Bending the curve: Employer strategies for managing COVID's downstream health care cost impact
Already one of the largest expenses for most businesses, employer health care costs are poised for a spike in 2021 and beyond.
As communities grappled with business shutdowns and stay-at-home orders this spring, many employers held on to the hope that these measures — while often economically and personally painful — would be enough to “flatten the curve,” potentially defeat COVID-19, and get us back to life as we knew it. Now as cases surge across the country, it’s clear we’re in for an extended period of upheaval that will continue to batter businesses and threaten the health of more Americans.
That’s why it’s particularly critical that financial and benefits leaders consider cost-containment strategies to mitigate their organization’s health care spending in the year ahead.
Related: 2021 health insurance premiums: What to expect
Already one of the largest expenses for most businesses, employer health care costs are poised for a spike in 2021 and beyond. Consider that in March and April, 55% fewer Americans sought hospital care due to COVID-19. Many health systems canceled elective procedures — high-margin cases like joint replacements and spine surgeries — to make room for a surge of COVID-19 cases. In an attempt to stem the losses, hospitals worked to reassure wary patients it was safe to return just as coronavirus cases accelerated in many states.
With more than 4 million elective procedures postponed in the U.S., many patients will now require more complex and costly interventions due to delays in needed care. Facing enormous pressure to recoup lost revenue, health systems are likely to shift these cases to the most profitable setting as they strive to capture additional volume and explore price increases for 2021.
While there is still much we don’t know about the downstream cost impact of COVID, employers should act now to put guardrails in place for the year ahead. Here are some strategies for proactively managing costs while supporting employees’ health care needs.
Make it easy for employees to access cost and quality data
With some experts predicting it could take more than a year to work through the backlog of delayed procedures, it’s easy to imagine frustrated consumers scheduling the first appointment they can get. Unfortunately, costs can vary as much as 600% for the same procedure among in-network facilities in the same market. Without a way to compare cost and quality information, patients may unwittingly choose a higher-price or lower-quality option.
Making accurate cost and quality information available to employees can combat this challenge. In fact, a recent McKinsey analysis showed that, when given a choice, 90% of consumers would choose lower-cost, in-network options that are of average quality over higher-quality, higher-cost options.
Reward employees for making optimal choices
Financial incentives can go a long way in encouraging employees to compare facilities and select high-value care. By offering rewards when employees choose a high-value provider for certain “shoppable” services, employers can drive good choices that have a positive impact on their bottom line — while also generating goodwill among their workforce. When implemented properly, savings from these programs far exceed the cost of the rewards, providing employers with strong ROI.
Communicate clearly, frequently and consistently
The coronavirus pandemic has reminded many organizations about the importance of communicating benefit details to their workforce. Helping employees understand their available benefits, and how to use them, will reinforce the importance of smart shopping. Whether it’s information on how to access EAP services during COVID-19 or how and why to use cost and quality data tools to shop for elective care, providing frequent, clear and consistent information is key.
Consider concierge support
Offering extra support for employees can go a long way in controlling costs. Some employers work with outside partners, either directly or through their insurance carrier or TPA, to provide their workforce with concierge customer service. Through the service, a concierge can help employees identify high-value providers, schedule and coordinate care. This can be particularly helpful when employees are scheduling complex and expensive procedures, ensuring they navigate to the right health care solution with limited time and cost burdens.
Health care costs are always a top concern for employers. But with a little extra planning and the right resources, it’s possible to bend the cost curve while maintaining robust benefits into 2021 and beyond.
Scott Paddock is the CEO of Healthcare Bluebook, an industry leader in guiding patients to high-quality, affordable care using objective cost and quality data.
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