Entrepreneurs are in a constant battle for talent – talent is key to survival. But, the playing field isn’t level, especially when it comes to health benefits. Large corporations receive lower rates on traditional health insurance and can absorb the staggering costs of healthcare. This makes it harder and harder for entrepreneurs to compete for talent.
Have you ever asked yourself why it’s so complicated and expensive to help your employees get affordable healthcare? While large companies have some advantages due to their size, the innovation of strategically minded entrepreneurs is turning healthcare into a competitive advantage.
How? By thinking differently about how healthcare affects their business.
Today, we’re up against bloated health insurers, drug companies and hospital systems that have no real incentive to reduce costs and improve efficiency. The higher the costs, the greater the profits. The system is designed to reward inflated costs – not to bring them down.
But, there is a better way.
Forward-thinking entrepreneurs are now shifting their mindsets to a new model of healthcare. They’re focusing first on self-insurance and care delivery, putting healthcare first and insurance last, and eliminating the waste, administration and profit margins built into traditional health insurance plans. The self-insurance model is enabling them to save a lot of money while offering healthcare that’s high value, convenient and easy to access – giving them a huge edge in hiring the best people.
What is Self-Insurance?
Companies that self-insure assume the claims risks of their employees in a limited and predictable way. For employees, the health plan can look and operate exactly the same as what they’re used to with a traditional model. But if employers know how to embrace the options available to them, they can save considerable money and redirect the savings back into their business.
How do Companies Build a Strategic Self-Insurance Plan?
- Stop buying insurance first. Many entrepreneurs have already started to reorient their thinking about traditional insurance. They have realized they can save a lot of money by self-funding the inexpensive, routine healthcare that most people need, most of the time. Most routine care doesn’t have to cost a lot, which means the treatment of basic health services are affordable without insurance.
To mitigate their risk, these entrepreneurs reinsure (with “stop loss” insurance) for only the expensive and unexpected healthcare services caused by catastrophic illnesses and accidents – the sort of healthcare that requires ongoing treatment and specialty care. A stop-loss policy protects the company from unexpected financial loss by covering health claims that exceed a certain threshold.
- Understand the variables that impact costs. The healthcare system is incentivized at every level to use complexity and non-transparency to guide people to the most expensive care. Many consumers don’t know that the healthcare system incentivizes status quo players to drive prices up. The status quo makes money hand over fist by directing people to high-cost sites of services.
Consider that an MRI costing thousands of dollars at a highly marketed hospital will cost only a few hundred dollars at a nearby clinic. It’s exactly the same MRI – there is no difference in quality. The same is true of X-rays, blood and urine tests, and other common procedures. In general, hospitals charge five-to-30-times more than offsite labs or doctors’ offices for identical services. Why would consumers ever go to the hospital for routine services? Because they’re unaware of the extreme difference in costs. If their provider steers them to a hospital, they think they have no choice but to listen, no questions asked.
Consider, too, the cost of prescription medications. Prices of common antibiotics vary dramatically depending on the pharmacy, the insurer and the way the doctor writes the prescription. The cost of a simple medication can range from $4 to more than $1,000.
This sort of disparity is present at every point in the system, adding up to hundreds of billions of dollars in inflated costs and wasted money throughout America. Simply recognizing the pricing differentials helps employers and their people make smarter choices about where to get their healthcare. With a self-insurance structure an employer gets to see where these price differentials exist.
- Enlist the help of a care delivery advocate and navigator. The healthcare system is complicated and confusing. In many cases, people don’t really know what to do when they’re sick or injured. Do they make an appointment with their primary care provider? Should they seek treatment at the urgent care or ER?
Third-party services can address the uncertainty and confusion in the healthcare system. In fact, working with a partner organization is essential to realizing the full benefits of a self-insurance model. A care delivery advocate helps employees navigate a cumbersome system, ensuring they get the care they need at the most appropriate site of service. For businesses, this means lower costs. For employees, it’s a simple, convenient and satisfying experience. Strategic managers use this better healthcare experience to retain and recruit productive teams.
- Own your data. In this day and age, it’s critical for companies to own their healthcare data. This doesn’t mean they’re invading employees’ privacy, as confidential information isn’t disclosed. It means companies that self-insure have access to every claim, from prescription medications and primary care visits to emergency room usage and specialist care. As the data grows, companies can benchmark their utilization against industry norms and address red flags, ultimately garnering insights to better manage benefits and control costs. Their health plans get smarter year after year.
- Find the right broker. Entrepreneurs will be best served by a broker or advisor who can explain how to implement a “healthcare first/insurance last model” and put the necessary self-insurance structure in place. Employers may be happy with their current broker, but there is nothing wrong with interviewing other brokers/advisors to find one whose philosophy mirrors their own.
See how hundreds of other companies have taken back control over their costs and turned healthcare into a competitive advantage by joining a webinar at http://www.redirecthealth.com/employer-webinars/.