Employers Using Evolving Health Care Strategies Cut Costs Significantly

“Best-performing” companies boast a $3,548 per employee per year (PEPY) health care cost advantage compared with high-cost companies, according to the 23rd annual Best Practices in Health Care Employer Survey by Willis Towers Watson.

Willis Towers Watson highlights five ways best-performing companies are optimizing the value of their health care plan that all employers can put to use:

Ensure quality of care through value-based designs – Best performers are focused on delivering health care to their employees through value-based designs and contracting that tie payments to quality care and health care outcomes—so cost is based on real results. This model aligns the patient’s and provider’s incentives toward efficient and effective care, preventing reoccurrence of illness and reducing complications, or—when treatment is needed—getting the patient the right care and the right site of service, sooner.

According to the survey results, 17% of best performers are using bundled payment approaches in their medical plans, compared with only 4% of high-cost companies. Bundled payments are a form of value-based contracting that support a holistic approach to certain health care and surgical episodes, by combining pre- and post-procedural care into an efficient, all-in-one-price. Ultimately, this can deliver savings as well as clarify and simplify the billing experience for both organizations and employees.

Almost one-third (30%) of best-performing companies also offer an expert medical opinion program, helping patients make sense of the inevitable uncertainties when it comes to determining treatment options; just 16% of high-cost companies have this type of program.

Emphasize pharmacy strategies to cut overall costs – As pharmacy benefit costs continue to climb, employers are harnessing strategies to decrease drug expenses, such as more closely evaluating specialty pharmacy expenditures. Employers are also encouraging the use of biosimilars as lower cost, clinically effective options. To curb the cost of specialty pharmacy for clinician-administered treatments like infusions, 37% of best performers are implementing coverage changes to influence site of care—whereas only 19% of high-cost companies have this approach currently in their plan design.

Employers are also in a good position to help stop opioid abuse and misuse, which has risen in prevalence to become a national public health epidemic. Best performers are more likely to take steps to ensure opioids are used safely and sparingly, with more investing in employee education and ensuring access to treatment compared with high-cost payers (43% vs. 21%). These initiatives to prevent opioid misuse and treat opioid addiction extend beyond managing pharmacy costs to improving the overall health, wellbeing and productivity of the workforce.

Incorporate integrated wellbeing into company values – As Gen Z enters the workforce and Millennials continue to move up in their careers, employees are becoming increasingly interested in companies that encourage a healthy physical, emotional, social and financial lifestyle with an eye toward integrated wellbeing. It’s no surprise that employers are more committed to understanding employees’ wants and needs, and applying human-centered design to their wellbeing initiatives that focus on the overall employee benefit experience. For example, programs that help employees meet their short- and long-term financial goals as well as initiatives that support a healthy, physically active lifestyle will help employees be more productive and engaged at work.

While more than one-third of high-cost companies (34%) have incorporated health and wellbeing into their organizations’ employee value proposition, best performers (48%) are leading the way when it comes to taking this step.

Further, to ensure employees feel emotionally safe bringing their whole selves to work and are met with respect, best-performing companies incorporate diversity and inclusion priorities into benefit design (40% versus 29%). Employers are assessing programs including their core medical and pharmacy benefits and subsidy strategy; voluntary benefits, perks and lifestyle benefits; maternity benefits, family planning/fertility programs and leave of absence programs; and financial planning, like emergency savings and retirement funds. Best-performing companies (60% vs. 42%) take other steps to promote an inclusive culture, such as promoting events and trainings that raise awareness and promote conversation in the workplace, and reviewing policies and procedures.

Empower employees to make informed benefit decisions – Cost is an inevitable concern for employers, but best performers remain true to putting the employee at the center of his or her health care strategy. Start by identifying exactly what your workforce needs and understand that each employee has a unique health care journey. By offering meaningful choice with a variety of benefit options, employees can personalize their benefit selection.

To meet the varied needs of employees, best performers offer tools that support personalized enrollment decisions (59%). Of high-cost companies, less than half (45%) provide these support tools.

Mine your data to ensure health care strategies work – Any good strategy has data at its core, and best performers know how to effectively evaluate their current programs to improve future benefits, employee engagement and health outcomes, Willis Towers Watson says. Fifty-three percent of best performers have a measurement strategy that supports multiyear evolution of health and wellbeing initiatives, while high-cost companies remain too focused on the here and now: Only 34% have a data-informed strategy. Enlisting C-suite support in evolving benefit programs is mission critical—from understanding facts on the ground relative to population health, productivity and employee engagement—to the importance of leading from the front with messages around the importance of wellbeing and safety in all dimensions within the work environment. 

“The lessons companies can borrow from the best performers are clear. These employers are effectively evolving their health care benefit strategies to enhance employee health and wellbeing while curbing costs,” says Julie Stone, managing director of specialty practices and intellectual capital at Willis Towers Watson. “Plan sponsors should continuously look to advance their health care benefit programs. Start by evaluating your current strategy and make changes to capitalize on cutting-edge benefit delivery innovations.”

The survey was completed by 687 U.S. employers between June and July 2018 and reflects respondents’ 2018 health program decisions and strategies. Respondents collectively employ 11.4 million employees and operate in all major industry sectors. Results provided are based on 554 employers with at least 1,000 employees. The survey report may be downloaded from here.