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A Different Level of Care: How Businesses Can Reduce Health Insurance Costs

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For many companies, health care spending is an expensive fact of life, and for most, these costs rank second only to wages.

In 2008, Price Waterhouse Cooper found that more than half of the $2.2 trillion spent on health care in the United States, or $1.2 trillion, was considered “wasteful spending.” This category includes unnecessary tests, procedures and prescriptions as well as money spent treating preventable conditions like obesity, musculoskeletal conditions and some mental health conditions.

While those numbers concern the health field in general, we can assume that many of those who sought treatment were doing so under their employer-sponsored health plans. So what can employers do to reduce wasteful healthcare spending as a whole, and to reduce their own costs in the process?

The Opportunity is There

Multiple studies have cited musculoskeletal and mental health issues as the top two reasons employees claim on health insurance. With a few exceptions, both are considered preventable. For example, 80% of musculoskeletal issues – a sweeping category that covers skeletal or muscle injuries, nerve pain, strains, aches and more serious conditions like fibromyalgia – are caused or exacerbated by lifestyle.

If these conditions are caused by lifestyle, it stands to reason that they can also be prevented or lessened in severity by making better lifestyle choices. And by all accounts they need to be, as musculoskeletal conditions are the most frequent cause of chronic disability the world over. If an employee is suffering from a condition of this sort, that means missed days and a loss of productivity. Businesses find themselves paying their portion of the treatment costs and the sunk cost of lost productivity, as well.

Prevent the Problem

Just as a business aims to be proactive in the marketplace, so must it be proactive when it comes to employees’ health. For an example of a company that has done just that and reduced their per capita spending to 50% when compared to the average employer, let’s look at Rosen Hotels & Resorts.

Some of Rosen’s policies seem pragmatic and easily implemented, like mandatory stretching for older and more active employees, free on-site wellness and exercise programs, and lower prices for the more nutritional foods in the cafeteria.

Perhaps most important of all, Rosen built its own 12,000-square-foot medical center on the premises and offers free screenings and check-ups. It has reduced as many barriers to treatment as possible and eliminated most co-pays and prescription payments. While this may seem counterintuitive at first, Rosen is both averting the onset of preventable conditions and reducing an employee’s financial strain; creating healthier, happier employees in the process.

Drawing Conclusions with the CDC

The Centers for Disease Control and Prevention has long been a proponent of businesses taking an active role in the health of their employees. As part of the CDC’s Healthy People 2020 initiative, the organization is hoping to raise awareness about the value of proactive workplace approaches.

And they work. According to a review of 73 published studies, there was a savings-to-cost ratio of $3.50 to $1 when companies implemented health and wellness programs. That means that for every dollar a company invests in establishing and maintaining these programs, they may save $3.50 in health care, absenteeism and lost productivity costs.

Think laughter is the best medicine? Think again. For businesses, preventive medicine is the best. Whether through wellness programs, raising employee awareness, or increasing coverage for preventive treatment; the proactive approach makes employees healthier – and a company wealthier.

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