Employers turning to direct contracting amid rising health care costs
Employers generally turn to direct contracting expecting lower costs, shared savings, and easy implementation. Most respondents reported expecting savings between 6% to 20%.
Rising health care costs coupled with employees’ high benefit expectations are driving employers to consider direct contracting. According to a new HR Dive survey conducted by Brighton Health Plan Solutions, LLC, around 75% of employers have already considered or used direct contracting, and another 41% said they likely will by 2025.
Michelle Zettergren, chief sales and marketing officer for Brighton Health Plan Solutions, expressed surprise at the market’s current interest in direct contracting: “These results are somewhat surprising and certainly suggest a wider interest in direct contracting than previously understood by the market.”
According to the survey, which includes responses from 150 benefit leaders, businesses are interested in direct contracting, but still relatively ignorant on the subject. The vast majority of respondents claimed to be familiar with direct contracting, but 40% still reported being extremely interested in learning more. What’s more, just 39% said provider groups and health systems had talked about direct contracting with them.
Employers generally turn to direct contracting expecting lower costs, shared savings, and easy implementation. Most respondents reported expecting savings between 6% to 20%. A majority also expressed interest in shared savings models, incentives, shared risk, and quality metrics. Some employers also pointed to other considerations, like multiyear arrangements, provider reputations, HCAHPS scores, geographic representation, the ease of implementation, managing new solutions/vendors and communicating change to employees.
Read more: Direct contracting surge: 75% of employer health plans contract directly with providers
In the report, Zettermen recommends that providers respond to the priorities of employers: “Employers want to save on their current costs, and they’re open to partnering with provider organizations who can offer shared savings arrangements. To generate savings for employers in both the short- and long-term, provider organizations should assess their unit costs and explore what medical management programs they may need to implement.”