Monday, June 17, 2013

Goings on with medical treatment and what these costs mean to medical benefit costs.

The healthcare industry, both on the delivery and financing side, is way behind others such as banking in the use of technology. Many have made statements like this over recent years so let’s take a look at what is going on today.

The June 2013 issue of the HealthLeaders magazine includes an article “Seeking the Strategic Sweet Spot” and brings out some steps providers are now or need to take to reform the way they operate. I want to share some points from the article on what this means for the way primary care will be provided:

● A team of people with varied talents working toward the same goal – management of populations

● Physicians working with high risk patients and funneling low-risk, low-acuty patients to physician assistants and nurse practitioners.

● A big move to telemedicine among younger patients.

● “About 80% of the office visits done right now by primary care can be done by midlevel providers and 80% of what the midlevels do can be done over the telephone”.

I found this last one of considerable interest. It represents one of the important steps for employers – to help employees understand the best way to deal with medical related situations.

Another factor, which is affecting providers, is the continuing trend of more and more consolidation among physicians and hospitals. A point was made on why this is happening:

● In narrow operating margin industries, which healthcare is destined to become, because of cost pressures “you need economies of scale and scope”.

We also find across the U.S. and here in Connecticut medical treatment costs, which some say are increasing at more than twice the rate of normal inflation. One part of this, which is having a very big impact, is the use of expensive medications.

What does all this mean for employee medical benefits? Increasing treatment costs result in higher plan premiums, which has a direct impact on an employer’s business and on the amount employees are asked to contribute as their share of plan costs. In addition, to increasing treatment costs medical benefit plan costs will face higher costs as federal health reform is implemented in the coming months.

Some steps employers are using to offset the ever increasing cost of the medical benefit plan:

● Working to help employees understand how lifestyle choices result in higher costs for them and the firm. They are also providing incentives for employees to work for better health.

● Encouraging, through employee contributions, the selection of cost effective health plans.

● Introducing a defined contribution approach as a step to control future costs.

Please contact if any questions on what these issues mean to individuals and employers here in Connecticut.

John C Parker, RHU, LTCP – (860) 451-9793

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