A record 47.4 million Americans voluntarily leaving their jobs last year created a grim reality for employers across the country and gave rise to a new term in the U.S. lexicon: “The Great Resignation.” As a result, employers have had to quickly come up with creative ways to attract and retain talent. The recently released February job numbers shows those tactics may be working, as the U.S. economy exceeded expectations by adding 678,000 jobs last month.
Since the COVID-19 pandemic began, many American businesses have had to completely re-envision their business model. Whether it’s managing equipment and technology around teleworking, implementing significant cost savings measures, or dealing with supply chain delays, business owners have been evolving to survive. But they have also had to turn their attention to keeping existing employees on staff or recruiting new talent to fill abandoned roles. Most recently, there has been a trend towards cutting internal costs in order to reinvest those savings back into their employees and new hires.
One business expense that remains a challenge is healthcare. With both premiums and prescription prices on the rise, the cost of employer-sponsored healthcare plans is unsustainable. Employers are forced to pass along these high healthcare costs onto employees in the form of higher premiums, copays and deductibles. And because PPO plans offered by major insurance providers severely lack transparency, employers are increasingly unsure of what they are actually paying for, while employees are debating whether the healthcare benefits that come with a job are really benefits at all.
Americans are aware that the healthcare system is broken but are still unknowingly paying widely different costs for the exact same healthcare service in the same city- even with the same PPO plan.
A typical CT scan in Los Angeles can vary by thousands of dollars from hospital to hospital. In fact, one hospital in the area charges $3,009 for a CT scan and another charges up to $6,762. How is this possible? Hospitals and major PPO insurance providers negotiate and establish rates. After those rates are established, insurance providers offer companies a discount off the chargemaster price for their employer-sponsored plan. The discounts often sound great – 40%, 50% – but when the starting price is arbitrary, is it really a deal?
One solution to non-transparent – aka “black-box” or “PPO”– insurance plans is known as referenced based pricing (RBP). Traditional PPO plans rely solely on provider pricing, which usually includes an inflated markup. RBP takes a more data-driven approach by using information like a benchmark Medicare or the actual cost reported by a facility is used to determine what a plan will pay for certain procedures. RBP isn’t a new solution, but it is an underutilized resource that can bring significant savings to self-funded businesses across the nation.
Most business owners are not aware of their options and feel resigned to a stagnant and costly healthcare system. If more business owners got creative with their healthcare choices, they could reinvest savings from an RBP solution into attracting and retaining talent.
Faced with the “Great Resignation”, some savvy companies have been using RBP in the place of traditional PPO plans as an avenue to pass along cost savings to employees as perks in order to recruit new talent and retain current employees. Creative business owners have used money saved in healthcare plans to offer additional benefits to staff, including free ride sharing, daycare assistance, tuition forgiveness, car leases, and bonus premium months with no co-pays.
During a time when a record number of workers have quit their jobs while US employers have had more positions to fill than ever before, it’s time for business owners to think outside the box on how to attract and keep employees. If we have learned anything from this pandemic, it’s that Americans are resilient, so it’s a good time for employers to consider how to make their healthcare plans resilient – and truly beneficial – as well.