5 Ways Employers Are Cutting Health Care Costs
Companies best at managing their healthcare costs scored a coup in 2013.
While the average company in a survey by Towers Watson saw the cost of their health care plans increase by 5.5%, TW's “best performers” reported an increase of only 1.6%.
That finding was contained in the pages of the 19th annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care.
The full report won’t be available until June, but the consulting firm offered a sampling of what it learned from the 595 employers it gathered data from between November 2013 and January 2014. This group's health plans cover 7.8 million employees.
For starters, TW and the NBGH quantified some trends that have been previously reported, such as an overall lowering of the health plan cost hikes in recent years (just a 4.1% average hike in 2013), the fact that most large employers (95%) intend to keep providing employee health coverage, and increased reliance on cost-shifting to rein in health bills.
In TW’s breakout of “best performers” vs. average performers, the best weren’t merely those who took cost into consideration.
“Best performers are more assertive than other employers in taking steps to both improve their health cost trend and help employees manage their well-being. The best performers’ health cost trend of 1.6% in 2013 was driven by several critical actions,” the report said.
What might those be?
Here are the five characteristics of best performers cited by the survey:
1. Design health plans that emphasize high performance.
2. Establish favorable contracts with pharmacy benefit managers and drive members to use generic drugs.
3. Understand and respond to the underlying population health risks of their employees.
4. Contract with highly effective partners (health plans, pharmacy benefit managers and providers) and aggressively negotiate financial terms with a growing focus on value-based arrangements.
5. Establish coverage tiers.
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