ACA & The New Normal

Four Ways Employers Are Fixing Healthcare

If you’re not paying benefits-professionals directly, they’re not working for you

by Donovan Pyle

Mr. Pyle is a Registered Employee Benefits Consultant and the CEO of Health Compass Consulting in Orlando, FL. He can be reached at [email protected]

Part II in a two-part series.

ORLANDO, Fla., July 31, 2019 /PRNewswire/ — The previous article from Health Compass Consulting touted the success of innovative companies who made tremendous strides in reducing healthcare costs while improving benefits for employees.

In this article, we look at four strategies employers used to achieve those results.

1. Seek Objective, Expert, Advice:

Probably the most important — and commonly overlooked — thing employers can do to reduce healthcare costs while improving benefits is to seek objective, expert, advice. Historically, employers have turned to health insurance brokers for advice and benefits management. However, most brokers get paid commissions and/or bonuses by insurance Carriers, creating a conflict of interest that clouds the broker’s objectivity and suppresses the motivation to innovate.

It only makes sense for companies to hire employee benefits professionals who disclose all forms of revenue (including bonuses from Insurers not listed on public filings) and refuse to accept compensation from the insurance industry.

Rule of thumb: If you’re not paying benefits professionals directly, they do not work for you, they work for someone else whose interests are probably not aligned with yours.

2. Price Transparency:

This might surprise you, but many employers have no idea how much they pay for individual healthcare services. Although most businesses manage operating expenses such as building materials and office space to the penny, when it comes to much larger expenses like hip replacements and maternity care, many of these same businesses are in the dark.

Knowing the price of healthcare services is essential for effective supply-chain management, and employers should demand transparency from vendors.

3. Direct Contracting:

By bypassing insurance companies and purchasing healthcare services directly from sellers, employers are able to improve the price and quality of healthcare provided to employees.

Examples of this include broad contracts with health systems or simply carving out primary care by contracting with a Direct Primary Care (DPC) center.

4. Aligning Financial Incentives:

In properly functioning markets, consumers pay more for high quality goods and services. In healthcare, the opposite is often true; if you pay for a BMW, you usually get a Volvo. Especially in the context of this inverse market, it only makes sense to reward employees for using high quality providers that cost less.

In practice, employers can reward employees by waiving or reducing employee copays or eliminating deductibles altogether.

If you take a step back and look at the items above, you might notice something: employers use these tools so often in other parts of their business that they hardly notice them.

  • They hire consultants to gain the objective expertise needed to run their business
  • They expect to know the price of the things they buy
  • They purchase services directly from sellers without using insurance as an intermediary
  • They reward employees for being cost effective

In short, the easiest way for companies to solve their healthcare problem, is to put themselves in a position where traditional market forces and best practices apply.