Even though employers are the largest purchasers of healthcare, besides the federal government, they rarely have enough influence in negotiating price. Because of this, a number of employers are seeking alternative ways to get better value for their healthcare spending. Continue reading to learn more.


While employers may be the largest purchasers of healthcare outside of the federal government, rarely does one organization have enough influence when negotiating with the powerful health plans and provider systems. As a result, employers — and ultimately the consumers for whom they purchase healthcare services — pay the price.

Instead of taking these lumps of coal sitting down, there are a growing number of employers on the cutting edge of healthcare purchasing seeking alternative ways in 2019 to get better value for their healthcare spending. They are looking for the diamonds in the rough.

In more than half of the healthcare markets in the U.S., providers have merged reducing competition and leaving employers and consumers with little choice for their care. Employers must stop insisting that health insurance products provide access to the broadest network of healthcare providers — if providers know they’ll be kept “in network” no matter how they behave, employers and payers further reduce their negotiating position. Employers also should band together to be sizable enough to call the shots, but this rarely happens.

While this lack of market power and influence is a major frustration for employers, it’s far from the only one. Educated employers also know that the healthcare system produces uneven quality and high prices have nothing to do with excellent care. The amount an employer pays for a service merely represents the relative negotiating strength of the health insurance carriers and providers.

As prices continue to drive healthcare cost growth, Americans are finding their healthcare unaffordable and are willing to trade choice for affordability. Many Americans no longer view having the ability to pick any doctor they choose as essential if it means increased premiums and cost-sharing that comes at the expense of other basic needs. These shifting attitudes represent an opportunity for employers seeking diamonds to pursue the following new healthcare benefits options. Here are some.

Narrow networks: Health insurance plans built around a narrower network that cuts out care providers who are outlandishly expensive or have a particularly poor record on quality. Alternatively, center a smaller network around a direct contract with an accountable care organization selected for its potential to deliver higher quality and value. More commercial health insurance carriers and lesser known third-party administrators are offering and supporting these options. Premiums and cost-sharing are typically lower for the consumer than with broader network plans.

Centers of excellence (CoE): Steer patients to designated high-quality providers with expertise in a given medical area who are willing to enter into an alternative payment arrangement or offer a more reasonable price in return for more patients. Make CoEs attractive through more generous coverage or make them mandatory if employees want an elective or non-emergent procedure (e.g., bariatric or spine surgery). Either way, employers reduce the risk that employees will receive subpar or low value care.

Alternative sites of care: Increase access to and use of alternative sites of care including onsite or near-site clinics and telehealth services. These enhance the convenience of primary or behavioral healthcare for employees and can help the employer better control referrals to overpriced hospitals or specialists.

So, move over mainstream. When it comes to the tactics employers use to purchase healthcare, alternative is likely to become less fringe. Narrow networks, CoEs or alternative sites of care may not solve all of the frustrations. But employers’ pursuit of these new models sends a strong signal that lumps of coal aren’t going to cut it. Employers are on the hunt for a shinier, more attractive set of solutions.

SOURCE: “Move over mainstream: Alternative health options a road to better value” (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/move-over-mainstream-alternative-health-options-a-road-to-better-value?brief=00000152-1443-d1cc-a5fa-7cfba3c60000