Why Value-Based Care Is the Best Model for Employer Benefit Programs

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By Rahul Sharma and Lynn Carroll

For employers, providing health insurance can be an administrative headache, a source of friction with employees and a drag on corporate revenue and competitiveness. Tycoon Warren Buffet called U.S. healthcare costs “the tapeworm of American economic competitiveness.”

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As the costs of insurance rise steadily, companies are looking for ways to get the most value for their investment, both for themselves and their employees.   

Whether they pay insurers or self-fund their own claims, employers are under pressure to make their programs pay off in terms of employee productivity, morale, recruitment, and retention.

VBC and employee engagement

Employers should think of their benefits programs as strategic assets because well-designed ones help attract and retain quality employees. To ensure their success, however, the benefits program must be designed to incentivize employee participation. If benefits aren’t tailored in such a way that makes employees eager and able to enroll, the program will underperform.  

In the past few years, more employers have been boosting awareness among employees about the different types of wellness and life management resources available to them. This movement is long overdue and reflects the growing belief among employers that value-based care (VBC), in the context of whole-person care, improves the overall health of employees while lowering organizational costs. Value-based programs link provider reimbursement to patient outcomes and the quality and efficiency of care delivered.

VBC includes a focused effort to reduce the adverse impact of social determinants of health (SDoH) on outcomes and healthcare costs. Sometimes called “drivers of health,” these include access to quality healthcare, as well as non-medical factors such as stable employment and housing, transportation access, education level and quality, access to healthy foods, and social connections and support.

Centering benefits around VBC is a sound business decision because employers need better accountability for their healthcare dollars (due in part to the price-sensitive nature of the employer benefit environment), and accountability is built into VBC contracts. Likewise, the benefits package should improve patient and primary care collaboration, inclusive of community and home-based services.

Poor return on investment

There needs to be a greater emphasis on continued, algorithmic exploration of the distinctions between low- and high-value care. A significant amount of care delivered today is unnecessary, such as duplicative services and tests. 

That’s one reason why the U.S. does not receive enough value for what it spends on healthcare. In a 2021 report, the Commonwealth Fund ranked the U.S. last of 11 high-income countries in access to care, administrative efficiency, equity, and healthcare outcomes, despite “spending far more of its gross domestic product on healthcare.”

The report cites four features that distinguish top-performing countries from the U.S.: 1) they offer universal coverage and make care affordable; 2) they invest in primary care systems to ensure high-value healthcare services are available in all communities and to all people; 3) they reduce administrative burdens that divert resources from health improvement efforts; and 4) they invest in social services. 

These are lessons for employers designing benefits programs. For example, many employees might be unable to use community services offered in a benefits program unless the services are free or low-cost. Designing benefits programs to meet the needs of low-income employees encourages their participation.

The value of intervention

A crucial tenet of VBC is preventive care through routine screening and early detection (which increasingly will be reported via wearable devices). These services are particularly critical for preventing and treating chronic diseases, which account for 90% of healthcare spending in the U.S. Six in 10 Americans live with at least one chronic condition, while four in 10 have more than one, according to data from the Centers for Disease Control and Prevention. 

It is far more cost-effective to pay for primary care, nutritional counseling, and smoking-cessation classes than to cover claims for insulin and cancer surgery. Early intervention and detection initiatives that keep employees out of the hospital is money well spent.

Other considerations when designing a benefits package are transportation and scheduling challenges that employees might face in accessing wellness and community resources. In addition, many employees might benefit from a program with care navigators who can help them find specific resources, such as mental health services.  

Administering VBC relationships

When dealing with multiple relationships across a value-based network, employers and other network members require a value-based administration (VBA) platform. A cloud-based VBA platform can facilitate whole-person care through the simultaneous orchestration of medical and nonmedical care delivery and services that contribute to better patient outcomes and lower healthcare costs.

As long as employers continue to foot a significant amount of the healthcare bill, they must optimize their investments by structuring benefits programs that align with the needs of employees and produce better health outcomes while reducing costs. They also must develop a VBC network that includes community organizations offering wellness and other support services. 

This network can coordinate population-centric initiatives that can be applied to individual patients and ensure data sharing and compensation for services rendered. The result will be a healthier, more stable, and more productive workforce. VBA is key to this goal. 

More accountability for the type and volume of services would help with costs and improve patient health and well-being. Employers can do their part by making VBC the foundation of their employee benefits programs.

Lynn Carroll is the chief operations officer and Rahul Sharma, chief executive officer, of HSBlox, which assists healthcare stakeholders at the intersection of value-based care and precision health with a secure, information-rich approach to event-based, patient-centric digital healthcare processes – empowering whole health in traditional care settings, the home and in the community.  

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