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    Columns

    Top 10 Health Cost Drivers for Large Employers

    13% of employers report a greater number of late-stage cancers and 44% say they expect an increase in late-stage cancers.

    Top 10 Health Cost Drivers for Large Employers
    Table 1: Top two healthcare cost drivers for large employers.3
    Top 10 Health Cost Drivers for Large Employers
    Table 2: Remaining top 10 (3-10) of the leading healthcare cost drivers for large employers in 2022.3
    Top 10 Health Cost Drivers for Large Employers
    Table 3: Percent of employers that believe virtual health will have a “significant impact” on care delivery in the future.3
    Maria Shepherd, President and Founder, Medi-Vantage11.15.22
    Using large employer data as a proxy for assessing the overall state of healthcare in the U.S. is one way to look at healthcare costs. In a report from the Business Group on Health (n=135 large employers covering ~18 million lives),1 cancer edged past musculoskeletal disease states as the leading condition that is increasing employer healthcare costs (Tables 1 and 2).2,3 The Business Group leads programs to tackle the most important healthcare issues facing employers today.4

    Of the companies surveyed, 73% have greater than 10,000 employees.1 While the top three conditions powering healthcare costs are the same since 2021—cardiovascular disease, cancer, and musculoskeletal disease—their relative positions have changed.2

    The costs of these conditions can be enormous. Of great concern to patients, employers, and the U.S. healthcare system is 13% of employers report a greater number of late-stage cancers and 44% say they expect an increase in late-stage cancers in employees. This is largely attributed to the pandemic, which caused delays in care, according to Business Group on Health.2

    Why This Is Important

    The survey revealed there was no material increase in healthcare costs from 2019 to 2020. In 2021, however, that changed. Employers reported a significant increase in costs, with a median cost increase of 8.2%.2

    To address the cost of care for cancer, 50% of surveyed employers said they will offer employees access to cancer centers of excellence (COE). An additional 26% of employers are internally discussing the provision of access by 2025.5 COEs are a relatively new care delivery model, providing highly focused programs within healthcare organizations. These programs have strong reputations for delivering good patient outcomes.6 In some cases, employers are offering access to centers of excellence with incentives such as travel reimbursements. Based on CIGNA calculations, there are greater than 3,000 centers of excellence across the U.S.7 They provide COEs in bariatric surgery, cancer, heart surgery, pulmonology, and joint replacement, among others.

    Among surveyed employers, 32% said they will cover genomic testing for cancer treatments in 2023, while 14% stated they are considering genomic testing for cancer treatments by 2025. Another 11% of surveyed employers said they will cover multi-cancer early detection blood tests in 2023.5

    Regardless of increasing costs, the survey revealed employers expect to cover 82% of the cost of employee coverage in 2022.2 As costs continue to soar, employers are reluctant to charge a greater percentage of cost to employees. Employers know the real issue can only be addressed with basic delivery system reforms to try to change unmanageable healthcare expenses and prescription drug costs.

    The largest employers in the survey cite their concerns about prescription drug trends. In 2021, prescription drug costs were calculated at a median of 21% of employer healthcare costs, with greater than 50% of pharmacy dollars going to specialty medications.2

    Pharmaceuticals Cost Is the First Target

    Employers remain intensely fixated on policy programs to lower the cost of prescription drugs. Two areas of great focus are the cost of maintenance medications and gene therapies. Maintenance drugs are prescriptions routinely used to treat chronic or long-term conditions. These conditions usually need daily use of medicines for conditions such as blood pressure, heart disease, asthma, and diabetes.8

    For gene therapies, the number of approved treatments remains very small. Of the 22 cell and gene therapies approved by the FDA, eight are cord blood-based treatments. The remaining include two gene therapies, seven cell therapies, and five gene modified cell therapies.9,10

    Also important is the cost of mental health service, which, through the virtual health model, may provide more affordable access, a subject of high importance for 24% of employers.2

    Virtual Healthcare Is an Important Trend

    Virtual health has infiltrated numerous aspects of employer health and well-being assistance. In 2022, 74% stated virtual health will have a “significant impact” on care delivery in the future (Table 3).4 Virtual health, however, is not a panacea. Many survey respondents felt virtual health is approaching a decisive crossroads. Eighty-four percent of employers believe integrating virtual health and in-person care delivery is fundamental and is the most important action their healthcare partners can take to influence the future quality of care.2 Without careful planning, the virtual health experience could result in redundant services, superfluous care, careless spending, and a fragmented care experience.2 There will be integration challenges, though.

    Virtual health holds promise, however, illustrated in the projected growth of virtual primary care offerings (cited as rising from 32% in 2022 to 69% in 2025), and proposals by 57% of employers to offer more virtual health solutions to their employees in 2023. For now, virtual health has settled in, but its full potential will be seen once measurable improvements in integration, quality, and marketplace rationalization are achieved.3

    Sixty-five percent of employers have learned the health and well-being of their employees is a strategic imperative that will play an integral role in their success, an increase from 42% in 2021. This is the result of multiple factors, including the requirement to attract and retain employees, keep them healthy and functioning so that the impact of workforce well-being on business performance and culture remains high.3

    The Medi-Vantage Perspective

    Despite the headwinds of healthcare, the medical device market has strong momentum headed into 2023 and beyond. While 2022 was a pivotal year coming off a global pandemic, it was also an opportunity for medical device manufacturers to establish themselves in a market that’s growing in demand more and more with each passing year. Acknowledging these challenges and keeping them in focus serves to strengthen manufacturers, to help us stand out in a market prone to change, and to be the company that attracts the best employees. 

    References
    1. bit.ly/mpo221101
    2. bit.ly/mpo221102
    3. bit.ly/mpo221103
    4. bit.ly/mpo221104
    5. bit.ly/mpo221105
    6. bit.ly/mpo221106
    7. bit.ly/mpo221107
    8. bit.ly/mpo221108
    9. bit.ly/mpo221109
    10. bit.ly/mpo221110

    Maria Shepherd has more than 20 years of leadership experience in marketing in small startups and top-tier companies. After her industry career, she founded Medi-Vantage, which provides marketing and business strategy and innovation research for the medical device industry. Shepherd can be reached at mshepherd@medi-vantage.com. Visit her website at www.medi-vantage.com.
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