12 Strategies to Reduce Healthcare Costs

12 Strategies to Reduce Healthcare Costs

In recent years, ordinary people are seen spending a substantial portion of their earnings in health care. However, it does not equate to a better quality of care that everyone would expect. For instance, in the US, the onset of coronavirus has tested one of the world’s best in the healthcare system. The hospitals were overwhelmed and people are complaining of not receiving the top-level quality for its costs.

Employers around the country are finding a means to lower the cost of health care contributions while improving its quality. But can ordinary companies succeed in this task?

There are developments and strategies that lead to health care cost reduction over the last few years. Businesses have applied some of these strategies and saved significant amounts on healthcare costs on behalf of their employees.

1. Review Healthcare Data

Review Healthcare Data

The first step to take if you want to reduce healthcare costs in your company is to review past data and statistics. Here you can track referrals and find out specifics of health care claims and health records. These data will play a significant role for you to find the best outcomes and more detailed resources. And with this in hand, you can steer your employees to better providers and receive better if not the best health care.

2. Apply Medical Management Program

Another strategy that companies can apply is to have a medical management program. These programs can effectively reduce health care cost of healthcare and also coordinate employees’ care, provide treatment options, and keep watch over ongoing medical treatment. Applying this strategy may help redirect your staff towards low-cost, but high-quality healthcare providers. The end goal of medical case management is to direct your employees to the right care at the right time, place, and price.

3. Consider TeleMedical Care

Consider TeleMedical Care

Telemedical or Telemedicine is another strategy to apply if your company is trying to lower health care expenses for your employees. It provides more convenient access, promotes a healthy workforce, and provides significant cost-savings for both employees and employers. Availing of telemedicine services can save employers up to $500 per episode of care for the most common health conditions. In a year, the savings will make up 11% of the total healthcare expenses and it is a significant reduction for everyone.

4. Utilizing On-Site Clinics

Utilizing onsite clinics and or health care facilities near the workplace can largely reduce healthcare costs for the company. Onsite clinics provide better coordination and boost primary care quality for your employees.

It can save both parties a lot of money for basic healthcare services such as:

  • Health and wellness programs and screening
  • Health-risk assessments
  • Employee health and wellness coaching
  • Chronic condition management

Providing these services to employees educates them better about their health conditions and prevents it from getting worse. Utilizing your on-site clinic also guarantees that your employees receive timely and quality primary care. With the best primary care, there is also the prevention of potential illnesses. Preventive care also ensures that your employees are healthier, thus there is less need for medication or treatments. In some cases, this can even help reverse chronic health conditions.

5. Utilize Direct Primary Care or DPC

Utilizing Direct Primary Care or DPC is another strategy for businesses to cut health care costs significantly. DPC is a kind of health coverage but it is different from health insurance. DPC plan members pay a fixed, monthly rate and receive an easy access to primary care providers without the need to send claims to insurance providers.
DPC offers multiple advantages for both employers and employees. If you will take a DPC plan in your company, they can enjoy more consultations with physicians and lesser issues with insurance companies. More so, employees get better healthcare quality and reduced out-of-pocket costs.

6. Have a Dedicated Fiduciary Pharmacy Benefits Manager

General healthcare costs are continuously rising and a substantial portion of this increase can be traced to expensive pharmacy purchases. Thus, having a fiduciary pharmacy benefits manager is another strategy that can help the company reduce overall healthcare costs. The advantage of having this service is a controlled price variation as the prices of prescription medication continue to rise in the coming years.

A PBM or pharmacy benefits manager is an organization that handles health plans and administers pharmacy benefits. It creates formulas that are deemed “preferred” drugs that insurance plans cover. With the PBM, the medications and the health plan are placed in a primary bargaining stance.

Manufacturer’s drugs that are not in the formulary list are generally not covered by insurance plans. So with a PBM, negotiations can occur so that manufacturers will pay off rebates based on the volume of medications dispensed to the plan holders. The PBM will share part of the rebates with health plan partners, but not all the discounts. Still, it can be a great saving for both employers and employees to have medications covered by their insurance plans.

