Executive Education

If You Want to Lower Company Healthcare Costs, You Have to Put Employees’ Needs First

She thought of her children and started to cry. Her oncologist told her she had stage 4 cancer. Yet more horrifying than the diagnosis was the thought of her children’s future. That thought eclipsed everything else the doctor said.

The doctor created a care plan that would have her stay the night at one of the better cancer hospitals while she was receiving chemotherapy. However, she was a working mom. Her children depended on her income, rides to school, trips to recitals and team events.  And like most Americans, she didn’t have the savings to cover her $6,000 deductible. She didn’t know how she would cope.

During this time of extreme stress and confusion, the last thing she thought about was second guessing her admission into the hospital, or an alternative place of service.

Oh, and the hospital requested $125,000 for chemotherapy treatment.

Her primary care doctor with Redirect Health understood the challenges she faced. She called the oncologist to gain a better understanding of her customer’s options. After hearing the story, the oncologist recommended the chemo could be done at his office. When asked if the patient would be shortchanged, the oncologist said it was the same care plan he would give to his own mother. It was the same drug, done by the same doctor, on an outpatient basis.

Oh, at the doctor’s office, the cost of chemo was only $30,000.

The patient was presented with the two options: get the chemo at the hospital as originally presented, or take the outpatient route and save $95,000 for the exact same service at the doctor’s office.

Fortunately, her employer offered a healthcare plan through Redirect Health that eliminated her deductible. But even more important, the woman could go home at night. She could work part time. She could spend more time with her children.

Pretty easy choice.

The original place of service would have been a mistake for the patient. It would have been a mistake for her children as well. And, if controlling costs mattered, it was a big mistake for all parties involved. But be assured, this mistake is made more times than not. It’s very profitable for the U.S. healthcare industry.

This is a cautionary and all-too-common tale of the healthcare industry that is driven by transactions rather than relationships. Time and time again, healthcare providers and insurers create plans for patients that require them to adjust their lives, as opposed to understanding the lives of patients and creating a plan that fits into their lives.

A plan that starts with a relationship – instead of a financial transaction – not only saves lives but can cut millions of dollars of waste. A plan that gives the customer options and provides real price transparency creates the best customer experience. The status quo benefits from narrowing the options and keeping the customer in the dark.

There is good news. Employers can take back the power for their people and better control costs. They can increase their employees’ access to care, reduce costs and eliminate the burdens of double-digit increases in healthcare costs. Here are the keys:

  1. Walk away from the fully insured world where you don’t have the ability to control costs. If you do end up saving money, the insurance company gets the benefit – not your company. Move to a self-insurance model with stop-loss insurance to protect your business while better controlling healthcare costs. Today, this option works well for nearly any company, whether it has 10 employees or thousands.
  1. Build your self-insurance plan around the customer – your employees – and immediately address convenience and access. Improve and increase access to primary care, chiropractic care and physical therapy where the cost of service is a fraction of urgent care or emergency rooms. Demand service that is 24/7, same-day/next-day, or over the phone when it makes sense.
  1. Help your employees navigate the system. A customer-driven relationship should identify the 10% of people who spend 90% of the money. With that knowledge, your plan can be set up to give that 10% extraordinary service. Show them options on pricing. Adjust their plan so that they are incentivized for choosing affordable options, possibly eliminating their deductible.
  1. Protect your employees from the stupid stuff. For instance: a diabetic who doesn’t get insulin often ends up in the ER where costs can easily exceed $25,000. And due to Medicare rules, most hospitals check out Medicare patients before 11 a.m. Other patients who check out after 11 a.m. pay for a whole other day. Further, MRIs in a hospital can easily cost $2,000 to $4,000. Outside a hospital, its $400 for the exact same MRI. There are technologies and teams that can prevent these stupid mistakes.
  1. And, here is the most important part: do not believe that better outcomes and better customer experiences must cost more money. They don’t. You can get better outcomes and a better experience at the lowest price. If we, as CEOs, are going to revolutionize healthcare, it has to be affordable. It needs to have low premiums, low deductibles and low copayments. The only parties that will disagree with this point are among the status quo whose income depends on the opposite.

CEOs have the power to take back control of their company’s healthcare plans and take better care of their people. Doing so has many benefits beyond cost savings. They can recruit and retain their best employees, create a competitive advantage and utilize a healthier, more satisfied and productive workforce.

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Written by:
Paul Johnson, co-founder and CEO of Redirect health.

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Paul Johnson
Paul Johnson is CEO of Redirect Health, which helps employers and their brokers build affordable, ACA-compliant healthcare plans using a self-insurance model.