7 benefits of centers of excellence programs

Healthcare costs continue to rise, with PwC’s Health Research Institute predicting that commercial healthcare spending will grow to its highest level in 13 years during 2025. Those skyrocketing costs place a heavy burden on employers, who spend more on health insurance than any other employee benefit.

Understandably, companies are looking for ways to manage and reduce their healthcare spending. In one recent survey conducted by Lockton, 29% of employers (up from 22% in 2023) cited reducing costs as the most important factor when it comes to what they decide to put in their benefits portfolio—ranking only behind attracting and retaining talent (33%, down from 44% in 2023).

But cutting costs shouldn’t mean compromising on care. That’s where a value-based centers of excellence (COE) program comes in. Here’s a look at seven ways a centers of excellence solution can help employers save on healthcare costs while prioritizing access to high-quality care.

1. Centers of excellence programs target the highest drivers of employer healthcare spend

While there are seemingly endless healthcare needs, only a few conditions—cancer care, musculoskeletal (MSK) care, and cardiovascular care, for example—drive the bulk of employer healthcare costs.

Rather than encompassing a never-ending array of conditions, centers of excellence solutions focus on providing access to high-quality care specifically for these higher-cost service lines. Many COE programs incorporate other high-cost categories too, such as diabetes, maternal medicine, and behavioral health.

This means workers can receive care targeted to their most pressing needs while employers can keep costs at a minimum.

2. Value-based centers of excellence solutions leverage alternative payment models

Individual employers don’t have much negotiating power with health insurance companies. But, because a centers of excellence program represents a large group of employers (and thus members), it has more leverage to agree on alternative payment models (APMs) with insurers.

Unlike typical fee-for-service (FFS) arrangements, where patients and health insurance companies are billed for each service provided, APMs focus on the quality of service over the quantity.

From bundled payments to shared savings and pay-for-performance, there are several different types of APMs that value-based centers of excellence programs like Carrum leverage. While they have their different setups, the bottom line remains the same: a centers of excellence solution works with providers to offer care that’s both higher quality and more affordable (for both the employer and the member).

3. Centers of excellence solutions focus on appropriate care

As we just mentioned, value-based centers of excellence programs emphasize quality over quantity, which means providers are committed to ensuring that patients get the best and most effective care—rather than racking up treatments and procedures for a higher price tag.

Unfortunately, because a traditional FFS model financially rewards providers based on the number of procedures, unnecessary medical care is a surprisingly common problem.

In one survey, 71% of participating doctors said they believe those in their field are more likely to perform unnecessary procedures when they can profit from them.

In a third-party study by RAND, 30% of Carrum members who were originally recommended surgery were redirected to more appropriate care, such as physical therapy. Not only does this focus on appropriate care save patients from costly and disruptive treatments, but it also reduces employer healthcare expenses. After all, fewer surgeries (and other expensive treatments) mean lower costs.

4. Value-based centers of excellence programs have fewer complications and readmissions

Centers of excellence solutions often lead to better patient results for two different reasons:

1. Providers are reimbursed based on outcomes, which means they assume some risk and are more diligent with their work
2. Best-in-class COE programs rigorously evaluate providers based on the quality of care they provide

Those two things together mean centers of excellence programs significantly reduce complications and readmissions. In the same RAND study, Carrum’s program reduced readmissions by an impressive 80% when compared to the national average.

And if readmissions do happen? Some of Carrum’s offerings include a 30-day post-surgery warranty (since 30 days is the most common window for complications and readmissions). In these circumstances, the center of excellence—not the patient or the employer—is responsible for the cost of those follow-up treatments.

5. Centers of excellence programs lead to better health outcomes

You’re probably getting the sense that all of the above factors—higher quality providers, more targeted care, payment that’s tied to performance, and reduced readmissions and complications—mean good news for patients.

That’s true. Employers who leverage value-based COE programs end up with members who have better short and long-term health outcomes. And while that’s worthwhile in and of itself, it also leads to further savings for employers who avoid paying for follow-up care to correct unnecessary or ineffective treatments.

Among employers with a COE program, high-quality health outcomes are one of the top drivers of COE utilization.

6. Centers of excellence solutions reduce absenteeism

Every organization relies on its people. That means chronic workplace absenteeism can have some dire effects, including lower productivity, reduced performance, decreased morale, and increased costs.

And while it’s expected that employees will need to miss work every now and then, high-quality care from a COE solution can help reduce absenteeism.

Workers can get more effective treatment for the conditions that keep them out of work (or distracted during work) in the first place. That translates to faster recovery times and the ability to return feeling their best both inside and outside of work.

And, of course, a lower absenteeism rate is good for the company’s bottom line.

7. Centers of excellence programs increase employee satisfaction and retention

Think employees don’t notice or care about their health benefits? Think again. Competitive and quality care options can help organizations attract top talent, with 46% of employees saying health insurance was a significant reason why they chose their current employer.

First-rate health coverage can help keep top talent around, too—56% of workers with employer-sponsored health benefits say the quality of their coverage is a major factor in staying at their job, and 60% of employees rate benefits as a very important contributor to their overall job satisfaction.

For employees, healthcare isn’t an inconsequential perk that’s only relevant during their onboarding or enrollment period. It’s a meaningful benefit that significantly impacts their well-being and their commitment to the organization.

Considering the cost of finding a replacement for a single employee can amount to two times that employee’s annual salary (or more), anything that can help retain employees is integral to a company’s success.

Centers of excellence programs: An HR leader’s best friend

Balancing high-quality healthcare with manageable costs can feel like a zero-sum game for employers. Fortunately, a centers of excellence solution can help. An impressive 95% of benefits leaders report they’ve seen positive results from having a COE program in place.

You don’t need to sacrifice quality for cost—or vice versa. With a centers of excellence solution, you can give employees access to the level of care they deserve without having to accommodate an unreasonable price tag.

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.