Retirement plan sponsors are the first, and most important, line of defense in providing employees with well-managed retirement savings plans.
The United States spends over 18% of Gross Domestic Product (GDP) a year on health care. The rate of growth in healthcare costs has become unsustainable and employers are now searching for innovative ways to reduce costs while providing competitive benefit programs for their employees. The major factors for the high cost of health care in the United States are:
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Prices: the cost of physician visits, pharmaceuticals, nursing care, hospitalizations, and diagnostic tests outpace all other developed countries
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Defensive Medicine: physicians feel pressured to order multiple tests with some estimates of up to $650 billion attributed to defensive medicine
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Aging of the population: the population is aging, with some 10,000 Americans turning 65 every day. By 2029 18% of the population will be at least 65 years of age
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Lack of Consumer Engagement: the consumer is removed from the equation and rarely is aware of the true cost of health care services. Costs of care can vary widely, but information on costs is not easily obtainable
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Fee for Service Reimbursement Models: health care providers are paid on a fee for service basis, not on efficiency or outcomes. This can create an incentive to over-utilize services
Value-based care—what is it?
Value-based care is a payment model that ties reimbursements to health care providers to the quality of care provided and rewards them for both efficiency and effectiveness. Health care providers are incentivized to use evidence-based medicine, engage patients and most importantly, keep their patients healthy. Value-based care can be delivered in various forms with accountable care organizations and patient-centered medical homes being the most common among employers:
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Accountable Care Organization (ACO): groups of doctors, hospitals, and other health care providers who come together to deliver coordinated care to their patients. The network of providers shares in the savings if they deliver reduced health care costs and improve health outcomes. Health care providers that choose to participate in an ACO also assume some risk for shared losses
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Patient-Centered Medical Home (PCMH): an innovative model of primary care delivery designed to improve access and the coordination of care. The PCMH is based on an ongoing relationship between a patient, doctor and the patient’s care team.
Of a value-based health care program is a great way to differentiate yourself as an employer to attract the best talent. Patients participating in value-based networks tend to have higher satisfaction and more positive outcomes.
SWBC’s Employee Benefits Consulting Group can provide employers with value-based options and advise you on all aspects of your employee benefits program.
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