5 Tips on Reducing Healthcare Spend from Mercer and Carrum
Spoiler alert: Healthcare spend is rising.
This should come as no surprise—it’s been the trend for many years now. But each year, this upward trajectory becomes more concerning, especially for employers, who are on the hook for a large portion of the costs.
In our recent webinar, The Fastest Way to Curb Expensive Procedure Spend, with Carrum’s Chief Commercial Officer Brook West and Dr. Mary Kay O’Neill—a partner and senior clinical consultant at Mercer with years of experience as a physical medicine and rehabilitation physician—we discussed the top drivers of employer healthcare spend, what’s behind these runaway costs, and some strategies for how to better contain spend while still providing a top-notch health benefits program.
Here are a few takeaways from the webinar:
1. The top drivers of healthcare spend are cancer care, musculoskeletal conditions, and cardiovascular conditions
In a survey by the Business Group on Health, employers shared the health conditions that were their top three cost drivers in 2022—86% listed cancer, 75% said musculoskeletal (MSK) conditions, and 30% listed cardiovascular conditions.
Watch the webinar to learn what’s behind the costs in those three categories.
2. Most people want value-based care—but everyone needs to be on board
When asked about her stance on value-based care versus the traditional fee-for-service models, Mary Kay said she believes “everybody would love to have a value-based care environment.” But, of course, this is easier said than done.
“I think the frustration comes not in the concept behind value-based care, but with the engagement on the healthcare delivery side,” Mary Kay says. “Because most of those organizations and individuals are living in a hybrid environment.”
And those in the healthcare delivery space are under a lot of pressure right now as they face unprecedented workforce shortages and budgetary challenges, making it even harder to fully pivot to a new care delivery and payment model.
3. Cost containment strategies can be grouped into three “buckets”
When advising her clients on how to reduce their healthcare costs, Mary Kay suggests splitting spend into three categories:
- What you pay for services: Think contract negotiations for episodes of care, bundled pricing, warranties that ensure certain follow-up procedures and treatments are included in the episode, and so forth.
- Utilization: Ensuring people are getting the care they need when they need it, and that they aren’t being given things they don’t need—we want people to engage with the right care while avoiding unnecessary care and overtreatment.
- Preventive care: Keeping people as healthy as possible so they don’t need as many services (especially costly, invasive ones).
4. Treat your employees like they’re your customers
Engaging employees in their healthcare journey is no easy feat and requires diligence on the part of the employer. “Think about your opportunity to connect with them at all different points along the continuum of the relationship,” Mary Kay says.
She advises against bombarding them with information about every single available benefit during open enrollment. “If you try to teach people ahead of time about all these benefits,” she says, “people shockingly don’t retain all the details.”
During open enrollment, consider saying something like, “The only thing I want you to remember, other than to sign off on your benefits, is to call this number if you need anything.” The less they have to remember, the more likely they are to retain it.
In addition, make sure all benefits information is easy to find, accessible, and up-to-date at all times, and consider soliciting the help of a navigation partner who can help your employees find what they need, when they need it.
5. Centers of excellence (COE) programs help employers cut costs and deliver high-quality care
As part of her work, Mary Kay provides guidance on specific types of benefits programs to consider implementing—including centers of excellence networks.
Not only can a centers of excellence program provide employers with a much clearer and definite understanding of the services they and their employees will be getting, but best-in-class COE programs also have the controls in place to ensure all patients are getting the highest quality experience and care.
However, Mary Kay reminds us that not all COE benefit programs are the same. To really reap the benefits of a centers of excellence network, it’s important to partner with one that goes beyond just checking off the standard boxes.
The information contained on this page is for informational purposes only. No material is intended to be a substitute for professional medical advice, diagnosis, or treatment.
