Dive Brief:
- Fed up with high and rising healthcare costs, some high-profile corporations are bypassing insurance companies and negotiating directly with healthcare providers for services, reports Reuters. Silicon Valley's Cisco Systems, for example, negotiated directly with the neighboring Stanford Health medical system. As part of the deal, Stanford physicians agree to track health indicators to prevent expensive emergency care and keep workers happy with their treatment, says Reuters. If they succeed, Stanford earns a bonus; if they fail, Stanford pays a penalty. Cisco says costs for employees in the Stanford program are 10% lower than for those outside the program, Reuters reported.
- Intel, Boeing and Walmart have negotiated services directly with providers, the report says, and Amazon, Berkshire Hathaway Inc., and JPMorgan Chase are considering doing the same. According to Reuters, employers subsidize healthcare for 170 million Americans, aided by insurers, at a cost of $738 billion in 2018. Healthcare costs reportedly have been rising by 5% each year.
- Direct negotiations with providers could be met with resistance from employees, who tend to like their own providers and specialists, says Reuters. So to increase enrollment in these direct plans, employers are offering incentives, like health savings plan contributions or lower premiums and co-pays.
Dive Insight:
Employers remain committed to providing workers with health coverage while lowering the cost of care. Some are thinking outside the box to do so, offering second-opinion services and improved access to telehealth services.
Employees may prefer their own healthcare providers, but significant reductions in out-of-pocket costs can be a powerful motivator. Reuters points out that such plans might not be suitable for all employers, but with costs only expected to rise, experts expect many to consider some new solutions.
“Employers are recognizing that traditional cost control techniques alone aren’t able to reduce costs to the point where they are no longer a drain on the bottom line,” National Business Group on Health president Brian Marcotte previously said in a statement. "As employers look ahead, we expect them to increasingly focus on value purchasing opportunities within the delivery system and improving the experience for health care consumers."
