Can Big Companies Put a Lid on Health Care Costs?
Health Care

Can Big Companies Put a Lid on Health Care Costs?


Reuters’ Caroline Humer reports on the lengths some U.S. companies are now going to in an effort to get their health care costs under control by more closely monitoring and managing employees’ health through direct partnerships with health care providers. “The movement is small, just a few very large U.S. corporations that have signed up tens of thousands of workers so far,” Humer writes. The challenges involved are significant, but the savings can be, too.

How it works: Cisco Systems, for example, “last year began offering its employees a plan it negotiated directly with nearby Stanford Health medical system.” Stanford operates a spa-like clinic on Cisco’s San Jose, California campus. “Under the plan, physicians are supposed to keep costs down by closely tracking about a dozen health indicators to prevent expensive emergencies, and keep Cisco workers happy with their care. If they meet these goals, Stanford gets a bonus. If they fail, Stanford pays Cisco a penalty.”

How much it saves: Cisco told Reuters that fewer than 1,000 employees have enrolled for 2018, but the costs for those on the Stanford plan are 10 percent lower than the regular health insurance most of the company’s workers still use. Microchip giant Intel has about 38,000 employees and dependents enrolled in a similar program called Connected Care; it says it saves 17 percent on health care costs for those enrollees — and that employee health has been improved.

Why it matters: “Corporations help pay for healthcare for more than 170 million Americans, in most cases working with an insurer to handle everything from the price of treatments to medical claims,” Humer says. “These employers will spend an estimated $738 billion on health benefits in 2018, a figure that has been rising about 5 percent annually in recent years, according to federal data.”

A big but: “Experts warn Cisco’s approach is not suitable for most employers,” Humer notes. “For starters, companies need thousands of employees in one place, usually a city, said David Muhlestein, Chief Research Officer at healthcare consultancy Leavitt Partners in Washington D.C. Then their healthcare partner needs to be committed to improving patient health, rather than just offering a discount to win a big client.”

Read the full Reuters story.