By Bob Fabbio
According to Fortune magazine, employers fund over 60 percent of the $2.5 trillion health care spend in the United States. With double digit increases over the last five years, little that employers (or benefits consultants) have done has made a significant dent in lowering health care-related costs for themselves or their employees and dependents. Why? Because employers rely on expensive, inefficient provider networks (from insurance companies) their employees and dependents do not like or want to use. And so, health care costs continue to rise, while employee health and satisfaction deteriorates.
Most employers offer health insurance to give their employees and dependents access to a provider network and facilities that are very inefficient because they run with little or no automation. It is common to see mounds of paper in doctors’ offices and clinics containing patient charts, medical histories, lab requests and results, prescription requests, and more. Without automation, everyone pays for far too many people doing unautomated tasks and making too many mistakes. In the end, 52 percent of health care costs in the U.S. are spent on labor. And, according to the Medical Group Management Association’s 200 benchmarks, there are five administrative and support staff people to every provider in America. These armies of people combined with year-over -year increases in wages, facilities, Rx medications, and medical supplies are what make provider networks so inefficient and expensive.
It’s no wonder that employers struggle to motivate their employees and dependents to improve their health when they are asked to use a provider network that is hard to access, expensive, and full of hassles. And the more unhealthy employees are, the more they are absent from work as they navigate through the complexities of the provider network – costing businesses even more money in absenteeism.
There are a variety of strategies employers typically implement to try to improve their health care costs – many of which add additional cost and make for an even more expensive and unsatisfying health care experience for their employees:
Cost sharing – Cost sharing motivates employees and dependents to avoid using the expensive provider network because many can’t afford to. Cost sharing may be a short-term solution, but it not only upsets employees that they have to share more of the cost, lowering employee morale and satisfaction. It also brings the risk of increasing the cost to the health plan over the long-term because employees avoid medical care – and then their health worsens.
Wellness programs – It’s hard to motivate employees to take care of their health, in part, because it is difficult to change their behavior. Wellness programs encourage employees and dependents to see medical providers that are hard to access, expensive, and full of hassles. Who wants to do that? This means employees don’t see medical providers unless it is absolutely necessary.
On-site clinics – For those on-site clinics that are fee-for-service based, they simply make it easier for employees to generate more claims against an employer’s health plan. Independent of the financial arrangement, on-site clinics give only employees access to a limited scope of care during working hours. In most organizations, there are two to three times more dependents than employees on an employer’s health plan. Therefore, the vast majority of those who need medical care are still relying on the expensive, inefficient provider network.
Biometrics – Generally biometrics vendors take a blood sample (through a finger stick) and perform a very basic diagnostic to give employers an overall view of the health of their employees (not dependents) based on those who participate. However, we know that not all employees participate and that employee’s health changes over time. Paying for biometrics at a once-per-year event with a small group of those on the health plan is not terribly useful.
Shopping tools – Giving people better information about the cost and value of health care in a transparent manner is a good thing. However, this does not change the inherent problems of the health care system.
In spite of all the efforts by the employers and benefits consultants, Kaiser reports that employers and employees have experienced double digit increases over the last five years (best cases being five to seven percent annual increases). Whether it’s a five percent, seven percent, or a 14 percent annual increase, health care costs are not declining for employers or employees. Employer efforts are not working because they treat the symptoms, not the problem. The provider network employees and dependents have access to is fraught with inefficiencies and costs that aren’t going away anytime soon. Employers need to seek out innovative solutions that provide high-quality, consistent care to their employees outside of the expensive and inefficient fee-for-service model. Until then, health care costs will continue to rise and employee health will continue to worsen.
Bob Fabbio is the CEO of Austin-based WhiteGlove Health, focused on changing health care on a national level by lowering the cost of health care while improving the consumer’s health care experience. WhiteGlove Health provides an innovative, technology enabled comprehensive health solution to employers. www.whiteglove.com
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