Re-exerting Control Over Supply Side of Health Care to Control Costs

Health care expenses typically are one of the top four expenses for the manufacturing, construction and transportation industries. This article is intended to help you gain control over those costs, make more informed decisions and avoid wasted spending.

We’ll start with a few statistics from a recent National Association of Manufacturers’ survey.* According to the results:


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Additionally, the average annual health care cost for manufacturers last year was $20,000, whereas that figure for all types of employers nationally was $15,000. So manufacturers carry about $5,000 in additional health care expenses than the average mid-sized employer. 

THE SUPPLY SLIDE OF HEALTH CARE

When we look at how skilled labor has tried to understand this discrepancy, it's very similar to looking at the supply side of manufacturing, for example, raw materials. When we look at health care, we're looking at the same granularity of . . . What are those raw materials? Where is the supply chain of health care coming from? In this way, you can be just as focused and specific about how you're purchasing health care as any other business expense., especially considering the fact that health care is usually a top four expense for any company, particularly in manufacturing. 

RE-EXERTING CONTROL OVER THE SUPPLY SIDE OF HEALTH CARE

When we look at the supply side of health care, the main thing is for employers to understand the purchasing elements – all of the different components inside of the supply chain – to create improvements in their overall population health and cost outcomes. 

Taking a look at some case studies, you’ll see several commonalities regarding the elements an employer can include in (or exclude from) their supply chain to create efficiencies. These are the different potential concepts an employer in skilled labor can look at as additive processes to the health care ecosystem, such as:
  • carving out specialty pharmacy practices
  • adding in a client advocacy program
  • steering toward quality rather than locality for cost efficiency
  • health care transparency
  • second opinion program to avoid unnecessary spending relative to an inaccurate diagnosis

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As an employer, when you’re considering all of these options that can be created inside of a health care ecosystem to regain cost control, generally, you must be more adaptive than simply buying straight from a large insurance carrier (not to say that those networks are ineffective for all employers). However, if you establish your buying objectives and identify the areas where you’re trying to create efficiencies, versus handling the paradigm of disruption, you can determine the components that are most compatible and will be most beneficial. 

The bottom line is that gaining control over the supply side of health care is really about understanding what's driving the costs and where there's opportunities for improvements on the granular level, and then ultimately tying that back to the larger piece of the pie, which is the overall health care expense.

*Source: NAM Manufacturers’ Outlook Survey Q4/2020

Re-exerting Control Over Supply Side of Health Care to Control Costshttps://www.cbiz.com/Portals/0/Images/3-Accounting-Changes-CBIZ.jpg?ver=2021-05-11-111003-437Health care expenses typically are one of the top four expenses for the manufacturing, construction and transportation industries. This article is intended to help you gain control over those costs, make more informed decisions and avoid wasted spending.2021-05-14T16:00:00-05:00Health care expenses typically are one of the top fourexpenses for the manufacturing, construction and transportation industries. Thisarticle is intended to help you gain control over those costs, make moreinformed decisions and avoid wasted spending.Employee ManagementEmployee BenefitsYes