KelseyCare Blog

Small businesses leaving healthcare saving strategies on the table

Posted by Julio Iturriaga

As healthcare costs continue to climb, employers are considering creative ways to curb spending and protect their profits. In many cases, companies simply end up shifting these expenses onto their employees, Plan Sponsor reported. However, new research suggests employers are leaving options unexplored that could help limit overall healthcare spending. 

In a survey of more than 400 executives of companies with 50-1,000 employees, insurance brokerage Hub International discovered that a majority had not taken advantage of certain health plan options designed to reduce employer expenditures. First reported by Employee Benefit News, the study showed that although 70 percent of executives believed their approach to "reigning in costs" was effective, just 16 percent used narrow networks, 18 percent took advantage of self-funding and 31 percent leveraged pharmacy carve-out strategies in their efforts to cut spending. 

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Narrow networks  Insurers use narrow networks to guide patients toward lower-cost providers, reducing both out-of-pocket expenses and the cost of claims. Employers may shy away from these options for fear of imposing tight restrictions on their employees' care options, EBN reported. However, a majority of employees would actually rather choose from a smaller network if it resulted in a lower cost of care, according to a study cited by Modern Healthcare. 

Self-funding One reason smaller employers may not take advantage of self-funding is that they perceive it as only being cost-effective for larger companies who have the overhead to assume more risk. While that may have once been the case, there are now plenty of financing options - such as stop-loss insurance - that can protect small employers from having to pay the kind of large, unexpected claims that could threaten businesses with a more sensitive bottom line. 

Pharmacy carve-out Employers who pursue carve-out programs stand to save as much as 20 percent on their drug benefit costs, according to EBN. With prescription drugs accounting for as much as one quarter of all healthcare spending, these savings could be significant for small employers looking for alternatives to shifting costs onto their workforce. 

Posted by Julio Iturriaga

Julio Iturriaga is the manager of Sales and Business Development for Kelsey-Seybold Clinic.

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Topics: Healthcare, small business, Healthcare Savings

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