Imagine getting a credit card from your company and never seeing the bill. Now further imagine that your company allows you to use this credit card at a restaurant whose menu doesn’t contain any prices. Wouldn’t you just eat whatever you want? Wouldn’t you order the filet mignon and the finest bottle of wine that the waiter recommends without a concern in the world? This scenario sounds strange but it happens every day in the world of healthcare. Companies provide health insurance to employees with little guidance on how to use it and no incentive for employees to shop for healthcare and lower healthcare costs.
According to the Health Care Cost Institute’s 2016 report “Spending on Shoppable Services in Health Care” 43% of the $524.2 billion spent on healthcare by individuals with employer-sponsored insurance (ESI) in 2011 was spent on shoppable services. For a healthcare service to be considered to be “shoppable,” it has to be a common, standard healthcare service that can be priced and researched before the service is performed; there must be competition for the service within the market the user is in and access to data about quality and prices must be available. These shoppable expenses are the secret to lower healthcare costs.
To really understand the price variations involved, let’s take a look at 4 different procedures and see the potential in price ranges we’ve seen from our employer clients.
Screening for colon cancer should begin after the age of 50 for most people. If a colonoscopy doesn’t find any benign tumor or cancer and there is no family history of issues, tests should then occur every ten years. If any benign tumor is removed, the exam should be repeated every five to ten years, sometimes even more frequently. We’ve seen prices for colonoscopy vary from only $550 to $2,200 (4X) in a given market, for a potential savings of $1,600 per colonoscopy.
MRIs are a very common test that uses a magnetic field and radio waves to produce detailed pictures of the body’s organs and structures. We’ve seen prices of an MRI for the lower back in New York City range from only $450 to an exorbitant $4,500, an insane 10X difference in pricing – a potential savings of $4,050 for a single MRI.
Knee arthroscopy surgery is performed 2 million times worldwide each year to diagnose and treat problems in the knee joint. Prices vary from a little under $1,000 to over $6,000 (6X) for a potential savings of $5,000 for the surgery.
A mammogram is an x-ray procedure that allows doctors to look for changes in breast tissue and can often find or detect breast cancer early. It’s recommended for women over the age of 45 to have them performed every year or two. We’ve seen prices during National Breast Cancer Awareness Month for only $50 to prices of over $1,000 (20X price different) for a potential savings of $950.
If you have 1,000 employees and are self-funded, you could have over $4,300,000 of shoppable expenses every year. It becomes really easy to understand that encouraging employees to start shopping for prices before they consume healthcare can lower healthcare costs, but how do you get them to do it?
Over the last 10 years, most employers and insurers have added tools to their websites that estimate the costs of different procedures to allow employees to shop around. The feedback from employers has been that these tools rarely get used, no matter how good they are. When trying to encourage employees to use these tools, there are basically two strategies: the carrot or the stick.
Many employers have started to offer cash and other incentives, such as free diapers to pregnant employees, to encourage them to use existing tools and price shop for services to lower healthcare costs. Basically, a reward will be given if an employee chooses a less expensive alternative for care. Rewards have proven effective at changing behavior and can work on a percentage of the population.
Over the last few years, we’ve seen a shift to high-deductible (HDHP) or tiered health plans to force employees to pay more out of pocket. The expectation is that, since they have to pay out of pocket more, they will price shop more. Twenty-nine percent of covered workers are now enrolled in HDHPs, so companies believe they can change behavior with plan design. Early results, however, indicate it’s not as effective as the carrot approach.
Our goal is to make healthcare easy for employees and become an employee’s first stop for all their healthcare needs. Since we combine many features in our app – a benefits wallet, online doctors, helpful healthcare Concierges and a proactive artificial intelligence called JOY – we become a natural first destination for employees.
Our mission is to guide employees into making the best healthcare decisions both from a health and cost perspective. Rather than provide them with a do-it-yourself tool and make an employee perform research, we handle everything for them. Our healthcare Concierge team are experts in finding the highest quality services that also are most cost-effective for both the employer and employee. When providing any recommended service, we’ll work in a cost analysis and provide the best results to lower healthcare costs. We even use artificial intelligence and machine learning to help our staff sift through huge data sets when doing research.
We can work with any health plan including high-deductible and tiered plans and can even integrate employee rewards into our system. We make it extremely easy and seamless for employees to turn to us. This has led to our having the highest utilization rate in the industry and delivering quick ROI for our employers.