What Are Cost-Containment Strategies? (Plus 3 Solutions for Clients)

aaPiggyBank_275_0802.jpgFirst, let's start off with a definition.

Cost-containment strategies: the business practice of maintaining expense levels to prevent unnecessary spending or thoughtfully reducing expenses to improve profitability without long-term damage to the company.

Why Is “Cost-Containment” The New Buzzword for HR and Healthcare?

Rising healthcare costs have created a market for technology solutions to combat these increased expenses for employers -- usually the second biggest check written every month behind payroll.

While there are certainly low-tech programs affecting healthcare organizations (ACOs, MECs) and restricting patient access, the health-tech industry overall has created some incredible apps to help people access information and healthcare in new ways. By leveraging health technologies in all markets, the hope and goal is to not only create cost savings, but also expand access and increase transparency. The only problem is that the actual consumers of healthcare, the patients, have a hard time understanding when, where and how they should be using these new technologies to help them make decisions. In other words, engagement with these new technologies is pretty low.

The Key to Cost-Containment

Driving engagement is the key to generating actual value for the employer and employees in new cost-containment strategies. This can be difficult in healthcare because changing behavior on how to make decisions and access care is hard.

Once you understand (and are onboard with) increasing your engagement to drive savings, check out these three healthcare cost-containment strategies trending in the benefits industry:

Price Transparency

Why do things cost so much? If we think of healthcare today as a triangle of relationships:

  • Relationship A to B is Employee to Employer
  • Relationship A to C is Employee to Insurance Company
  • Relationship B to C is Employer to Insurance Company

Each of these relationships has a complicated structure that is dependent on the other relationships in the triangle and consists of negotiated rates and discounts that are published or easy to understand—in other words, this triangle gets very complicated very quickly.

This results in messy price information and actual prices are impossible to discern. Consequently, lack of price transparency, and the dependence on the insurance company to negotiate and pay the doctors’ fees, fosters a disconnected system that is unable to regulate cost. As more and more people have access to insurance as mandated by the ACA, patient responsibility continues to increase and the demand for price transparency rises. But patients have no idea how to effectively use these tools in combination with their insurance.

Telemedicine

Virtual care isn’t exactly a new service, but recently it has become a big player in the benefits world. With health insurance premiums increasing (and employer contributions climbing by more than 60% since 2004), employers have shifted much of the cost burden to their employees. Telemedicine is a solution that can help slash costs for both the employers and employees by avoiding claims.

On-call physicians service a patient in just a few minutes, avoiding the costs associated with doctor office appointments, urgent care trips, or non-emergent visits to the ER. Generating real savings from avoided claims revolves around achieving high utilization of the telemedicine service. If people aren’t using the service, very little healthcare cost savings are realized.

First Stop Health uses a consumer-driven process that puts employee engagement at the forefront of our customized communication. This focus drives utilization rates that are 6 to 10x higher than the industry average. The corresponding savings in avoided in-person physician visits are actually guaranteed to exceed the costs of the First Stop Health telemedicine benefit.

Population Health Management

Big data has come to healthcare in population health management programs. These programs look at demographic and claims data to help companies combat the high costs of treating chronic illnesses like hypertension, diabetes and heart disease. They can also inform on case management strategies for the conditions that stem from those major health problems.

These programs can be an effective, yet complicated, way of managing costs in the medium to long term, but require efforts to case manage complicated cases. Savings can take years to be realized and can hinge on the cooperation of the individual employees with expensive health issues.


As you may have picked up, effective cost-containment strategies come from providing a benefit that’s utilized by both employees and employers. Buzzwords are fun to say, but employee engagement with these cost-containment strategies is require to generate results.

Wondering how we do it? Request a First Stop Health demo today and start saving tomorrow.