Reasons Employers Monitor Healthcare Spending

🔍 A lightbulb moment that's transforming C-suites across America: Employers discovering that optimizing their health benefits strategy delivered the same bottom-line impact as a 30% increase in top-line revenue. In a slow-growth industry, that's game-changing. In inflationary times, it can save jobs and the bottom-line. Here's the wake-up call from CFO Magazine: Most companies spend more on healthcare than their core materials (think Starbucks → healthcare > coffee beans). Yet they manage other major expenses down to 0.01% while accepting 5-20% annual healthcare cost increases. The shift that's creating competitive advantage? - Treating healthcare as a strategic business unit, not an HR expense - Hiring healthcare administrators with financial + supply chain expertise - Demanding transparency in pricing and outcomes - Investing in prevention and primary care The results? Companies have achieved: • 40-55% lower per-capita health costs across a wide array of industries & size of orgs • Improved workforce performance • Enhanced recruitment/retention • Stronger bottom line The best part? These advantages compound over time, widening the gap between forward-thinking companies and those stuck in the status quo. What's your experience? Has your organization treated healthcare spending as a strategic opportunity or a necessary evil? #HealthcareSolutions #CFOStrategy #BusinessTransformation Jeffrey Hogan Chris Deacon Patrick Moore

Your company will spend more on your health next year - but not out of kindness. A new global survey shows 67% of employers are increasing investment in preventive healthcare. Why? Because medical inflation is exploding, and companies are paying for it. The insurance premiums they pay for employees can jump by 10–20% per year. And the more employees claim insurance, the higher the cost goes. So now, companies are realising that prevention is cheaper than treatment. This means more wellness programmes (yoga, meditation), workplace environment changes (air purifiers, walking meetings), early screenings, and mental healthcare. A meta-analysis by Harvard researchers also found that : - Every $1 spent on preventive wellness saved $3.27 in medical costs - And also saved $2.73 in absenteeism and productivity loss So the message is clear: investing in prevention saves companies money, AND keeps employees fit for better work output. While companies may do this for economic reasons, I do think this is a win-win situation. - It helps you feel better, live better, be healthier - Mental health support is becoming a core part of plans - In India, cancer and heart disease are top priorities So overall, your risk of disease will decrease, and longevity will improve. It's a win-win situation. Is your company offering preventive healthcare yet? #healthandwellness #workplacehealth #lifestyle

You’ve got fertility benefits, mental health apps, gym subsidies… but are they making a difference? With healthcare costs rising faster than they have in 20 years, HR teams are under serious pressure. Not just to cut costs but to make every dollar count. What’s changing: • Employers are rethinking their providers • Sending staff to “centres of excellence” for better, cheaper care • Reviewing all those niche add-ons (mental health apps, fertility perks, etc.) to see if they really deliver • Using AI and data tools to track what’s being used and what’s not It’s no longer about offering more. It’s about offering what matters and proving it adds value. Smart HR isn’t just about empathy. It’s also about efficiency. https://lnkd.in/gTiGVFUW #DrJaclynLee #HRstrategy #BenefitsReimagined #HealthcareCosts #WorkplaceWellbeing #HRLeadership #PeopleAndPerformance

Complex and high-cost medical cases are increasingly driving cost trend in healthcare. Addressing areas of health spending growth is a top strategic priority for Morgan Health, particularly as affordability is a top concern. A new report by Health Action Council and UnitedHealth Group shows that employers' monthly claims for high-cost procedures and conditions like cancer have surged nearly 40% since 2020. Many complex conditions can be detected earlier, better managed, or even prevented through routine primary care visits. Yet, the data also show that younger adults are seeing their PCPs less often. We can do better. To start, expanding access to comprehensive primary care can go a long way in improving one’s health, well-being and longevity – while also reducing spending on costly, complex conditions down the line. It’s a win-win for both employees and employers. Employers should consider strategies to engage employees in primary care – like JPMorganChase is doing in Columbus with apree health – and provide robust care navigation for serious conditions, as our portfolio company Thyme Care does for cancer. Our investment in Quantum Health c/o Embold Health promises to bring more value into benefit design that help. Other more comprehensive approaches to high cost cases like Lantern health have promise as well. Employers increasingly have tools to address these issues. Robin Shah, Daniel Stein, MD, MBA, Jonathan Porter, Patty Starr, Shane Jacobson, John Zutter https://lnkd.in/ehkQXbTu

