How to Reduce Medical Costs: A Comprehensive Guide
Strategies to Reduce Healthcare Costs That Will Save You in the Long Run
Healthcare costs in the U.S. continue to spiral. Employers know that one of the most prized benefits they can offer to attract new talent is health coverage. With healthcare spending in the U.S. reaching $4.1 trillion, it’s one of the country’s most significant sources of spending.
Healthcare cost reduction can save your organization tens of thousands of dollars annually. Learning strategies to reduce healthcare costs is beneficial because it enables your business to provide a higher standard of care. That’s good for your company and employees.
10 Strategies to Help You Reduce Your Healthcare Costs
There are many ways to reduce healthcare costs, but it’s surprising how many employers fail to get creative or even do the bare minimum.
Tackling the increasing costs of employer-provided health coverage will allow you to save money and do so without cutting benefits for your team. Follow these ten strategies on how to decrease healthcare costs.
1. Target High Pharmacy Benefit Costs
Employers are finding ways to cut their drug expenses by evaluating their spending on specialty drugs, including injected and infused biologics. Instead, employers are increasingly turning to lower-cost biosimilars. Go through the offerings of each healthcare plan to determine which pharmacy benefits you receive and whether your employees’ needs are being adequately covered. It's best to consult a professional to help you understand everything.
You can also lower your costs by searching for plans emphasizing generic brands rather than brand-name drugs. Brand-name prescription drugs are among the highest costs of any employer-provided healthcare plan. Forming relationships with on-site or near-site pharmacies offering generic prescriptions will help your business slash costs and provide employees with lower monthly premiums.
2. Incorporate Well-Being Programs
Prevention is the best cure for lack of productivity at work. Generation Z is increasingly focused on holistic approaches to healthcare. Investing in preventative well-being programs now has the potential to reduce your costs by creating a healthier workforce.
Moreover, the new generation of workers is increasingly concerned about their long-term health. Bringing well-being programs into your health plan can reduce health care costs in the long run and act as a selling point for your company.
3. Shop Around
The healthcare industry has demonstrated itself to be ultracompetitive. Employers have more choices than ever regarding the healthcare coverage they can find.
Shop around regularly to ensure you’re truly getting the best deal. Don’t be afraid to switch from one policy provider to another if the prices rise. Some healthcare providers may even offer price match options on similar programs.
Online comparison tools are an excellent starting point, but unless you can decode the ins and outs of healthcare plans, you should consult a health insurance broker before making a purchase. Bargain basement prices often mean bargain basement healthcare.
4. Opt for a High-Deductible Health Plan
High-deductible plans are among the most straightforward strategies to reduce healthcare costs. The problem with reducing health care costs in this manner is that it shifts the burden onto employees. Many of these high-deductible plans come with deductibles north of $10,000.
Think carefully about choosing this option for lowering health care costs as many employees are unhappy with these plans.
However, businesses offering a high-deductible plan benefit from lower monthly premiums, as do their employees. Before selecting these plans, it's best to consult with your team and gather some feedback.
5. Choose a Digital Clinic
Hinge Health is a digital musculoskeletal (MSK) clinic offering end-to-end care. By incorporating technology into the mix and enabling employees to take care of chronic back and joint pain remotely, the average reduction in healthcare costs stands at 60%.
Opting for an end-to-end digital solution doesn’t mean compromising on the quality of care. Instead, it enhances it by bringing medical professionals from several disciplines together. It’s the revolution in telemedicine and covers everything from prevention to post-op rehab.
Digitizing your employer-provided health plan is one of the simplest options for how to lower healthcare costs while improving health outcomes.
6. Offer an FSA
Flexible spending accounts (FSAs) are a mechanism offered by businesses to allow their employees to save some of their pretax dollars to cover out-of-pocket healthcare expenses. If someone needs to access medical care, they can use their FSAs instead of digging into their paychecks.
There are three available FSAs employers can offer, including: Health Care FSA – This FSA account can be used to pay for medical, hearing, vision, dental, and prescription drugs for themselves and their dependents. Dependent Care FSA – This type of FSA may be used to pay for both child and adult care, including summer camps and daycare.
Limited Purpose FSA – Your employees can use a limited purpose FSA for dental and vision expenses. Some over-the-counter health products and prescriptions are covered. Your team can also have a limited purpose FSA if they already hold an HSA.
You have the option to offer more than one type of FSA to give employees more choice. This can be an advantage if you’ve opted for a healthcare plan with a higher deductible.
7. Drop Underutilized Wellness Benefits
Another option to reduce healthcare costs is to get rid of benefits that aren't serving your employees. For example, if you offer a monthly gym membership but none of your employees have signed up for it, you can remove this benefit and shift that money to other places, like a wellness stipend. You can get a better idea of what benefits your employees are using by sending out an employee benefits survey. This will ensure your dollars are going where they count.
8. Partner with Nearby Primary Care Clinics
Another option for how to reduce medical costs is to work with primary care clinics that are either on-site or near-site.
Besides saving on costs, partnering with these clinics enables employees to avoid long waits for appointments and provides them with same-day prescriptions for generic drugs. Direct primary care mitigates your costs without mitigating quality.
9. Offer Incentivized Programs
Every business knows that a healthier team with no health issues will reduce the healthcare burden because they’re not making as many large claims. Some companies have opted for incentivized programs to encourage their workforce to make positive health-related choices. Healthy eating programs, smoking cessation initiatives, and exercise classes can be incentivized by reducing payroll surcharges. It may seem counterproductive for employers to waive some payroll charges. Still, encouraging healthier choices across the company limits the number of significant claims made in the years ahead.
10. Empower Employees to Make Informed Decisions About Their Benefits
Education matters. Provide your employees access to online platforms and tools that break down various health plan options to identify the ones that meet their individual healthcare needs.
Understanding what plans best suit your employees' circumstances gives individuals greater flexibility in choosing the coverage they require and allows you to avoid a costly 'one-size-fits-all' approach to healthcare benefits.
One important reason to offer a personalized approach to health plans is the composition of today's workforce. Millennials and Generation Z represent a significant chunk of the labor pool. These employees, in particular, seek flexibility, personalization, and convenience concerning their roles and healthcare options. The best employers understand that every employee's needs are different and will meet them where they are on their unique healthcare journey.
Reduce Medical Costs with Hinge Health
Businesses, policymakers, and employees are discussing how to reduce healthcare costs in America. Unfortunately, the price of good healthcare access continues to rise annually. As HR and benefits leaders you have the chance to support your employees by providing them with direct medical care and wellness options.
Hinge Health is the nationwide leader in digitized physical therapy. Incorporating technology and remote access to PTs, health coaches, and orthopedic surgeons, Hinge Health is a proven solution to help address chronic back and joint pain while also reducing medical costs.
To find out more about available plans for employers, the advantages of digital MSK solutions, and the personal benefits of joining the Hinge Health family, get in touch now.