The surprising solution for rising healthcare costs: more (and better) primary care

As employers refine their benefit plans to enhance the health of their members while managing expenses, they are exploring ever more complicated financial arrangements, service delivery models, and point solutions, often involving multiple overlapping vendors.

Yet, the most effective way to keep people healthy and control costs may be as simple as improving access to good primary care.

Over decades of research, the data is clear: People who have regular access to quality primary care are healthier, live longer, and spend less on healthcare. That’s because troublesome signs and symptoms are detected earlier and thus treated before they progress to life-threatening and expensive conditions. In addition, primary care providers focus on prevention, like cancer screenings and coaching to help patients to make lifestyle changes that head off illness. When members aren’t accessing good primary care, employers end up paying for more frequent (and more expensive) emergency room visits, additional chronic condition management, and increased hospitalizations.

Driven by fee-for-service economics, which incentivizes volume over quality, America’s healthcare system devotes most of its resources to expensive specialty care and hospital services. In fact, only 5% of the country’s healthcare spending goes to primary care. Not surprisingly, medical school graduates looking for income to pay off student loans are shunning primary care.

The result is a severe shortage of primary care providers that is expected to worsen over the next decade.

For these reasons, Alliant is investing in advanced primary care strategies as an effective lever to steer members to high-quality, cost-effective resources, which may include existing client care options.

By exploring alternative care delivery systems that employ primary care clinicians outside of the traditional fee-for-service model, employers can not only address the shortage of providers but also reap the benefits of improved employee health and reduced healthcare costs.

Designing plans to encourage the use of primary care

As healthcare inflation has increased over the past several years, many employers have attempted to manage healthcare costs by increasing medical copays and deductibles. These changes increased the proportion of medical expenses borne by employees. But they also were meant to encourage members to be smarter consumers of healthcare services. The economic turmoil of recent years, however, has squeezed the family budget. Around 44% of US employees don’t make enough to cover the basic needs of a dual-income household with two children.

In many cases, these scenarios have prodded members to make disastrous choices — forgoing regular checkups and routine testing. Too often, they wait until they have a serious condition before seeking care, a choice that risks their health and runs up much higher bills. There are ways, though, to rework health plan incentives to encourage members to get care early.

Provide incentives for primary care visits

Rewards and incentives (extrinsic motivation) can play a significant role in increasing primary care utilization rates, especially among individuals who are not intrinsically motivated by a desire for personal well-being or to live longer for their families and dependents. Plans can offer rewards to members who designate a primary care provider, have an annual checkup, or complete certain preventive screening tests. The incentives can include a reduction in premiums or a company contribution to a healthcare savings account.

Reduce or eliminate copays for primary care

Many people are reluctant to get routine physicals and health screenings despite the promise under the Affordable Care Act that preventive care must be provided at no cost. They’ve learned the hard way that as soon as there is a diagnosis, a visit may no longer be classified as purely preventive; they can be billed for the initial doctor’s visit and any follow-up testing.

To foster proactive healthcare among members and address their concerns about out-of-pocket expenses, employers could explore a leading-edge strategy of waiving deductibles for primary care and related diagnostic tests, as well as reducing or possibly even eliminating associated copays.

Reconsider high-deductible plans for lower-income employees

High-deductible health plans, typically paired with health savings accounts, have been an effective way for employers to manage healthcare costs. Unfortunately, research shows that they also dissuade members from getting the care they need.

Participants in high-deductible plans have significantly worse health outcomes. For example, they have a higher risk of diabetes complications, and they discover metastatic cancer five months later than those in low-deductible plans. The disparities are particularly wide for employees who earn less than $75,000.

To account for these issues, employers may want to limit the availability of high-deductible plans for lower-income workers or, at least, ensure that the medical savings accounts of low-income participants are funded so that money is available for primary care services.

Increasing access to primary care providers

It’s not enough to encourage members to use primary care if they can’t find a provider when they need one. In rural areas, in particular, it can take months to secure an appointment with a primary care provider.

And even when they get in to see a provider, the visit is likely to be rushed. Primary care doctors in the U.S. often have a patient load between 2,200 and 2,500; meanwhile, experts say only a patient count of less than 1,000 allows for quality care and avoids burnout.

For companies willing to invest in quality primary care for their members, there are several models that employ doctors and other providers with low enough caseloads to be available when they are needed.

On-site and near-site primary care

Primary care may be provided at the worksite. At many companies, the traditional occupational health departments have evolved into more holistic primary care offerings. A recent survey found that 36% of large employers offer primary care at their facilities or at a nearby location. On-site facilities offer convenience to employees while reducing time spent away from work. Typically, they are most appropriate in facilities with a large concentration of employees.

Virtual primary care

Virtual care has become a permanent part of our healthcare system. During the pandemic, many companies began offering access to healthcare providers through video calls. Lockdowns and social distancing led to innovative solutions and quickly expanded the availability of advanced virtual primary care. With these new opportunities for virtual care, individuals can form relationships with healthcare providers and have access to care navigators who can help them find specialists and in-person services as needed.

Virtual care is an effective way to promote health equity. With the expansion of advanced virtual primary care, employers can eliminate cost barriers by offering low or zero copays. Virtual care also allows employees in underserved rural areas to access healthcare and reduces the need to take time off work for healthcare visits.

Additionally, more digital health solutions integrate virtual primary care with condition management, creating a continuous care model to enhance condition management from the healthcare provider to the health coach.

Direct primary care and other alternative financial models

The primary care provider can be “on retainer.” Direct primary care is a movement to extract primary care providers (typically physicians) from the fee-for-service economic model that dominates U.S. healthcare today. Patients pay an upfront fee, typically between $50 and $100 per month that entitles them to same-day appointments and a set of other services. Doctors in this model see far fewer patients (an average of 402 in one survey).

A growing number of companies are choosing to subsidize the cost of direct primary care memberships for employees. Although the fee is substantial, it includes visits and tests that the plan would have otherwise paid for, as well as preventive care that can help avoid much more costly future medical care and procedures.

A variation of direct primary care is a medical group model that charges a lower up-front access fee, but bills visits and procedures to insurance. With a combination of virtual and in-person care, these services may appeal to members as they can greatly improve both access and the healthcare experience; so far, though, we haven’t seen much evidence that they save money for employers.

Final Thoughts

To be fair, it may take time for employers to achieve ROI on any of these options, and there will be trade-offs at first. It is common to see a relatively immediate drop in ER utilization and hospital admissions as access to primary care improves, while claims for primary care may increase initially as members follow up on treatment for previously unknown conditions.

Over time, however, savings will accumulate as expensive treatments are prevented while workers stay healthier and more productive. Indeed, in a study for one mid-sized manufacturing company, Alliant found that a properly designed primary care program could save more than $3,700 per year for each enrolled member.

The impact to each company will be different, of course. Alliant’s proprietary analytical models can help employers identify where their members are not getting the primary care they need and design a strategy to improve health outcomes and manage costs.

How Alliant can help

Alliant’s Clinical Services team helps clients navigate opportunities that not only provide better care outcomes but also reduce the total cost of care and improve existing benefits offerings by integrating curated and proven solutions. Find out more.