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When it comes to championing new forms of healthcare transformation, one could typically expect it to come from a handful of places: government, industry incumbents, new market entrants (VC backed), or mega-employers.
While progress in care solutions have been made in several areas, healthcare insurance premiums continue to rise at a completely unsustainable rate. To successfully transform healthcare we need to look to a different type of leader - Chief People Officers and other employee benefit decision makers for midmarket companies.
Decisions that CPOs (and other benefits leaders) make have tremendous impacts that reverberate throughout the healthcare ecosystem.
CPOs are the third fastest growing executive-level role in recent years¹ , and are responsible for shaping the future of the organization. Their decisions around benefits, talent, culture, and company strategy have a ripple effect for years.
For employees, the strategy set forth and implemented by these leaders define the “how and where” for accessing their most critical benefits like healthcare, retirement, life insurance, and more. Chief People Officers know that their people are their greatest asset, and they carry the vital responsibility to maximize the impact that they bring to their employees.
Employee Benefits Costs have a Massive Financial Impact for both Employers and Employees
With employee benefits averaging 30% of total employee costs², the decisions that Chief People Officers make when crafting benefits strategies have massive impacts on both the company’s and employees' financial health.
In the current system, many companies accept rising benefit costs as a given, leading to a low adoption of high value solutions. In the short-term, this may seem to avoid disruption for employees. However, the cumulative impact results in unaffordable healthcare, low employee satisfaction, and a drain of investment capital to grow the business.
Decisions that a CPO makes have a direct impact on not just premium, but how employees interact with their healthcare, and the downstream effects of a confusing market.
Overly complex benefit solutions can result in employee confusion, resulting in over or under use of care or worse employees unintentionally seeking care outside their network, and ultimately burdened with unexpected costs not covered by their benefit plan.
The most innovative MidMarket CPOs are proactively adopting new benefits offerings that are engaging, value-driven, and result in employee satisfaction and healthier outcomes.
When done correctly, first year savings typically result in a 20% reduction in total premium
(savings are shared by the employer and the employee.) Years 2 - 5 can deliver a 50% reduction in premium trend. These strategies also result in improved employee satisfaction and streamlined administration.
The Chief People Officer can be the catalyst for market-level change
Decisions that Chief People Officers make not only directly influence the companies they are leading and the employees that they manage, but collectively impact the larger healthcare market. With over $1.4T in premium spent every year in employer-sponsored health benefits, CPOs are uniquely equipped to be the catalyst for market-level change.
The year one market opportunity collectively is $280B³. With a reduction in employer healthcare cost trend from 11.6%⁴ to 5% in year two, another $175B can be impacted by Chief People Officers.
Beyond the direct impact that CPOs can make on the cost of healthcare for their employees, investments into healthier populations have long-term effects, ultimately resulting in healthier retiring populations entering into the Medicare market.
Given the role that employers play in influencing and delivering employee benefits solutions, Chief People Officers have the unique opportunity to drive the next wave of healthcare transformation for millions of Americans.
1 - State of C-Suite Sept 2024
2 - Employer Costs for Employee Compensation - September 2024
3 - (Adopting a total benefits strategy that saves on average 20% premium first year savings)
4 - CMS NHE FACT SHEET 2023
