We all know that U.S. healthcare is broken. Prices keep rising, placing more of a burden on employers and employees. Due to increased employee participation in healthcare, take-home pay is actually declining. To make matters worse, while the U.S. spends 2.5x more per capita than other developed countries, we’re not receiving the best care.
Rising healthcare prices are of great concern to most employers, since they want to offer the best possible benefits package to their employees. As HR executives, what can we do about it? First, we need to understand the reasons behind the healthcare price hikes.
One key reason for increased prices is the rampant hospital mergers across the country, including in the New York tri-state area. Today, more than half of the 5,700 hospitals in the US belonging to larger health systems. Health systems are also buying up doctors’ practices. By the end of 2016, only 33% of physicians were independent. The consolidation of hospitals and providers into larger health systems has also increased costs in many communities, due to reduced competition.
Another contributor to rising healthcare costs is how we pay our providers. There’s the fee-for-service approach, which encourages providers to schedule more visits and perform more procedures. Then there’s the capitation model, where providers receive a lump sum per member. This may be economically efficient, but requires quality metrics to determine that people are getting the care they need, since it may incentivize providers to give less care. We need to develop a pricing model that encourages the right amount of care.
Watch this webinar sponsored by SHRM NYC, “The Secret to Controlling Health Care Costs for Employers,” to learn how to use the current health system landscape to reduce costs. We’ll discuss novel ways to improve cost, quality, member satisfaction and even population health.