Full-Service HR

Healthcare Costs and the Power of a PEO

sheakley
Healthcare Costs and the Power of a PEO
Reading time 8 Mins
Published on Jul 11
Share

Today’s employers are using unique alternative cost strategies to cut their group healthcare expense.

Starting and growing a business is an enterprise full of financial pitfalls and uncertainties, but employee healthcare benefit costs don’t have to add to that burden. There are an abundance of new insights and strategies available for benefit cost-containment. Through collaboration with its clients, Sheakley’s PEO has gathered some helpful ideas and promising trends that can offer a roadmap to high-quality, affordable healthcare options.

4 Key Healthcare Cost Management Categories

Information gathering is the first step in laying the foundation for a comprehensive cost management strategy. The four most common areas in which businesses have found success in reducing overall healthcare costs are:

  1. Getting the Best Price — When building a benefits plan, it’s important for a business to shop around to ensure they’re receiving the most competitive and cost-effective quotes for services. Make sure to factor in the price of both plan administration and actual medical care.
  2. Reducing Utilization — Claims costs can balloon if physicians are authorizing procedures that are impractical or unnecessary for an employee’s care. Periodically review claims to ensure that the treatments employees are receiving are appropriate for their condition(s). Companies can also create and encourage participation in wellness programs that aim to increase the overall health of their employee populations.
  3. Cost Shifting — To maintain the financial stability of a health benefit program, a company should ensure that employees are paying their fair share of the medical costs. For example, consider switching from a traditional PPO plan to a high-deductible plan with an HSA.
  4. Driving Members to Quality — Encourage employees to seek treatment from established, high-quality medical providers that have been proven to provide excellent care at competitive prices.

Employer Trends in Healthcare Cost Control

Crafting a competitive healthcare benefits package that ensures readily-available and high-quality care is the end goal for most employers. Examining trends within the healthcare industry can provide useful insights into ways to ensure excellent care for employees without sacrificing cost-savings.

  • Centers for Excellence — In recent years, health plan participants are seeking treatment from providers who are specialized experts in a certain field, such as oncology, orthopedics, or cardiology. For example, an employee in need of an organ transplant is more likely to seek treatment from the Ohio State Medical Center, one of the top 15 transplant hospitals in the country.
  • Primary Care Providers — Preventative healthcare is key to early detection and treatment of a number of medical issues. The first line of defense is the primary care physician (PCP), so employers are encouraging, and in some cases requiring, employees to have and visit a PCP at least once a year.
  • Data Analytics — More and more employers are relying on technology and software platforms to analyze the large amounts of employee claims data received from their health plan providers. When compiled, the information provides management with a snapshot of areas where employee health can be improved. Plans and programs can then be crafted to address those issues.
  • Competitive Market Healthcare Analysis — In an increasingly competitive job market, maintaining an attractive benefits package is key for employers looking to hire top talent. By comparing their plans with those of other companies in the same industry, employers are able to evaluate their position within the marketplace.

Healthcare Cost Reduction Strategies

Business owners can sometimes find it difficult to align their growth goals with expenditures, especially with regards to healthcare. A significant number of cost-management pitfalls can be avoided by employing these cost-saving strategies:

