Employees who are ‘true consumers of health care’ bring down costs

May 8, 2015
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As health care costs to employers and consumers continue to rise, the echo chambers of despair offer no solution.

Lacks Enterprises, however, has used ingenuity and planning to create a whole other model unique to West Michigan that bears attention. The result is cost savings achieved by thoughtful planning versus reactionary business decisions to absorb the costs, increase pricing or make drastic changes in benefits.

One year ago the Bureau of Economic Analysis projected health care as a portion of the GDP would rise from 17 percent to 19 percent, but current analysis shows a moderating trend, in part attributed to higher co-pays in insurance plans. Bloomberg Business last fall reported a decline in health care spending nationally, and the BEA, by year end, made downward revisions.

Lacks Enterprises’ Jim Green, executive director of human resources, noted higher co-pays were only a part of the company’s work to help its 2,600 employees become “true consumers of health care” using health savings accounts with high deductible plans.

Green didn’t start there, however: In 2008, the company began employee wellness plans to set the stage. Last year Lacks Enterprises opened two employer-sponsored clinics for its employees and their dependents. The report in this week’s Business Journal by reporter Rachel Weick details the program’s structure, which resulted in cost savings of 35 percent even after deducting the setup costs of running the clinics, and employee costs were flat.

“If you look at the spending we had for health care, it was our fourth-largest expense as a company. Obviously, from a business perspective, it was a major expense — and it was growing at 6 to 8 percent a year. At some point it was going to become unaffordable or take away the benefit dollars we had and erode the ability to give raises, bonuses, profit sharing and 401(k) matching. We knew we needed to come up with a solution,” Green said.

Employers all are working to find solutions to the same scenario, and Lacks has spent five years educating its employees about health care and health choices. The company also used the expertise of CareATC to assist in managing individual health, resulting in an improved risk pool of the employee population.

In its Health Affairs journal, nonprofit Project Hope notes research showing the increasing use of higher deductibles in private insurance plans have cut down on consumer health spending. While not all companies have the ability to create wellness programs and open clinics, the reduced costs at Lacks are founded on creating “true consumers of health care.”

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