7. Ask for Reference Based Pricing

When you ask for reference-based pricing, the health insurance will set an amount on specific healthcare services. Without this strategy, such services may ask for wide cost variations. Fixed amounts are based on several market standard pricing including insurance reimbursement rates.

Through this healthcare reduction strategy, employees can enjoy better price variations and bypass traditional insurance carrier contracts to directly pay providers. Employees are given more transparent and cost-effective healthcare services without carrier contracts from insurance plans.

Reference-based pricing also guarantees lesser spending for employers, protection, and reduced out of pocket costs for employees. It may also be combined with other cost-reduction strategies for healthcare.

8. Invest in Financial Wellness Education

The majority of employees anywhere in the world are affected by financial stress in one way or another. In most cases, ordinary employees consider finances to be a major stressor and distraction at work. Being stressed about one’s financial situation can affect workplace productivity and significantly impact the company’s health care costs.

Financial stress leads to reduced employee productivity, unscheduled leaves, increased healthcare claims, and higher employee turnover. Investing in financial wellness programs is another strategy that can help companies counter the adverse effects that come with financial stress.

9. Integrate Voluntary Benefits

A successful employee benefits program is measured by the high-quality health insurance plan that is provided to each employee. Thus, one of the best ways to reduce healthcare costs in the organization is to integrate voluntary benefits into the overall program. However, employees may easily overlook these offers when they do not understand how it works.

Ancillary benefits like dental, vision, and disability coverage are crucial to an organization as it reduces spending on health care needs. Additional benefit offers to support the company’s health insurance plan and work to maximize the efficacy of your healthcare spending. A combination of voluntary and medical benefits in your employee program provides a comprehensive range of data.

Having in-depth records of voluntary benefits participation, the company can be proactive in reaching out and providing much needed clinical support for the employees.

10. Offer Incentives for Comparison Treatment

Another effective strategy to reduce healthcare costs in the company is to engage your employees to find quality but reasonably priced medical treatment. This can be a challenge for the organization as most consumers are not inclined to price shop for medicare costs.

One of the easiest ways to encourage employees to do more price comparison for health and medical care is to offer incentives. Likewise, the company can provide tools to make comparison shopping an easier feat for the employees. Easy to use tools and incentives are bound to encourage your employees to take an effort in comparison shopping before seeking treatment. Some companies offer a portion of the company’s savings as a result of having a lower cost procedure.

It is a good idea to know the wide range of healthcare quality and costs in your city or neighborhood. Encourage your employees to use mobile and online comparison shopping tools to boost transparency and give you more savings in your healthcare spending.

11. Develop an Emergency Plan

The worst thing that employees can do is to wait until an emergency happens before looking into their healthcare options. This habit has a great impact on both employers and employees. Encourage your employees to develop an emergency plan for you to avoid significant financial stress related to healthcare in the future.

It can be a simple process for them to figure out their local emergency room or urgent care facility. Employees should also choose their emergency primary care physician and if possible, include telemedicine care in these plans.

12. Educate Your Employees

And finally, employee education is also an effective strategy that will help your organization have lower healthcare expenses. As employers, you have to educate them about their plans and options. It is a vital, but often overlooked phase of the employee benefits program. In recent years, more employees claim that they understand their benefits plan and it has helped organizations manage their healthcare costs better.

An organization can effectively maximize benefits plans by educating their employees about their benefits. Employees are empowered through education and they can utilize their options better. It gives employees a better understanding of the long-term value of their health plans.

Likewise, employees have better engagement on their benefits plan when they are well-educated about it. When employees receive benefits education, they develop a strong and positive connection to their quality. More so, educated employees place more value on their benefits plan as they develop a positive perception of their organization as a whole. When the benefits are communicated, employees are more likely to show higher levels of loyalty, engagement, and morale.


Americans spend incredulous amounts of money on health care costs, and this amount increases every year. This trend is not going to recede, thus it is up to your organization to take action on reducing healthcare costs. If you want your company to save on such spending, and find better if not the best care available, you have to take a proactive approach.

These strategies mentioned can be incorporated into your employee benefits plan and effectively reduce healthcare costs. Additionally, being proactive in educating employees about these benefits can help develop better employee engagement, lower health care costs, and maximize your health plan.

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