  • Health Advocacy – Encourage employees to be more involved and engaged in their healthcare. Seek top-performing provider networks staffed with high-quality physicians.
  • Data Analytics — Use the data compiled by plan providers to monitor high-cost claims and ensure that employees are using appropriate, compliant, and monitored treatment programs.
  • Provide More Plan Options— Employees needs vary widely, so, if possible, provide a variety of plan options. Make decision support tools available that aid employees in understanding and choosing the best plan for their specific situation.
  • Cost Management — Provide access to and encourage the use of remote healthcare delivery resources, such as TeleDoc and virtual visits, for the consultation and treatment of minor issues like colds, pink eye, and insect bites. These alternatives are typically less expensive than in-person office visits and provide the same outcomes.
  • Tiered Provider Networks — Consider setting up tiered provider networks, which group providers into subsets based on value and quality of service. Designate a “preferred tier” comprised of high-quality, low-cost physicians. Employees who seek care from providers in this tier have lower out-of-pocket costs, but may still access the full network at a higher cost.
  • Narrow Networks — Opting for quality over quantity, some employers are choosing to narrow their provider networks. Although offering fewer options may seem counterintuitive, the idea is to restrict the network to only those physicians and facilities that agree to meet strict quality requirements at a low cost.
  • Specific Networks — Consider limiting coverage to a single, local provider network that has been proven to supply excellent care and above average patient outcomes, all at low cost.
  • Prescription Savings Options — When possible, employees should choose generic medication over name-brand. Generics have the same active ingredients for a fraction of the cost. Encourage employees to shop around before filling a prescription, as retail prices for medication can vary greatly between pharmacies. There are websites and apps, like GoodRx, that list prices for pharmacies within a specific area and provide coupons that can further lower drug costs. If the health plan provider has a mail-order pharmacy option, require employees who are taking long-term maintenance medication to use it, as these typically have lower negotiated costs than brick and mortar stores.
  • Health and Wellness Programs — Create and encourage participation in a health and wellness program that stresses the importance of physical, mental, and financial health. Comprehensive programs should include resources for a variety of topics, such as tobacco cessation, stress management, healthy eating, and lifestyle coaching. Insurance cost incentives can be built into the program to incentivize employees to participate.
  • Evaluate Risk — Structure the healthcare plan to account for common risk factors, like spousal care. Since the law does not require that employers offer coverage for spouses, consider offering a surcharge on premiums for employees selecting spousal coverage. Companies may also choose to have plan rules that disqualify spouses from being covered if they have access to a healthcare plan through their own employer.
  • Dependent Audits — Periodically audit plan membership to ensure that those covered under the plan are eligible. Look for dependents who have aged out of the plan, divorced spouses who may not have been removed, and new spouses that have not provided marriage licenses. Cleaning up the membership list can lead to considerable cost savings.

The PEO Solution – A Master Plan

To develop a balanced, comprehensive healthcare plan, companies must be willing to spend the time and energy needed to research all of the cost-management strategies and trends in the marketplace. They must then analyze all of the data collected, decide on the most appropriate options, and craft a plan that offers the highest quality care at the lowest possible cost. This can be a monumental task for even the most well-equipped businesses.

Sheakley’s PEO has shouldered this burden, evaluated the data, and built a strategic healthcare plan that provides the most high-quality, cost-efficient combination of available services for its clients – the Master Plan.

Sheakley’s Master Plan focuses on both quality and efficiency. The PEO’s benefit experts have worked with their vendor partners to create a product that provides the best healthcare options available in the market today, including supplemental plans and features like dental, vision, EAP, wellness, stress management, and more.

Instead of multiple account managers across various vendors, participating employers will have a single point of contact at Sheakley for all of their benefit needs.

The Master Plan renews annually and is constantly being reevaluated to look for ways it can be improved. Sheakley’s priority is to offer its clients the plan options that best suit the needs of their employees at a cost that makes financial sense for their business. The PEO offers eight different plan designs, ranging from standard PPOs to high-deductible health plans with HSAs.

NOTE: For Ohio businesses located near the border that have employees working in surrounding states, the PEO can assist in providing both healthcare and Workers’ Compensation coverage options for your company.

Setting a New Course Towards Healthcare Cost Management

Through extensive research and collaboration with its vendor partners, Sheakley has overcome the most difficult challenges in healthcare planning and management to provide its participating clients with reduced costs, increased quality, and unmatched plan selection. With the PEO, it’s simple, it’s easy, it’s done.

Sheakley also works with its PEO clients to remove the burden of Human Resources, Risk Management, Workers’ Compensation, Payroll, Safety, and compliance, freeing them to focus on growing their businesses.


You may want to read

See all articles
X
X
X
X