Business of Well-being

The Anatomy of an Effective Health Benefits Package: How Adopting a Value-Based Care Strategy Can Help Employers

Ari Hoffman
Chief Clinical Officer and VP Population Health
Collective Health
employee benefits

Everyone deserves the highest value from their healthcare. Patients, providers and payers are aligned on the goal of better health at lower costs, but fragmentation, reimbursement patterns and prices that are both astronomically high and dizzyingly variable all conspire to pit these players against each other. However, I believe that a value-based care strategy – a strategy in which healthcare providers are paid based on patient health outcomes – can help employers design comprehensive health benefit offerings that better suit the needs of their members.

By tailoring healthcare benefits to their unique workforce, employers can provide offerings that better serve their people. To create an enduring strategy that works, employers must “speak the same language” on quality and cost as their people, prioritize personalized care and make impactful long-term investments in the health of their populations.

I’ve seen these considerations help employers turn run-of-the-mill benefits into game-changers and powerful retention tools. I am passionate about finding measures to help improve the accessibility of high- value healthcare, which is something I’ve learned more about not only through my clinical work at UCSF, but also now through my work at Collective Health, where we help self-funded employers foster the health and well-being of their people at scale. In my experience, employers mean well, but can sometimes overlook key components of a complete value-based care strategy.

Let’s dive deeper into my top three considerations for how employers can create a healthcare benefits suite that provides lasting value and a tangible impact to their people.

First, employers should align their definition of value with that of their people

Employers and members may define “value” differently, which presents a unique opportunity for employers to align their definition of healthcare value with that of their plan members. This helps center the value conversation around the consumer – which, in a world where healthcare has become increasingly patient-centric and value-oriented, is essential.

In simple terms, value can be thought of as quality divided by cost — in other words, what you get for what you pay. To employers, quality care may mean happy, healthy and productive employees coupled with high retention rates. As for the denominator, I would encourage a broad view of costs that includes not only the actual price of care, but indirect costs such as time spent on plan administration, opportunity costs associated with that time, and stress of managing the complexity of healthcare on their benefits team. There is a great opportunity for employers to use their internal data on employee satisfaction, retention, absenteeism and productivity to help all of us better understand what benefit package elements truly drive value in this space.

To members, quality typically translates to functional outcomes that matter most to people – whether that’s having the time and ability to play with their kids or controlling chronic pain. When members think about costs, they naturally focus on their personal expenses. This includes their monthly share of the premium and out-of-pocket costs like deductibles, copayments, and coinsurance.

It is important to remember that individual and family cost-sharing may sound like small numbers compared to plan spend, but have significant impacts on people, especially as families feel the weight of inflation. And the employed population is not immune to these financial burdens. In a Collective Health survey, we found that 30% of survey respondents across our book of business reported delaying or skipping necessary care due to costs.

As if the affordability crisis in American healthcare isn’t bad enough, there are so many other costs facing members today, including the frustration of navigating a fragmented system, the stress of uncertainty due to delays and impediments to accessing care, and opportunity costs of time spent away from loved ones.

My advice to employers is to roll up their sleeves and do the work to understand what quality means to their people, and what costs — including those less tangible indirect costs — are most significant to them. They can consider the impacts of raising deductibles, which save plan spend but raise a financial barrier to accessing care. Studies have found that people on high deductible plans are less likely to access even the free preventive services (including vaccines for children), even when the deductible doesn’t apply. The cost of healthcare and their budget will undoubtedly require hard decisions to be made, but this thoughtful consideration will help them design a program with potential for great impact for members.

Prioritize personalized and effective care

I believe that what’s good for members is also good for employers. If employers are looking for ways to keep their members happy, they would be wise to focus on achieving greater quality and lower costs as defined by the member. To accomplish this, employers should prioritize inclusive care and personalized experiences for all members – which is easier said than done.

We, like many others, use data and predictive analytics to drive targeted outreach to members and appropriately match available services to the needs of individuals. But even a perfect algorithm will have no impact if it isn’t delivered effectively by a trusted source. Given my background studying electronic health record tools to change provider behavior, I lean on the “five rights of clinical decision support” as a helpful framework for effecting positive change with digital or human outreach. We need to deliver the right information, to the right person, in the right format, through the right channel, at the right time. Get these wrong, and people are likely to ignore even the best and most helpful information.

Not all elements of an effective benefits package are measured equally. There are some benefits that improve employee health or satisfaction but may not have a financial return on investment that’s easily measured or realized in a relatively short time window, like a plan year. For example, smoking cessation – arguably one of the single best interventions for an active smoker’s health – may take a decade or more to produce a hard ROI for a commercial plan sponsor. Meanwhile, other parts of a benefits package will focus more heavily on the denominator of the value equation, such as member or plan costs, or reducing harm. It helps to define what success looks like for their benefits package and measure effectiveness against those goals.

When personalizing care, remember that each member has different life experiences and needs. There are prevailing disparities in health and healthcare today because of privileges and disadvantages woven into the fabric of our systems and policies. The last thing employers want to do is exacerbate disparities through the creation of value that accrues preferentially to the advantaged. Inequities are not only morally wrong but can be more expensive for a plan through

unnecessary use of the emergency department and other downstream costs to pay for preventable sickness. To combat this, employers can incorporate inclusive care strategies to address the unique needs and experiences of their people. This is why Collective Health built our Care Navigation program with a focus on social determinants of health.

Invest for the long term

I’ve learned that making long-term investments in employer-provided healthcare offerings is truly the key to better downstream outcomes for their plan members.

Proactively investing in population health can mean spending more money upfront to either improve quality or reduce costs for members. This leads to a future win-win: greater value and lower costs for the individual means happy and healthy employees for employers.

These upfront investments can also lead to future cost savings from better downstream outcomes, since healthier people who have adequate help navigating the system are less likely to incur higher costs down the road. Recent studies reveal that spending more on advanced primary care that members trust and use led to lower total costs of care due to lower spending on specialty visits, emergency room visits and hospitalizations. I understand that the macroeconomic environment means that we all want to see the value of the programs and services we pay for – and we should. Just remember that when it comes to healthcare, the best clinical value may take time to show up as plan savings.

In short, my advice is to invest the time and money now into designing a plan structure that will serve their people in a meaningful way.

Create alignment for greater value

Helping people get the maximum value from their healthcare is a mission I believe in, and I think it’s entirely within our power to achieve.

My belief is that self-funded employers — employers that assume direct financial responsibility for the costs of their employees’ healthcare claims — are in a good position to create greater value for their members due to both purchasing power and the flexibility in creating their own plan design. I would encourage HR and benefits leaders to lead the charge on pursuing value-based care strategies and help shift the paradigm from the many disincentives in the current system toward paying for value with the member in mind.

Unearthing and adopting a value-based approach that works for an organization can take some time and effort, but it is time and effort well-spent. Aligning with members on a definition of value, providing personalized care and making long-term investments are the first steps that every company can take on the path toward delivering healthcare benefits that make a real difference to their members – and in turn, keep their members engaged, happy and healthy.

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