What’s your strategy for lowering employer healthcare costs?

A recent Healthcare Dive article highlighted the growing crisis for employers: the cost of providing health insurance keeps going up, but neither employees nor employers can absorb the increases for much longer. But there are some things you can do to address some of the root causes of cost increases: 

Pay for outcomes, not care volume. Like many payers and providers, more employers are now designing value-based care (VBC) contracts to emphasize outcomes – lower cost, and higher quality – over care volume. It’s not easy to do if you’re operating with legacy technology designed to optimize profits in a fee-for-service healthcare world. Finding opportunities to predict outcomes and lower costs requires technology designed specifically for a VBC world, with:  

• In-depth, predictive and prescriptive analytics that are on the leading edge of advances in AI, generative AI, and agentic AI 

• Seamless integration with care management tools that translate data insights into actionable steps for care teams 

• Payment adjudication software that can handle the complexities of everything from upside-only quality initiatives to full risk capitation and prospective bundles 

• A data foundation that pulls together all the information from hundreds of healthcare sources to create clean and enriched data for a single source of truth 

Understand vendors’ ROI declarations. When you engage with point solutions or programs that promise to improve employee health, lower costs, or boost quality, make sure you’re getting what you pay. The best way is to leverage analytics tools that can help you track outcomes and ROI. That gets challenging if you’re only relying on the datasets and metrics from the point solution vendors because that may be difficult to normalize across multiple vendors and compare “apples to apples” impact. An analytics solution that allows you to create cohorts based on point solution KPIs and compare it to others, or to your broader VBC goals, is the most valuable tool.  

Find (or build) programs and networks that align with VBC goals. Everyone is on a unique journey toward value-based care, so when some healthcare partners in your network are not as far along the path as you it can impact progress and success. Finding a local Center of Excellence (COE) and incentivizing employees to get care from participating COE providers is one way to ensure everyone has the same goals and objectives to reduce costs and improve care quality. One market leading COE example in Houston, Texas, CardioVascular Care Providers (CVCP), has been participating in prospective bundled payments for more than 40 years, the longest-running such program in the country. Study data comparing results from CVCP’s patient outcomes and costs to regional and statewide averages confirms that working with one of the more than 3,000 providers in that COE reduces costs for employers. Employers, payers and providers should seek out opportunities to leverage existing COE programs and partner together with technology partners to create new COE programs to improve care and outcomes. 

Go beyond tracking historical costs to identify and act on opportunities for improvement. Many analytics tools can track historical costs, but not all of them can predict what might happen in the future. When employers understand what is likely to drive costs in the future – like high drug costs, avoidable ER visits, or gaps in post-discharge care after surgery that lead to hospital readmission – they can work with care partners and employees to improve.  

Healthcare Dive highlighted an example of employers identifying rising pharmaceutical costs from GLP-1 medications, and using it as an opportunity to add appropriate support tools, such as nutrition counseling for patients using them to manage diabetes. If you identified potentially avoidable ER visits as a likely cost driver in the future, you could launch an educational campaign to help employees understand lower-cost alternatives, such as urgent care. 

Use data analytics to inform cost-saving strategies. Data is one of the most powerful tools that organizations have to improve benefits offerings while controlling costs. But the strategies you get from data are only as good as the tools you have available to analyze what’s happening with your employee population. When you have clean, homogenized data in a single source of truth, and can analyze it with advanced tools like AI, you can identify which cost-saving strategies are going to be most effective, and least likely to disrupt benefits offerings – ensuring that you can continue to offer competitive benefits that attract and retain top talent.  

U.S. employers are in a challenging position of wanting to offer high-value benefits offerings that improve employee health and productivity, while struggling to contain costs that continue to grow at an unsustainable pace. Advanced analytics and care management tools that balance total costs with benefits offerings are no longer just “nice to have,” they are a necessity for businesses to thrive in today’s market.  

By David Morris