6 Strategies HR Leaders Can Use to Take Control of Healthcare Costs

For years, HR professionals have been told the same thing: rising healthcare costs are just part of doing business. But what if that wasn’t true? What if you could take control, cut unnecessary expenses, and provide better benefits at the same time?

Too many companies accept healthcare increases as inevitable, year after year, without realizing there’s a better way. Here are six strategies HR leaders can use to take control, reduce costs, and improve healthcare outcomes for employees.

1. Understand That Traditional Insurance Isn’t Your Only Option

Many employers stick with fully insured plans from big-name carriers because they believe it’s their only choice. The reality? These plans are designed to benefit the carriers, not your company. The traditional model makes it nearly impossible to see where your money is going, and you’re left with rising premiums and little control.

By considering alternative funding models, like self-funding, level-funding, or reference-based pricing, you can break free from the cycle of unpredictable rate hikes and take ownership of your plan’s financial health.

2. Demand Transparency in Pricing

One of the biggest reasons healthcare costs are out of control is the lack of price transparency. In traditional plans, employers and employees have no idea what procedures, medications, or treatments actually cost until they get the bill.

A self-funded or reference-based pricing model forces providers to disclose real costs. Employers can then negotiate better rates and ensure employees are receiving high-quality care at fair prices.

3. Rethink Pharmacy Benefits Management (PBM)

Prescription drug costs make up a significant percentage of healthcare spend. Yet, most employers simply accept whatever their big-name carrier’s PBM offers, without realizing how much waste and unnecessary spending is built into these plans.

Switching to an independent PBM or implementing an international sourcing option can cut pharmacy spend by 30% or more, without reducing access to essential medications. And in some cases, strategic partnerships can drive that number even higher.

4. Invest in Primary Care Access

Traditional healthcare models push employees into a cycle of reactive care. Meaning they only see a doctor when something is already wrong. The problem here is that this approach increases long-term costs and leads to worse health outcomes.

Onsite or near-site direct primary care (DPC) clinics provide employees with easy access to preventive care, significantly reducing ER visits, hospitalizations, and costly chronic disease management. Employers who invest in primary care options often see improved employee satisfaction and reduced long-term costs.

5. Shift the Focus to Quality, Not Just Cost

There’s a common misconception that higher costs mean better care. But in reality, price and quality in healthcare are often inversely related. Some of the most expensive hospitals and providers deliver some of the worst patient outcomes, while top-performing doctors often charge significantly less.

By working with data-driven tools to identify high-quality, cost-effective providers, HR leaders can steer employees toward the best care available, and at a fraction of the cost.

6. Align Your Broker Relationship with Your Goals

Too many companies stick with brokers based on long-standing relationships rather than results. If your broker isn’t actively helping you lower costs and improve benefits, it’s time to reassess.

Look for an advisor who operates with full transparency, aligns incentives with cost reduction, and is willing to be compensated based on performance rather than carrier commissions. A strategic broker partnership should prioritize your company’s financial health. Not just the insurance company’s bottom line.

The bottom line here is that HR professionals have more power than they realize when it comes to managing healthcare costs. By breaking free from outdated models, demanding transparency, and aligning incentives correctly, companies can slash expenses while providing employees with better, more effective healthcare.

If your current plan isn’t working for you, don’t just accept the status quo. Take control, ask the right questions, and start exploring better options!

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