Want to Boost Your Bottom Line AND Help Your Employees? Transform Your Healthcare Plan

In business, there are only so many levers you can pull to improve performance and influence culture. Remaking your healthcare plan does both.

I helped lead this double win in a Fortune 500 public company. And it’s not a one-off. As a member of a health care alliance, I’ve seen the win-wins across a broad range of employers. For the 80 alliance members, the combined health care spend is a whopping $40 billion. By transforming their health care plans, these same employers are netting nearly $2 billion in combined annual savings. And at the same time, improving the health care their employees and their families receive.

How can you do that?

It All Comes Down to Strategy 

In my first article, I created the case for changing your health care plan. The second piece shared the self-insured health care supply chain, and the questions you should ask when you start to engage in your plan. This third and final article details the strategies to execute the transformation. These six strategies will set you up for success:

1. Put the Team Together
   Tackling health care is a team sport. If you already have a great benefits team, use them.  Ditto your HR leaders to represent the needs of employees and their families. But that’s only the start. Based on the cost and P&L impact, tap your purchasing and finance teams. Engage IT to help navigate the data, analytics and AI implications. Add Legal to help with contract matters. Create a shared vision for the team, then unleash them to deliver, with regular updates to senior leadership.

   Two other points: Health care strategy ebbs and flows with market dynamics. So make the process continuous, not episodic. Structure the cross-functional group as a process team, not a project team. And if your organization is unionized, include them. At my company, we formed a joint union-management team that served as a feedback source and a sounding board. Giving them a seat at the table to shape the health care transformation paid multiple dividends.

2. Focus on the Fundamentals
   One of the first steps for your team is to evaluate and understand your health care supply chain. As outlined in the last article, start with the organization as the payer and employees and their families as the recipients. Understand what’s in between, and the motivations of each supply chain player. And follow the money. Know where the cost is, how the money flows and where it goes.

   Leverage other strategic tools such as Porter’s Five Forces to determine the competitive landscape and a SWOT analysis to assess current capabilities and potential. A simple stakeholder analysis will help you to understand the deciders, influencers, and onlookers. You may be surprised with what you find. And how that can impact your bottom line.

3. Dive Into the Data
   Leaders can’t afford to let the volume and complexity of health care data intimidate them. Gain access to that data, and invest resources to do your own objective analysis. Expect pushback from supply chain partners — but push through. Every prescription, treatment, electronic health record, fee, member’s health care experience – it’s all there for the taking. And will fuel your transformation.

   Debate the question on whether to insource data analytics, outsource it, or some combination. But make it a priority. Analytics are gold, helping you answer the questions we posed in the second article. Like whether you’re getting value from all of your health care supply chain participants. And if your employees and their families are healthier as a result of your health care plan.
   And make this an ongoing process, creating a consistent cadence of data analytics reviews to inform and evolve your health care transformation.

4. Evaluate your Insurer / Carrier 
   Carriers (known by many as the insurers) determine your network, administer your claims, manage high-frequency and high-cost claims, and direct customer care. In many cases, they control the majority of the supply chain. AND where the money goes. Dive into your contract with your carrier, and initiate an RFP.  When you get competitive proposals, review what is the same. AND what is different. Even if you decide to stick with your current carrier, the process yields positive results.

   When you review your options, you have to decide what you want, how you want it done, and the value of what you are receiving. There are numerous nuances, and carriers’ priorities aren’t necessarily your organization’s priorities. Prepare for a tough negotiation. And know that it’s worth it.

5. Assess your Pharmaceutical Benefits Managers (PBMs)   
   PBMs are the interface between the prescription needs of employees and their families and the pharmaceutical manufacturers and distributors. Like a real estate agent that represents both buyer and seller, PBMs get paid upstream and downstream. By the pharma companies, and by employers who leverage their services. With pharma representing upwards of 30 percent of your total health care spend, digging into your PBM contract and issuing an RFP is well worth the effort.  And if you seek competitive PBM proposals, cast the net wide. Explore pass-through PBMs who only represent employers.

   One additional note: specialty drugs and treatments like GLP-1s can break the bank.  There are rebates in the supply chain that are provided to the PBMs and also to you. Your contract review will help shine a light on these and other cost-saving opportunities.

6. Engage your Employees
   Health care is emotional. Period. I’ve had countless conversations, letters, and feedback about how health care impacts peoples’ lives – for better and worse. And that translates to their views of your company culture. Is it caring, responsive, innovative? Or, sadly, the opposite?

   The solution: Engage employees in reshaping your health care strategy. Invite open, honest feedback and recommendations on where and how to improve. Get to the heart of what causes issues for them, track it back through your supply chain, and make tangible, sustained improvement.

   And when you act on your employees’ ideas, let them know. In my experience, that improves more than just perceptions of their health care plans. It creates more contented cultures.

Worth the Work  

Transforming self-ensured health care plans is not for the faint of heart. It’s a complex business, with lots of players. I hope this and my last two articles demystified the process, providing a roadmap for driving positive change. Rolling up your sleeves is well worth it. For your company. Your employees and their families. And your bottom line.

Written by Thomas Plath.