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Ten Ways Small Businesses Can Lower Healthcare Costs (And Hire More People) in 2012

After an economic drought, employers are anxious to energize and refresh their staff, but they are still deeply worried about finances. Between the crushing economy and the uncertainty of the new health-reform implications, many businesses have had to cut back on hiring. But in November, there was a glimmer of hope: According to Intuit, the software company behind TurboTax and Quicken, approximately 55,000 new jobs were created by small businesses that month. Yet this study also showed that small business employees were working fewer hours and making less money than they were even in October.

One way to boost the hiring rates, yet still maintain reliable employees by offering healthy salaries and steady work, is to cut costs in that seemingly unmanageable beast, healthcare. Let's take a look at how you can cut your healthcare costs in 2012-and use that money to retain your employees. I've included here both the time-tested ideas that may be key to shaping up your healthcare as well as a few more experimental ideas that could whittle your waste.

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1. Pool together with others for healthcare. The greater the number, the lower the cost. While it may seem like a tedious exercise, check out nearby employers and ask them if they'd like to go in on an insurance plan together. See if your regional industry association will help hook you up with others in the same boat; they might even have a plan you can buy into. One more consideration: You may want to look into a Professional Employer Organization (PEO). These are single-source providers of integrated services, including payroll and benefits administration, who negotiate on behalf of their client companies collectively.

2. Get as many quotes as humanly possible. Don't just blindly accept your annual premium hikes without seeing what else is out there. Go online or talk to other small business owners about their plans. You may want to consider using an agent or broker, since they intimately know and understand the quickly changing carrier market. They can help you find, negotiate and implement a plan.

Or consider changing your broker if he or she does not provide multiple quotes. According to Dennis Miceli, a Senior Benefits consultant at Wells Fargo Insurance Services, an employer should choose a broker by interviewing at least two or three. "Ask for recommendations from your banker, CPA and attorney," he says. "Trust your trusted advisers to help you select another trusted adviser, your insurance broker. Don't be afraid to ask for references, and be sure to ask how they are compensated. While commissions are the industry standard, employers should be willing to consider a fee arrangement. After all, why should the broker get a raise when you get a rate increase? A frank and upfront discussion on services to be provided and compensation for those services needs to happen before a broker is selected."

And be sure to look beyond just the big names in healthcare. Check out your local hospitals and healthcare systems-they might be offering a hidden gem of a healthcare package.

3. Provide a wellness program. A wellness program can be as simple or as elaborate as you want to make it. It can be anything from implementing an online tool that helps employees count calories to targeted speakers on specific diseases or health contests with prizes. Earlier this year, not-for-profit health insurance company Highmark published a four-year study in the American Journal of Health Promotion that demonstrates that a steady wellness program can slow healthcare cost growth by 15%-or by about $332 per participant.

Not only will you significantly cut healthcare costs, you will also boost employee morale and decrease absenteeism. And remember, you don't have to be a multibillion-dollar corporation doling out free gym memberships to your employees-although that would certainly be nice! Just let your employees know that, in addition to their lunch break, they also have an optional 30-minute exercise period built into their days. Lead by example so they feel secure about skipping out in their walking shoes.

4. Go to the extreme and don't hire smokers. According to the CDC, smokers cost the United States approximately $193 billion a year between lost productivity and healthcare expenses. Some companies have started charging smokers-sometimes even those with a high BMI-more money to cover their higher premiums.

While you're more likely to produce a positive work environment with those helpful wellness programs-including a smoking cessation program and rewards for those who improve their overall health-this is an option if you just want to cut to the chase. However, before you put anything on the books, make sure it's not illegal in your state to discriminate against smokers.

5. Set up a nurse hotline through your insurer or through an outside source. This is a popular topic lately, and for good reason: Surveys and studies have repeatedly shown that these hotlines reduce the number of trips to the ER or doctor's office. Plus, they cut down on absenteeism and contribute to that sense of well-being so important to your company's morale.

6. Volunteer to be part of a pilot program. Ask a big health plan if your small business could be a guinea pig as part of a clinical trial for lower rates. Yep, this is probably a long shot, but if it gets you a great deal on full-coverage health insurance, it's certainly worth a few exploratory phone calls.

For example, both patient-centered medical homes (a teamwork approach to comprehensive primary care) and accountable care organizations (a network of healthcare providers who voluntarily manage a certain number of Medicare patients) have been pilot-tested recently in attempts to increase patient care and lower healthcare costs across the board.

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7. Consider cost sharing of various kinds with employees. There are generally four ways to place some of the burden of healthcare on your employees' shoulders: Co-payments, co-insurance percentage split of the bill, high-deductible plans and the premium. Try implementing these with a health savings account, such as a flexible spending account debit card. This will provide employees with an incentive to hang onto their money, and the funds will not be lost to them at the end of the year.

8. Narrow the choices. Look for a "narrow network" HMO in your state. By offering a smaller range of often less-expensive doctors, you can cut your costs by as much as 25%. Aetna, for instance, offers a cheaper plan that restricts employees from seeing certain doctors. "Employers are saying, 'Look, open access, choice, freedom of movement around the system, in or out of the system, was great when trend was manageable and the economy was good,'" American Medical News quoted Aetna CEO Joe Zubretsky as saying in 2010. "Employers are willing to limit choice to create a better cost advantage."

Of course, there isn't as much flexibility in a plan like this, but if you stick to a highly recommended and high-quality circle of medical providers, your employees will probably be pleased that they have not been asked to take on some of the healthcare costs themselves.

9. Audit your premiums. Make sure you are paying for your employees and their legitimate dependents. If you are not self-billing, you need to ensure you are not paying for someone else's folks or for some of your employees' neighbors and friends.

10. Cover only generic drugs. Generic drugs can save you up to 80% on the cost of a prescription when compared to the brand name drug, according to the Generic Pharmaceutical Association. Insurers will reflect these savings in your premiums.

Courtesy of Forbes.com


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