The health care industry as we know it is changing. With new compliance requirements and rising health care costs, organizations must proactively manage their health care and benefit expenses. Consider the realities of today’s health care world: 

2 Simple Strategies to Reduce Health Care Spending

The health care industry as we know it is changing. With new compliance requirements and rising health care costs, organizations must proactively manage their health care and benefit expenses. Consider the realities of today’s health care world:

  • Three out of four CFOs report that health care cost is their most serious business concern.[1]
  • Organizations’ health care expenses are poised to jump by 6.8% in 2015.[2]
  • Wasteful health care spending is projected to reach $1.5 trillion in 2014.[3]

“The statistics on rising health care expenses should concern every organization in the country. Since this perpetual increase in health care spending is not sustainable, companies need to start making changes now. We must look at health care spending in a way that we’ve never considered before and be prepared to take a revolutionary approach to solving this problem,” said Mary Jo Davis, vice president of product management for Ceridian.

Are you ready to change how your organization views its health care costs? Let’s look at two simple health care strategies for reducing your organization’s expenses.

Health Care Expenses Stat

Strategy #1: Revise your approach to health care cost containment

If you’re like most organizations, you’ve probably tried a few tactics to reduce your health care expenses. 1) You increased premiums or 2) You modified your plan options, including possibly moving to a consumer-directed health care strategy. The problem with these actions is that they are short-term solutions to a long-term problem.

The key to reducing costs is equipping employees to take ownership of their health care decisions. Since many employees are passive participants of their health care decisions, you must offer them tools and incentives to become better health care consumers. Empower employees by giving them ongoing education – both during open enrollment and year round – and encourage them to make smart health decisions, including eating right, exercising, not smoking and monitoring health numbers like blood pressure and BMI.

When employees do use their health benefits, make sure they have a vested interest in keeping costs down. The Affordable Care Act requires organizations to provide employees a Summary of Benefits and Coverage that outlines the organization’s contributions and employee costs for health plan options. Take your approach one step further by giving employees tools to compare and contrast the cost of treatment. Provide them incentives to shop around for treatment options by weighing price against the quality of care they receive.

Strategy #2: Give your wellness program a boost

Wellness Program StatWith only 19 percent of employees use their company’s wellness program[4], it is evident that organizations need to change how they promote their wellness programs. These programs may contain all the ingredients for success – health education, counselors and resources – but the “recipe” needs to be tweaked.

If you have a wellness program, you must shift from thinking about it as an expenditure to viewing it as an investment that will lower the company’s health care costs. Invest in your wellness program by creating a culture where participation is the norm. Once a health culture is developed, the next step is to encourage ongoing wellness activity and interaction.

When creating a wellness program strategy, don’t make the mistake of expecting every employee to participate. Instead, your job is to use incentives to convince the majority of employees to be part of the program. You can do this by offering wellness program participants a premium discount while charging nonparticipants higher premiums. Similar to assessing a surcharge to smokers, this strategy uses premium differentials to help fund the wellness program.

“The formula for wellness success is simple: gain high wellness program participation – over 50 percent – through the effective use of incentives and a comprehensive, but targeted, program. The more employees who participate in the wellness program the healthier they will be and the lower your overall health care costs will be. While the formula is simple, putting it into action is made easier with the help of wellness experts, such as those offered by Ceridian LifeWorks,” Davis said.

Armed with these two simple strategies, your organization will be on its way to reducing health care expenses for the long haul.

For more information:

  • Read Ceridian's Wellness Incentives eBook
  • View our quiz: What kind of Wellness Warrior are you?
  • Learn about Ceridian LifeWorks

[1] Employee Benefit News

[2] PricewaterhouseCoopers’ Health Research Institute

[3] Wellness Manager