I had the opportunity to attend a prestigious healthcare convention organized by a top health insurance company. It was a huge invite-only event for sponsors who got a chance to showcase their offering at their respective booths. There was a fairly large sponsor pool of over 300 booths.
The use of data and analytics is becoming increasingly important in understanding cost drivers and implementing mitigating programs to affect them. Price transparency is key understanding those drivers in order to make more effective program and service decisions.
Why are small-to-medium self-funded employers paying much more than the large ones for their healthcare costs?
Here’s a scenario for you to ponder. A small manufacturing company’s healthcare costs have been rising at a 19.6% rate per year over the last 5 years. The tragedy is that this employer-owned organization is paying much more per employee on healthcare costs than a large organization! This could be saved and re-distributed to the employees, if they knew what risk factors drove their healthcare costs and what actions they could take to reduce those risks.
36,000 employees of Verizon went on a strike mid-April to protest against the company’s policies regarding salary, healthcare benefits, plus job and retirement security. Union leaders have alleged that Verizon made approximately $39 billion in profits but is not taking care of its employees. The leaders also allege that Verizon is refusing to negotiate any terms that would benefit the employees in the long run.
The world of healthcare is a constantly evolving one, and several unsettling trends have emerged so far in 2016. Healthcare costs are increasing and customers are struggling to figure out why as their wallets are consistently empty. More and more large medical and pharmaceutical brands are linking together to bump out smaller competitors. These smaller medical facilities then have to pay more than the big fish to offer the same healthcare for customers. Patients are also flooding hospital emergency rooms. ER usage is much higher than usual. According to a poll completed by 2,098 medical professionals for the American College of Emergency Physicians, 47 percent of doctors believe that ER overuse rates have become only slightly worse while 28 percent believe that they’ve become much worse. Many believe that those numbers will only increase unless this problem is stopped.
In our series of opinion pieces on questions that companies should be asking their carrier at all times, one of the most important one is related to non-optimized pharmacy spend and variability in drug costs. Everyone claims to be offering a transparent PBM. The question is, if it really is transparent or not? We have seen drug prices such as $498 and $166 for the same drug in the same region at retail stores depending on the PBM the employer is on. The difference is around $222 to up to $332 per drug. We are talking about savings of anywhere between 1 to 5% on overall healthcare costs.