Pharmacy spending now makes up 27% of commercial healthcare costs. What are employers planning to do about it? --- Last month, Business Group on Health released their 2025 healthcare strategy survey results (in the comments). In it, they show that the median employer is spending 27% of #HealthcareCosts on #pharmacy. That's compared to 21% only two years before (see attached graphic). --- -93% of employers are "concerned" or “very concerned” about #DrugCosts -86% are concerned/very concerned about the lack of transparency in pharmacy contracting and rebates -84% are concerned/very concerned about the opaqueness of the pharmacy supply chain Pharmacy spending is largely responsible for the recent increases in overall healthcare costs above expected trends. The top cost driver? #GLP1s 67% of employers are now covering GLP-1s for obesity, compared to less than half last year 87% rely on prior authorization requirements to manage obesity GLP-1s. 52% require patients to participate in a weight management program 51% have patient eligibility requirements like BMI or comorbidities --- What are the employers going to do about pharmacy costs? Here are the top strategies being considered: -Leverage an RFP process (even if you don't change vendors, you'll often get better pricing from the current vendor) -Limit/reduce coverage for GLP-1s (even more than now) -Replace under-performing vendors -Eliminate programs with low utilization (watch out point solutions) -Adopt a transparent PBM model -Implement a high-performance network/center of excellence model --- It's impossible to know how you're doing until you get your pharmacy data and (ideally) visualize it to see how things are changing over time. -What are the top drugs and drug classes? -Who are the top prescribers, pharmacies, and employees? -How do pricing, rebates, and discounts compare to benchmarks? Then take that information and use it in the top strategies listed above. How else would you know what you need and if your strategy worked?

Employers are REALLY taking an activist role to drive healthcare innovation. Medical cost trend has hit a boiling point, with 9–10% annual increases projected through 2026 (some segments even higher!). Self-funded employers pay for around 2 in 3 commercial dollars, and they simply can’t afford to sit back anymore. In talking with many self-funded employers, many aren't just accepting benefit designs handed to them by their carriers. They are truly pushing for innovation. This has caused the scope of their role to increase significantly, as shown by this image from McKinsey (link in comments). Everyday I hear more about variable copay plans, alternative payment models (shout out to our partners at Aligned Marketplace), and radically different mechanisms to manage ballooning pharmacy costs. And importantly: employers are demanding proof. Many employers raced to adopt programs during COVID and are now paring back those programs that haven't proven a clear ROI. This is reshaping the benefits landscape. Health plans and vendors who can deliver validated outcomes and hard cost savings will thrive. Those who can’t will get squeezed out. Most folks don't realize it, but employers have always been the hidden force in U.S. healthcare. Given the current trend, they are REALLY out front, forcing their partners to do more. And that’s a good thing. #employeebenefits #healthcare #healthtech #digitalhealth

Pharmacy spend makes up over 25% of all healthcare expenses 🤯 With the cost of medications rising, what does this mean for employers? A recent Boston Globe Media report highlights how prescription drug costs are playing a major role in driving up healthcare expenses. They report that 5% of your employee population are responsible for 50% of your pharmacy costs. Especially for those companies that are self-insured—these costs aren’t just numbers on a report. They have a direct impact on budgets, employee premiums, and overall business sustainability. Here’s what employers need to know: 1. Hidden Fees Are Everywhere – Many organizations assume they’re managing costs effectively, but pharmacy benefit managers (PBMs) and pricing structures often contain hidden fees that drive up spending. If you're not actively managing your pharmacy program, you're likely overpaying. 2. Larger Companies Have More Control – Enterprise organizations often negotiate better deals and implement strategies to curb excessive drug costs. But what about mid-sized and smaller businesses? Without the right strategies in place, these companies are absorbing the costs without realizing where they could save. 3. Self-Insured Companies Feel It the Most – If your company is self-insured, you’re directly responsible for covering rising prescription drug costs. Without active oversight and smarter contracting strategies, these costs will only increase. My recommendations? ✅ Audit pharmacy spend to uncover hidden fees ✅ Negotiate better pricing and rebates to reduce unnecessary costs ✅ Implement smarter benefit strategies to help employees and the company save This isn’t just about cutting costs—it’s about sustainability, transparency, and ensuring employees get the care they need without breaking the bank. Are you seeing rising drug costs impacting your benefits strategy?

The rising cost of what we call "healthcare"—but is really health insurance—has become an unsustainable burden for employers. If left unchecked, it may follow the path of pension plans: a once-standard benefit now nearly extinct. Healthcare costs are defunding other valuable employee benefits, forcing tough choices for employers. But it doesn’t have to be this way. Applying a fiduciary lens to your healthcare spend can control and reduce costs. Consider this: 25%-30% of every healthcare dollar is lost to waste, fraud, and abuse. Eliminating just that portion could boost your bottom line by the same percentage. Imagine what you could do with those savings—enhance employee benefits, reinvest in your business, or drive innovation. A fiduciary-focused strategy isn’t just about cutting costs—it’s about creating value. It’s time to rethink healthcare spending with accountability and transparency at the forefront. I’d be happy to walk you through it. #fiduciaryinabox https://lnkd.in/dfdQpKdu