In 2022, healthcare spending in the US was $13,493 per person. At that price, it’s no wonder average Americans struggle so much with healthcare while their employers struggle to foot their part of the bills.
Not only that, but the elephant in the room is that so much of the healthcare spending in the US is entirely superfluous.
No country comes anywhere close to the US’s per capita healthcare costs. The second highest-paying country in per-capita healthcare is Sweden, which, in 2022, paid $8,049 per person — about $5K less than the US. I remind you that Sweden is still a way-above-average spender in healthcare — it’s only compared to the US, they seem thrifty.
Let’s consider my native country, Israel, for example, which has socialized medicine. In 2022, the healthcare spending per person was just $3,444. And although that’s almost one-fourth of what the US spends, Israel’s health outcomes are very competitive, if not better.
With so much unnecessary spending going on in the US — a country of over 331 million people — there is a massive amount of potential for companies to cut costs. But they have to be willing to work harder, challenge the status quo, and sometimes, so do their employees.
And that brings us to the exciting part.
Many innovative companies today are not waiting for the US healthcare system to heal from its chronic cash-bleeding pathology. Companies such as Pacific Steel & Recycling, a midsized Montana-based company, are proving that it can slash spending by cutting out malignant and unnecessary healthcare costs.
A recent write-up in Axios showed how Pacific Steel & Recycling hacked their healthcare costs. The Montana-based company, with about 900 employees across ten states, saw the skyrocketing costs ten years ago and took some audacious measures. Over a decade, Pacific Steel & Recycling
Pacific Steel & Recycling’s approach demanded a lot from the employees to make it successful and wouldn’t necessarily work for every company in the US. However, against rising healthcare prices, they’ve managed to save $6.5 million annually, cutting company healthcare prices by almost half. Although Pacific Steel & Recycling’s approach is far from being a one-size-fits-all solution, I found some insights from their success that most companies can apply to save money on healthcare costs.
Here are five strategies that companies should at least consider to help bring down their healthcare costs:
Why is analyzing insurance claims data so important?
Think of it as your roadmap to understanding where your healthcare dollars are going.
By digging deep into this data, you can pinpoint high-spending areas, identify trends, and uncover any inefficiencies lurking within your healthcare plan.
So, how do you go about analyzing this information?
Start by looking for patterns.
Consider negotiating better rates with your current insurers or exploring alternative healthcare providers who offer more affordable options.
The key here is to use your newfound insights to drive more innovative, cost-effective decisions when managing your employee healthcare benefits.
Note: Analyzing insurance claims data is NOT just a one-time task. It’s an ongoing process that requires regular monitoring and adjustment. Stay vigilant and proactive and you’ll be well on your way to slashing your employee healthcare costs.
Major insurers offer a broad network of healthcare providers and a solid reputation. However, they often come with high costs, limited flexibility, and a need for more pricing transparency.
Pacific Steel & Recycling decided to work with small insurers to gain
This doesn’t mean that large insurers can’t be a huge help. However, in the case of Pacific Steel & Recycling, small insurers were willing to provide what they wanted. The main thing for you is to seek transparency, flexibility, and affordability.
As more businesses come to expect transparency as the norm, it will become like a self-fulfilling prophecy.
Reference-based pricing is a pricing model where your company’s insurance plan sets limits on how much they’ll pay for certain medical services, all based on a reference price.
This is what Pacific Steel & Recycling did once they realized they had been paying exorbitantly more expensive prices than Medicare’s pre-set reimbursement prices.
They used Medicare’s standardized reimbursement prices loosely as a yardstick to come up with their own standardized price list of what they were willing to pay for healthcare services.
Why did they use Medicare’s price list? Because Medicare is known for its standardized rates, and they typically pay hospitals significantly less than other insurers do. We’re talking about reimbursements that are 200%, 300%, or even up to 400+ percent less than what other insurers pay.
So, even if you’re paying, say, 120% or 180% of what Medicare pays, which is a realistic benchmark, that can result in profound savings for your company.To understand how to implement this model, check out our post on reference-based pricing.
When Pacific Steel & Recycling started their efforts to cut healthcare costs, they put a lot of the responsibility on their employees (more on that below). But over the years, they built relationships with over 5000 different providers.
Private negotiations with providers can be time-consuming, but they can also pay off in the long run.
One of the reasons why Pacific Steel & Recycling was successful in getting employees on board was because employees own shares in the company.
Another reason is that they didn’t give the employees much choice.
Once the company decided how much they would pay for each healthcare service, the employees learned that they had to find providers who charged those prices, pay the difference out of pocket, or get involved in disputing charges after the fact (with help provided).
Most employees in most US companies would probably not be happy to get so involved in price shopping and haggling unless there is something in it for them or if it’s made simple.
Healthee, for example, is a healthcare benefits navigation platform that simplifies the process of healthcare shopping for employees. By letting them filter their personalized searches according to prices, locations, provider ratings, and more, Healthee makes it easy for your employees to find the best options and for your organization to contain healthcare costs.
In today’s dynamic healthcare landscape, where costs continue to rise, finding ways to cut healthcare expenses without compromising quality of care is crucial for companies aiming to manage their budgets effectively while keeping their employees satisfied with their benefits.
Through strategies such as:
Your organization can navigate the complexities of healthcare spending with greater clarity and control.
Book a demo for more information about how Healthee’s healthcare navigation app can help your employees make wiser healthcare decisions and your organization save money.
Learn more about Healthee! Talk to our team for a FREE demo of the Healthee app.
