A Proactive Approach to Controlling Expenses

The Unsustainable Trend in Healthcare Costs

As business owners and HR professionals, we’ve all experienced the gut-wrenching feeling of opening that annual healthcare renewal email, only to find that our premiums have skyrocketed yet again. It’s a cycle that feels never-ending, with costs rising 8-12% on average each year. According to the Willis Towers Watson 2025 Global Medical Trends survey, medical trend is projected to continue rising in North America, up from 8.1% last year to a staggering 8.7% in 2025.

For too long, companies have accepted these relentless cost increases as an inevitable reality of doing business. They react to the renewal numbers, negotiate with carriers, and end up choosing the “least bad” option, all while feeling powerless to truly control their healthcare spend. But what if I told you there’s a better way?

Shifting from Reactive to Proactive Cost Management

The smartest companies aren’t just reacting to their renewals – they’re taking a proactive approach to managing their healthcare costs. Instead of focusing solely on the outputs (premiums, claims, reports), they’re digging deeper and addressing the actual cost drivers that are inflating those numbers in the first place.

This proactive cost management strategy is a game-changer. Rather than waiting until renewal season to negotiate with carriers, these forward-thinking organizations are making strategic moves throughout the year to reduce their cost of care and pharmacy spend. They’re not just sitting back and watching premiums go up; they’re taking control of the system and making it work for them.

Real-World Examples of Proactive Cost Management

Let’s take a look at some real-world examples of companies that have successfully implemented proactive cost management strategies:

Plaid Hospitality: Negotiating Direct Contracts for Surgical Care

• Instead of letting employees rack up massive hospital bills, Plaid Hospitality negotiated direct contracts with surgical centers.
• This strategy reduced out-of-pocket costs for employees and provided no-cost surgeries, ultimately driving down the company’s overall healthcare spend.

Packaging Atlanta: Partnering with Direct Primary Care

• Rather than relying on insurance networks to steer employees to expensive, unnecessary care, Packaging Atlanta partnered with a direct primary care provider.
• This ensured that employees received the right care at the right price, without the inflated costs associated with traditional healthcare systems.

Pittsburgh Pipe: Firing Their PBM and Implementing a Pass-Through Model

• After realizing the extent of hidden fees and spread pricing from their PBM, Pittsburgh Pipe decided to take action.
• They fired their PBM and implemented a pass-through model, where they now keep 100% of their prescription rebates and pay only for what’s actually dispensed at the same cost the PBM gets.

Neville Built Trailers: Negotiating Capped Rates with Providers

• Neville Built Trailers refused to overpay hospital networks and found a provider that caps costs at 140% of Medicare rates.
• This strategy drastically reduced their overall healthcare spend without sacrificing the quality of care for their employees.

These examples illustrate a common theme: the companies that are winning at the healthcare cost game aren’t just reacting to renewals and negotiating with carriers. They’re taking a proactive approach, addressing the actual cost drivers that are inflating their premiums in the first place.

The Pitfalls of Reactive Cost Management

When you’re only focused on the outputs – premiums, claims, and reports – you’re missing the bigger picture. The healthcare system is designed to overcharge you unless you know how to fight back. If all you’re doing is waiting for your renewal and hoping for a better rate, you’re essentially seeding control to the carriers and PBMs.

The truth is, healthcare costs are not a fixed expense – they’re a controllable one. But to take control, you need to shift your mindset from reactive to proactive cost management. Every dollar you overspend on healthcare is a dollar that could be reinvested into your business or used to provide better benefits for your employees.

Strategies for Proactive Cost Management

So, what can you do to start taking control of your healthcare costs? Here are two key strategies to consider:

1. Manage Your Pharmacy Costs

Pharmacy spend is a significant driver of healthcare costs, and it’s an area where many companies are leaving money on the table. By closely examining your pharmacy costs and negotiating better deals with your PBM, you can unlock significant savings.

One way to do this is by implementing a pass-through PBM model, like the one used by Pittsburgh Pipe. This ensures that you’re only paying for the actual cost of the drugs, without the hidden fees and spread pricing that can eat away at your bottom line.

Another strategy is to explore alternative pharmacy solutions, such as direct contracting with specialty pharmacies or implementing a reference-based pricing model for your prescription drug benefits. By taking a proactive approach to managing your pharmacy costs, you can achieve substantial savings.

2. Negotiate Better Provider Rates

Hospital and provider costs are another major driver of healthcare expenses, and they’re an area where many companies are overpaying. By negotiating directly with healthcare providers and exploring alternative care models, you can significantly reduce your cost of care.

One approach, like the one used by Neville Built Trailers, is to negotiate capped rates with providers, limiting the amount you pay for services. This can help you avoid the inflated charges that are often associated with traditional healthcare networks.

Another option is to explore direct contracting with healthcare providers, bypassing the insurance networks altogether. This can give you more control over the cost and quality of care, as well as the ability to steer your employees towards the most cost-effective providers.

Getting Started with Proactive Cost Management

If you’re ready to take control of your healthcare costs and break free from the cycle of endless rate hikes, the first step is to get a clear understanding of where you’re overspending. That’s where our Health Risk Scorecard can help.

By requesting our complimentary scorecard, you’ll gain valuable insights into the specific areas of your healthcare spend that are ripe for optimization. From there, we can work with you to develop a customized strategy for proactive cost management, helping you implement the same tactics used by some of the smartest companies in the industry.

Remember, every dollar you save on healthcare is a dollar that can be reinvested into your business or used to provide better benefits for your employees. The choice is yours – will you continue to let costs rise, or will you take control and make healthcare work for you?

To get started, request your Health Risk Scorecard today.

It’s the first step towards a healthier, more sustainable healthcare strategy for your business.

Don’t let your benefits plan hold you back. Contact BeneSmart today for a tailored strategy that scales as fast as you do. Check out our other videos to learn more about transforming your health insurance strategy:

• How to Reduce Health Insurance Costs by 20% or More
• The Hidden Costs of Traditional Health Insurance
• 5 Strategies to Reduce Health Insurance Costs

And be sure to subscribe to our channel at @BeneSmart for more insights on optimizing your health insurance strategy.

Ready to get started? Reach out to us at quotes@benesmartservices.com or contact me directly at rich@benesmartservices.com. Let’s work together to build a benefits plan that can keep up with your growth.

Connect with me on LinkedIn: https://www.linkedin.com/in/richardwestermayer/

To learn more about BeneSmart’s innovative solutions and how they can help your business, check out our YouTube channel, https://www.youtube.com/@BeneSmart

Don’t forget to subscribe @ https://www.youtube.com/@BeneSmart to stay up-to-date on the latest trends and strategies in the world of benefit expense management.Ready to take the first step? Reach out to Rich Westermayer https://www.linkedin.com/in/richardwestermayer/ at rich@benesmartservices.com to get started on your own transformative journey.