 87% since 2014. This alarming trend thrusts high-acuity conditions like cancer and related drug costs into the employer spotlight, and it’s clear that a small subset of employees accounts for the majority of healthcare costs. Employees with claims over $1M only represent only 2% of total stop-loss claims, yet 20% of reimbursements.
Naturally, stop-loss carriers are seeking ways to mitigate these high-dollar reimbursements, and employers are anxious to lower their risk as well. As a result, the dialogue amongst brokers and insurance carriers has centered around these severe cases. While these high-cost claims are important, this narrow emphasis has caused employers to neglect the vast majority of claims, many of which don’t trigger stop-loss coverage but still represent a material expense to employers.
Emergency room visits, for example, may not jump out on your stop-loss carrier’s spreadsheet, but they are frequent occurrences that really add up, especially if you have a few employees that are “frequent fliers”. Redirecting these employees to a primary care doctor can dramatically improve their outcomes and save employers money. By focusing on the basics like ensuring employees go to the right place to get the right care at the right time, employers can realize significant savings.
Your insurance broker can’t cure cancer
Employers need to redirect attention to much earlier stages of employees’ health. Preventative medicine and screenings are absolutely critical to ensuring employees avoid serious illness in the first place, and employers can actually make a difference here. For example, diagnosing cancer in early stages is vital to ensuring the best chances of survival. At the risk of sounding callous, businesses can directly benefit as well. High-acuity conditions like cancer result in exorbitantly priced courses of treatment, which can include any or all of the following: surgery, radiation, and chemotherapy. Earlier stage cancers (and other diseases) can often be managed much more efficiently and provide the best chance of ensuring your employees get better and minimize costs.
In this country, employers are the primary drivers of healthcare. It doesn’t matter whether you’re a landscaping business or a restaurant group or an investment bank; the strength of your health benefits program is the single most important indicator of whether your employees will receive and use health care services appropriately. As such, employers need to get a lot smarter about bolstering preventative medicine efforts. Wellness programs that include blood pressure checks and gym memberships are definitely important, but we need to get employees to go to a doctor regularly again.
The insurance model makes Americans very nervous about visiting the doctor because they don’t know how much it will end up costing them and they have to pay a toll each time they go (co-pays). Pair that with even one negative experience of being rushed through a visit, or waiting weeks to get an appointment, and you have a population that suddenly believes doctors are a rip-off.
Employers need to stop being reactive. If you dig a little deeper, it’s clear that prevention and timely care is a tangible and effective way to mitigate high-dollar health care claims. In five short years, claims exceeding $1M rose by 87%. Those were not all freak accidents and car crashes. Those were cases of cancer, heart disease, and other conditions, many of which could have been managed better (and for less money) if they had been caught and addressed sooner. Lack of primary care is a root cause of high-cost claims.
So what can employers do?
I’ll throw in a couple of caveats at this point:
- Not all healthcare events are preventable: There are instances where people simply get sick. Cancer is the malady of our day and even with good primary care, many people will, unfortunately, suffer from a form of cancer or other serious illnesses. Again, ensuring good prevention and early care can go a long way to help.
- Third parties deserve a lot of blame: Drug manufacturers, pharmacy benefits managers, GPOs, and other third parties have definitely contributed (i.e. caused) the dramatic rise in healthcare costs. It’s crucial that employers don’t just sign up for the most convenient medical plan. Talk to your broker and really educate yourself on how drug costs and other services will be managed.
But to answer the question of how employers and businesses can intervene and control costs, I think the first step is quite clear: self-insured businesses need to start caring about primary care. Here are the top three things self-insured businesses should do to create a strong primary care strategy:
- Find out about DPC or on-site clinics: Talk to your benefits advisor or broker about options like direct primary care (DPC) or on-site clinics. The latter really only applies to large employers with 5,000+ employees that are concentrated to one location or geography, but any size employer can take advantage of DPC. If your broker doesn’t give you any direction here, it’s probably because these are more innovative strategies that they’re not as familiar with. Or, they just don’t care because they don’t make commissions from promoting them (look for a better broker!) Either way, reach out to us and we’ll give you the information you need or even find you a different broker.
- Rewards and friendly workplace competitions: Don’t just hold open enrollment seminars to explain insurance options to your employees. Really focus on encouraging them to get a primary care doctor and get regular checkups. Offer perks or create friendly competitions to reward this behavior. Employee engagement is key!
- Make it mandatory: If you’re really serious about creating a healthcare strategy and reducing costs, make it mandatory to enroll with a primary care doctor and get regular screenings. This initial step can pay huge dividends to your employees’ health and your bottom line. One self-insured business that we spoke with required its 1,000+ employees to receive a physical each year and had a 95% adoption rate. Many of those employees translated that preliminary step into establishing a regular doctor.
If you’re an employer or a benefits advisor/broker that would like more resources on how to create a strong primary care and preventative medicine program, let us know! We have plenty of information and can guide you to other great sources as well.