In 2022, healthcare spending in the US was $13,493 per person. At that price, it’s no wonder average Americans struggle so much with healthcare while their employers struggle to foot their part of the bills.
Not only that, but the elephant in the room is that so much of the healthcare spending in the US is entirely superfluous.
No country comes anywhere close to the US’s per capita healthcare costs. The second highest-paying country in per-capita healthcare is Sweden, which, in 2022, paid $8,049 per person — about $5K less than the US. I remind you that Sweden is still a way-above-average spender in healthcare — it’s only compared to the US, they seem thrifty.
Let’s consider my native country, Israel, for example, which has socialized medicine. In 2022, the healthcare spending per person was just $3,444. And although that’s almost one-fourth of what the US spends, Israel’s health outcomes are very competitive, if not better.
With so much unnecessary spending going on in the US — a country of over 331 million people — there is a massive amount of potential for companies to cut costs. But they have to be willing to work harder, challenge the status quo, and sometimes, so do their employees.
And that brings us to the exciting part.
Many innovative companies today are not waiting for the US healthcare system to heal from its chronic cash-bleeding pathology. Companies such as Pacific Steel & Recycling, a midsized Montana-based company, are proving that it can slash spending by cutting out malignant and unnecessary healthcare costs.
A recent write-up in Axios showed how Pacific Steel & Recycling hacked their healthcare costs. The Montana-based company, with about 900 employees across ten states, saw the skyrocketing costs ten years ago and took some audacious measures. Over a decade, Pacific Steel & Recycling
Pacific Steel & Recycling’s approach demanded a lot from the employees to make it successful and wouldn’t necessarily work for every company in the US. However, against rising healthcare prices, they’ve managed to save $6.5 million annually, cutting company healthcare prices by almost half. Although Pacific Steel & Recycling’s approach is far from being a one-size-fits-all solution, I found some insights from their success that most companies can apply to save money on healthcare costs.
Here are five strategies that companies should at least consider to help bring down their healthcare costs:
Why is analyzing insurance claims data so important?
Think of it as your roadmap to understanding where your healthcare dollars are going.
By digging deep into this data, you can pinpoint high-spending areas, identify trends, and uncover any inefficiencies lurking within your healthcare plan.
So, how do you go about analyzing this information?
Start by looking for patterns.
Consider negotiating better rates with your current insurers or exploring alternative healthcare providers who offer more affordable options.
The key here is to use your newfound insights to drive more innovative, cost-effective decisions when managing your employee healthcare benefits.
Note: Analyzing insurance claims data is NOT just a one-time task. It’s an ongoing process that requires regular monitoring and adjustment. Stay vigilant and proactive and you’ll be well on your way to slashing your employee healthcare costs.
Major insurers offer a broad network of healthcare providers and a solid reputation. However, they often come with high costs, limited flexibility, and a need for more pricing transparency.
Pacific Steel & Recycling decided to work with small insurers to gain
This doesn’t mean that large insurers can’t be a huge help. However, in the case of Pacific Steel & Recycling, small insurers were willing to provide what they wanted. The main thing for you is to seek transparency, flexibility, and affordability.
As more businesses come to expect transparency as the norm, it will become like a self-fulfilling prophecy.
Reference-based pricing is a pricing model where your company’s insurance plan sets limits on how much they’ll pay for certain medical services, all based on a reference price.
This is what Pacific Steel & Recycling did once they realized they had been paying exorbitantly more expensive prices than Medicare’s pre-set reimbursement prices.
They used Medicare’s standardized reimbursement prices loosely as a yardstick to come up with their own standardized price list of what they were willing to pay for healthcare services.
Why did they use Medicare’s price list? Because Medicare is known for its standardized rates, and they typically pay hospitals significantly less than other insurers do. We’re talking about reimbursements that are 200%, 300%, or even up to 400+ percent less than what other insurers pay.
So, even if you’re paying, say, 120% or 180% of what Medicare pays, which is a realistic benchmark, that can result in profound savings for your company.To understand how to implement this model, check out our post on reference-based pricing.
When Pacific Steel & Recycling started their efforts to cut healthcare costs, they put a lot of the responsibility on their employees (more on that below). But over the years, they built relationships with over 5000 different providers.
Private negotiations with providers can be time-consuming, but they can also pay off in the long run.
One of the reasons why Pacific Steel & Recycling was successful in getting employees on board was because employees own shares in the company.
Another reason is that they didn’t give the employees much choice.
Once the company decided how much they would pay for each healthcare service, the employees learned that they had to find providers who charged those prices, pay the difference out of pocket, or get involved in disputing charges after the fact (with help provided).
Most employees in most US companies would probably not be happy to get so involved in price shopping and haggling unless there is something in it for them or if it’s made simple.
In today’s dynamic healthcare landscape, where costs continue to rise, finding ways to cut healthcare expenses without compromising quality of care is crucial for companies aiming to manage their budgets effectively while keeping their employees satisfied with their benefits.
Through strategies such as:
Your organization can navigate the complexities of healthcare spending with greater clarity and control.
Book a demo for more information about how Healthee’s healthcare navigation app can help your employees make wiser healthcare decisions and your organization save money.
Learn more about Healthee! Talk to our team for a FREE demo of the Healthee app.
It's that time of the year again, open enrollment. And now is the time to send an open enrollment email to employees to ensure they are aware of their benefits and actively engage in the open enrollment process.
Transform your enrollment process from stressful to seamless. Here’s how to unlock the advantages of benefits open enrollment software.
HR teams constantly spend time handling employee benefits inquiries – learn how HR automation can eliminate the busy work.
