Most of us have been hunkered down at home under the “stay at home” order and venturing out occasionally for essential items. At the grocery store many of the food items are off the shelves, not to mention toilet paper. This is due to not only people hoarding food but also the result of the lack of food production, higher than normal demands, or breaks in the supply chain.
As people aren’t allowed to go to work and be productive, many companies have temporarily closed, laid-off or furloughed workers, or closed altogether. This obviously affects the supply chain as businesses are out of production or scaled-back significantly and it has the trickle down effect.
As we know when this happens, a company’s revenue is diminished significantly but expenses continue. Ongoing expenses still have to be met and depending upon the type of business, their 1st, 2nd, or 3rd largest expenses has to do with employees – payroll and health insurance.
The health insurance expense may be the second or third highest expense on any given P&L – and it keeps going up – certainly at a rate faster than wages. Here are several strategies that can lower the cost of this expensive benefit and hopefully improve the bottom line.
- Eliminate the insurance company and change to an un-bundled, partially self-funded plan. This improves cash flow which will certainly help in these uncertain times. It also enables your company to maintain the current benefits to employees without raising deductibles, out-of-pocket limits, etc.
- Purchase stop loss protection which will protect the plan and significantly reduce your fixed cost each month.
- Just as you’ve eliminated the insurance company, you also need to eliminate the PPO network. PPOs allow facilities and other providers to arbitrarily set their prices and raise them whenever they want.
- Implement a Reference Based Pricing (RBP) program. There are many to choose from and they are not all created equal – some are clearly better than others – regardless of what they tout. A RBP program will set specific reimbursement levels and payments to providers, thus reducing claim costs.
- Change your pharmacy program to one that does not allow spread pricing and also gives your company 100% of rebates. There are many things to evaluate in these contracts, so be sure to read the fine print.
- Implement a specialty drug program that can reduce or eliminate the very expensive cost of these drugs. Humira for example, costs $65,000 per year. Some programs will reduce this cost dramatically, while other ones will eliminate the claim cost altogether.
- Implement a tele-medicine program which will cut down costs for office visits and potential emergency room visits. Once again, there are many to choose from and they are all not created equal.
- Depending upon the health of your members, evaluate specialty programs such as those for diabetes and cancer, and other chronic conditions.
Many of our clients have been able to reduce their annual expense by 30 to 40% or more utilizing some or all of these strategies. They are not difficult to implement – the key is finding the very best companies that offer these respective programs. Careful evaluation of, and experience with these programs is extremely important. You certainly don’t want to deal with second-class programs, you want to deal with Best In Class.
Large companies like Home Depot, CVS, and Marriott have implemented some of these strategies – you can too. If you would like to chat about what is possible for your organization, please call me at 970 – 349 – 7707 or email me at email@example.com