Healthcare cost management is one of the biggest concerns facing corporate America. For years, employers have struggled with providing necessary and valued benefits to their employees, while also protecting their bottom line. When it comes to self-funding, the opportunity for cost savings — even for small and mid-size companies — is clear. Once the decision to self-fund has been made, however, the question arises — to bundle or unbundle vendor services?
It’s a myth that bundling all services through one integrated vendor saves money. What employers may save on administration, they lose in competitive rates, flexibility and transparency.
Health plan benefits are not like buying the sports package on a new car. When everything is bundled together – high performance tires, sunroof, heated seats – you save money versus buying each a la carte. Instead, what happens when a client bundles healthcare – stop-loss, medical, Rx, dental, vision, wellness, and other voluntary benefits – they get some at a fair, or even low, market cost. But they also get some at a higher than market cost.
With bundling, your clients literally end up paying the price. The problem is compounded since they don’t know the breakout of the individual vendor fees because everything is lumped together. Unbundling invites competition – which is a good thing. Clients have transparency and can see exactly what they are getting and how much they are paying.
One size does not fit all. You never see two companies with the exact same medical profiles and scenarios. Depending on factors like demographics, geography, environment and heredity, the healthcare needs profile of an employee base can vary widely, even between companies in the same industry.
Unbundling allows you to shop around for vendors that are the best fit for each client based on factors such as location, company size and overall employee profile. You can evaluate among three to four pharmaceutical plan vendors, among three to four dental plan vendors, etc. Not every vendor is going to be great across every type of plan. When clients unbundle, you have the ability to choose the best vendors with the best services and the best rates.
Today’s employees are more informed and want to be informed. Providing companies with the ability to respond to the needs of their employee base and to exhibit flexibility in the selection of healthcare services not only exhibits good financial sense for containing healthcare costs, it also helps them to attract and retain top talent. Employers that can efficiently tailor programs and provide healthcare services that are important and needed by their employees hold a significant business advantage. Similarly, advisers, brokers and consultants that can assist their clients with these additional services will hold a significant advantage in retaining and gaining new business.
When it comes to separate cards for separate systems, the potential inconvenience fades in comparison once employees recognize they could have lower deductibles and receive more value for each healthcare dollar spent. Companies that provide transparency about the cost savings for employer and employees alike have faster and stronger acceptance of multivendor/multicard benefit plans.
Now, more than ever, self-funded healthcare benefit plans makes financial as well as sustainable sense. Traditionally, self-funding meant employers choosing between being handcuffed to a single integrated vendor or wrestling with several administrative processes for each service. Using the data and analytics available with a healthcare benefits plan administration platform, however, brokers can now fine-tune unbundled plans to provide clients of all sizes the exact services they need without overpaying. Today, unbundling gives benefit professionals the ability to get more out of every dollar invested in healthcare spending.