Self-funding for employee health plans

Area of Science:

• Healthcare Management
• Health Economics
• Employee Benefits Administration

Background:

• Hospitals face increasing pressure to reduce operational costs.
• Traditional employee health benefit plans present opportunities for cost containment.
• Self-funding employee health benefits is an emerging strategy for financial control.

Purpose of the Study:

• To explore self-funding of employee health care benefits as a cost-saving measure for hospitals.
• To evaluate the advantages of self-funded health plans, including improved cash flow and potential reinsurance pooling.
• To inform hospital management about alternatives to current employee health plans.

Main Methods:

• Regional meetings were conducted in fall 1980.
• Discussions involved hospital administrators, chief financial officers, and personnel directors.
• Exploration of self-funding alternatives and pooled reinsurance arrangements.

Main Results:

• Hospital management gained insights into monitoring and evaluating employee health plan alternatives.
• Understanding of potential cost savings through self-funding was enhanced.
• Pooled reinsurance emerged as a strategy for additional financial benefits.

Conclusions:

• Self-funding employee health care benefits presents a viable cost-saving opportunity for hospitals.
• Collaborative reinsurance purchasing can amplify financial advantages for self-funded plans.
• Continued exploration by organizations like SCHA is recommended for optimizing healthcare benefit strategies.