I have a client who is a small business owner – he has about 50 employees – and he says that at one point, “our healthcare insurance costs kept rising to the point that we were literally running the business just to cover our employees!” Sound familiar? What if I said you can stabilize your employee benefit costs?
In order to begin to stabilize employee benefit costs (health insurance), there has to be an understanding of what elements actually comprise a health insurance premium:
1) Pharmacy Costs
2) Primary Care Basic Health Care Costs
4) Cost of Actual Insurance that Protects Against the Unknown
Almost all small- to intermediate-size groups access health care for their staff by going to insurance representatives for quotes from insurance companies for one bundled price for all four of these very different element. The result of this “one size fits none” approach is that they are adding substantial unproductive mark-up to the cost of health care, pharmacy, and administrative services. As a result, you not only pay for things you’re not using, you end up not even knowing your actual cost for what your actual needs are versus the premium.
But there is an alternative, and you should know about it. Big companies sure do.
Large employers have each of the named components of their program separate from each other. They remove as many unproductive and expensive middlemen from their cost and reduce their cost/unit of service in each category. This is not because they are bigger groups – it is because their representatives have shown them how they can. Consequently, if smaller groups use the same method as the large groups, THEY TOO can experience the same cost efficiencies and cost reductions. This is what our ECCHIC Cost Management Team shows small employers how to do every day.
The first step is to unbundle the above components and address each category separately. Sound complicated? It’s not. It’s a matter of working with a team of professionals who are also small business people, who understand your challenges, and have successfully worked with people just like to get the advantages that a Boeing or a Caterpillar receive. The client I quoted at the top of this article also has this to say: “We’ve stuck to our 2009 budget and benefits have actually increased a little.” Wouldn’t you like to be able to say that?