By Chris Covill, Executive Vice President of Strategic Partnerships, Accolade
As a former sales leader of a large global health and benefits advisor and broker, I’ve had the opportunity to meet with hundreds of benefit professionals and dozens of chief financial officers over the last 25 years. The lament is consistent, “What can we do to abate the spiraling cost trend of my employer-sponsored medical plan?”
I remember distinctly a particular conversation with a CFO who, adamant that there must be a better way to control annual cost increases than cost-shifting and plan design changes, challenged all within earshot. “It’s the most inefficient system in the world. Find a solution and make it sustainable, I am not interested in flash-in-the-pan solutions.”
As we enter another open enrollment season, that lament is (unfortunately) still alive and well. A disheartening 80 percent of CFOs recently surveyed say they “feel powerless” when it comes to managing how much their companies spend on healthcare.
No surprise they feel powerless when you get underneath the traditional approaches to the health cost problem:
· Most solutions are focused on a specific employee population typically serving the chronically ill with the top 20 conditions, which is only 40% of their spend
· 80 percent of healthcare episodes are for a condition that was not apparent nor predicated by an episode a year earlier
· Participant engagement and corresponding influence over the healthcare spend is minimal since most solutions are not focused on empowering participants but rather “managing them.”
So, how do we break the cycle of small, incremental fixes that amount to rounding errors on the average 6 to 8 percent annual healthcare increases each year?
Cut the waste. According to a report by Oliver Wyman, an estimated 40 percent of the $3 trillion the U.S. spends on healthcare is due to avoidable costs. This huge amount of waste in the healthcare system means enormous savings potential for the nation’s employers.
Some Fortune 500 companies are already tapping into this potential — and realizing a 5 to 16 percent reduction in their annual healthcare spend — by doing something that’s elegantly simple. They’re engaging their employees to use the healthcare system in a more effective and efficient way. When equipped with the right resources, these members not only help drive down healthcare costs but also gain a greater appreciation for their employer and the sponsored health benefit offering.
Why start there? Because it’s the employee — or the “consumer” of healthcare — who’s making most of the errors that lead to unnecessary care and wasted spending. Contrary to what many believe, employees make more than 99 percent of their healthcare decisions outside of a health professional’s office. They are “patients” only a small fraction of the time. They are “consumers” — or potential consumers — of healthcare most of the time.
And, as consumers, they make mistakes. This can happen for a variety of reasons: the healthcare system is fragmented and extremely difficult to navigate. The hundreds of new healthcare apps and programs coming at them make decision-making even more overwhelming, especially when they’re faced with a serious healthcare issue and need timely help.
Add in a host of contextual barriers people are facing every day, from emotions and finances to cultural and family issues. These aren’t insignificant “warm and fuzzy” issues. For example, research shows that “anxious” employees are 46 percent more expensive. These are real issues that can stand in the way of good decision-making.
Waste can be avoided by going beyond managing the illness to supporting the person managing that illness. There’s a big difference in the two approaches. Helping the whole person means bringing the financial, care delivery and life elements together to make it easier for them to make the best decision possible about their use of healthcare.
This is the approach that we at Accolade use — and we know that by reaching 70 percent of an employer’s plan members, we have the potential to help influence more than 90 percent of the company’s medical spend. We’ve found that by engaging employees earlier and more comprehensively, we are able to help companies consistently bend their healthcare cost trend and save 5 to 16 percent. And, employees rave about having this kind of personal support, expressing a satisfaction level of over 98 percent. This satisfaction and appreciation accrues to the sponsoring employer and has a meaningful impact on overall employee engagement in their work.
All the latest surveys show there’s no real end in sight for rising healthcare costs. But that doesn’t mean CFOs need to feel powerless. By approaching employees as “consumers” of healthcare and equipping them with the right support, they can get employees to cut waste and save real dollars in a sustainable way. And, their employees will love them for it.
Chris Covill is the Executive Vice President of Strategic Partnerships at Accolade, Inc.