When it comes to the high cost of health care, some experts are saying it's time to stop doing business as usual.
The common approach of employers negotiating health care costs each year with the big insurance companies isn’t working anymore. It’s contributing to higher costs for employers and employees.
That’s the belief of a consulting firm that gave a presentation this morning to the CFO Forum, a monthly program offered by Manufacturers Resource Center, that explored how group health care purchasing alliances can save employers money in their health care budget.
John Sbrocco, a health care strategist with Questige of Madison, N.J., spoke at the Days Inn in Hanover Township, Lehigh County, about ways employers can save money on health care costs by joining a group insurance pool.
Some employers in attendance spoke about the challenges they face in providing health care for employees, including everything from the uncertainty, high costs and unwillingness of owners to change the way they access health care.
Sbrocco said the key is to apply risk management strategies to controlling and reducing health care costs. An avid poker player, Sbrocco talked about how he became interested in using those skills and applying them to the work of helping employers reduce health care costs.
“The true opponent I became infatuated with beating was the insurance companies,” Sbrocco said.
SPREADING THE RISK
Sbrocco talked about creating a different way of providing health insurance for employees by avoiding insurance companies altogether and using a group buying power method to create more predictable and stable pricing.
Through this approach, the risk spreads over the pool of employers in the group.
Though people may not be comfortable leaving insurance companies, Sbrocco said, eventually, people are going to want to buy health care online, shopping for the best physician or surgeon rather than being forced to stay in network.
He also talked about the potential of an employer viewing its health care costs online.
BREAKING THE MOLD
Gary Bender, co-founder at CFO Plus Advisors and CEO of the CFO Solution, and an organizer of the event, spoke about how when employers buy health care from an insurance company, they don’t know how the cost is broken down. Employers should know what’s driving their claims; when this information is transparent, savings come into play.
“What we are talking about today is; how do you break the mold?” Bender said.
Questige, which is a consulting firm that’s independent of the insurance industry, applies risk management strategies to reveal the fees, costs, commissions and supplemental arrangements those in the insurance industry benefit from.
“The size and frequency of claims, that’s what’s driving costs,” Sbrocco said.
Employers should know the quality of their health care providers and what they are paying for their procedures, Sbrocco said.
He said he can help employers do this by exploring different insurance pool program levels and using strategies such as paying cash for health care costs, rather than paying insurance companies, he added.
Large companies such as Toyota and Caterpillar often do this for outpatient surgery, Bender said. As an example, they could pay cash for the procedure; the employee would travel via company car to the hospital, stay in a hotel and have a two-day window to complete the surgery. The employee doesn’t get a bill and the hospital waives the deductible.
Gary Becker, CEO of ScriptSourcing, a company based in Baltimore and a partner with Sbrocco’s firm, spoke about how he is making options available for employers, such as pharmacy tourism programs, which allow companies to send employees to tourist destinations to obtain pharmaceutical prescriptions.
Employers can reduce their prescription spend by at least 50 percent, Becker said.
Overall, there are untapped strategies employers can explore to cut out the amount they spend in health care each year, the speakers said.