Creative strategies CFOs are using to reduce health insurance costs

For the last five decades, health insurance costs have increased about eight times the rate of inflation as compared to other products or services. And it is going to get worse!

According to the National Business Group on Health, health insurance costs are expected to escalate to nearly $15,000 per employee per year, making it your second-biggest operating expense right after payroll.

 No doubt about it, the health care industry is complicated, and there isn’t a single solution to reducing the escalating costs. The good news is that there are solutions and experts to help reduce these costs, but they require a multi-pronged strategy and internal leadership to get the job done.

 CFOs have more control in managing health-care costs than they often realize. It isn’t easy; however, with a strategic approach, it can be done. Here are a few strategies that savvy CFOs are using to reduce health care costs dramatically.

1. Offer rewards

Provide an incentive to use a cost-effective procedure or facility. Most employees don’t realize that prices can vary by 500% or more for most services, including medication and medical devices. You can get creative here!

2. Create individual emergency plans

Most employees wait until they have a medical emergency before they look at the health-care options. The financial impact to both the employer and employee can be significant. Having your employees determine where they would go in the event of an emergency can avoid unnecessary costs.

3. Provide telemedicine as part of the overall solution

In the past, one of the biggest challenges of telemedicine has been low employee utilization. Many of today’s providers have evolved from a single-siloed solution and are making telemedicine a component of the entire health-care program. This approach has significantly improved employee adoption and delivers a positive ROI by reducing office visits and time off work.

4. Incentivize employees to quit smoking

Consider combining a smoking cessation program with a rewards program to enhance effectiveness. Even with something like smoking, nominal rewards can be useful. Non-smokers have significantly fewer health issues, and that translates into lower costs and healthier employees.

5. Consider a self-funded versus funded plan

With a self-funded plan, you operate your health care plan with the help of a consultant /advisor and the plan administrator (TPA). Companies can manage the additional risk by stop-loss or excess-loss insurance. This strategy will save you money and improve your cash flow.

6. Shop around and put your consultant to work

If your company has been on an existing plan for a while, your health insurance expenses may be out of line with your risk. It is a good idea to have your advisor or cost reduction consultant present you with new options to consider.

7. Consider upgrading your advisor or consultant

Most health care plans get purchased through an insurance broker or benefits consultant. Is your broker staying up to date with your industry and routinely sharing ideas to reduce overall costs? Your advisor or consultant should keep bringing new solutions regularly.

8. Provide a health care concierge and nurse line service

These benefits experts help employees make better health care decisions. These services get accessed via a phone number or part of an online guidance platform that’s available on mobile devices. These services save money by putting you on the most effective path.

9. Reward employees for using cost estimator tools

Often, employees go wherever their doctor recommends (usually an overpriced hospital system). As with just about anything, most health-care services can be shopped, and prices can vary significantly. Incentivizing employees to utilize a pricing transparency tool can make a massive difference in what they pay for a service. (up to 500% or more) 

10. Incentivize and prioritize preventative care

The CDC says that chronic diseases account for over 75% of the health insurance spend and can be avoided by offering appropriate preventive care solutions. By adding a useful preventive care package, you can help keep employees from developing chronic conditions, which are often expensive to treat.

 The bottom line is this; CFOs can reduce health-insurance costs and save their company and employees tons of money by applying the same level of scrutiny and discipline to purchasing health care as every other area of your organization.