By Steve Dorfman
When times are lean, you have to find fat to cut — and sometimes it just can’t wait.
Precisely where you decide to cut will depend to some degree on your long-term strategy, and your broader vision for your company. No two firms are alike; you know better than anyone what yours can bear. But it’s no secret that healthcare is a perennial target for miserly executives.
There’s a catch, of course. Healthcare is an intensely personal benefit. It’s staggeringly complicated, too. Slash healthcare costs the wrong way and you could find yourself at the sharp end of an employee revolt. Even modest changes can adversely impact morale. It’s all about how you cut — and how well you communicate the new rules along the way.
These seven strategies for cutting healthcare costs work more often than not. Most are complementary, but you’ll want to evaluate your company’s needs — and its workforce’s — before making any front-facing moves that your employees are apt to notice in their paychecks or provider experience.
1. Get As Many Quotes As You Can
Your employees probably won’t notice this one — at least, not until their premiums change (hopefully for the better). You can sum it up in two simple words: “shop around.”
It’s virtually certain that numerous insurers offer group health insurance plans in your area. You will find a company willing to underwrite your team. The more quotes you source, the more accurately you’ll be able to budget for your employees’ health insurance — and the better equipped you’ll be to negotiate with insurers, should it come to that.
2. Increase Your Purchasing Power (Without Staffing Up)
Larger businesses benefit from innate purchasing power. Because they’re able to bring so many employees to the table, insurers are usually willing to cut them a break.
Smaller employers can’t rely on their heft alone. Good thing they’re not alone. By combining their purchasing power with other small businesses, they benefit from the same economies of scale as larger businesses without all the downsides of staffing up. (Self-employed folks — companies of one — take advantage of this arrangement all the time.)
There’s no guarantee you’ll be able to find a group health insurance plan that meets your needs and budget. But there’s no harm in trying.
3. Hire Healthy
Take a detour to the seamy side of human resources and ogle the many permissible forms of employment discrimination.
“The law varies from state to state, and it’s absolutely crucial that you stay on the right side of it.” — Steve Dorfman
But there’s a good chance that it’s legal not to hire smokers (for example) in your jurisdiction. Hiring healthy candidates without engaging in illegal forms of employment discrimination (or terminating employees for no cause other than perceived unhealthiness) is an effective means of cutting healthcare costs.
4. Incentivize Employees to Make Healthy Decisions
Embed healthfulness in your company DNA with meaningful incentives for healthy decision-making. That might mean a “Biggest Loser” style competition, discounted gym memberships, or bonus compensation (whether financial or in-kind) for attendance at on-campus yoga classes.
5. Institute a Companywide Wellness Program
If you can make the numbers work — and you probably can, depending on how many employees you have to insure — consider going one step further and instituting an employee wellness plan. Just make sure your plan is actually producing the desired outcomes; if you’re throwing good money after bad, there’s no reason to continue.
6. Consider an HMO
Though they’re not without their drawbacks, HMOs can reduce per-patient costs for group buyers of any size. This is a change you’ll want to communicate to your employees, though, as HMOs tend to have narrower networks with fewer providers and more restrictive referral policies.
7. Look into Health Savings Accounts
Health savings accounts (HSAs) can’t completely replace traditional health insurance plans, but they can make up for higher deductibles and less generous coverages. Again, you’ll want to be transparent with your employees about what HSAs are and aren’t, what benefits they can realistically expect from their accounts, and what tradeoffs — if any — you’ll ask them to make on the insurance front.
Find a Health Insurance Partner
There’s no magic bullet to cut corporate healthcare costs. If there were, we’d have found it by now, and you’d have no need to read articles like this one when any number of other matters demand your attention.
That’s why it’s so important to have the right health insurance partner in your corner. You need someone you can trust to simplify the numbingly complicated range of health insurance choices at your disposal and provide honest advice about what your company actually needs to do right by its employees.
Steve Dorfman is the founder and current CEO of two Florida-based firms: Simple Health and Simple Insurance Leads.