How Health Care Employers Can Control Health Care Costs

February 28, 2012 ( - For a variety of reasons, the health care industry has not moved as quickly as others to manage employee health care costs and trends, Towers Watson says.

As a result, many hospitals provide more services and pay a greater share of per-employee cost for benefits than other organizations. And, in a somewhat ironic twist, they also tend to have less healthy workforces, so employee use of health plan services (often at competing facilities) is frequently higher as well.  

Adding to hospitals’ concerns is uncertainty about how health care reform legislation will affect their cost structure as penalties for inefficiencies and overly rich plans take effect over the next few years. With reform likely to lower hospital revenues at the same time it affects costs for employee health care benefits, reducing those costs has become more critical than ever.  

In a new report, Towers Watson says there are three core strategies hospitals can use, individually and in tandem, to achieve this goal: 

  • Increase emphasis on employee health and wellness by designing and promoting wellness and disease management programs tailored to the organization’s unique situation and employee segments; 
  • Customize employee benefits to require or encourage the use of the hospital’s or system’s facilities, including physicians, pharmacies and other affiliated resources (often referred to as “domestic resources”); and  
  • Revisit the design of current employee benefit plans, and adopt some of the effective tactics other organizations are embracing, including consumer-driven and high-deductible plans, often backed up by health spending accounts. 


The report, “Wellness Programs and In-House Care: How Hospitals Can Lower Employee Health Coverage Costs,” discusses implementation of these strategies.  It can be downloaded from