How this company saved over $5 million with a self-funded health plan

In an uncertain labor market and economy, employers can usually bet on healthcare prices consistently increasing each year. But what if it's possible for employers to escape a seemingly inescapable trend? 

According to consulting firm Willis Towers Watson, health plan costs are expected to increase by over 6% in 2024 — 2022 and 2023 saw similar price hikes, making it clear that healthcare wouldn't become more affordable in the wake of a global pandemic. And yet, Nebraska Furniture Mart (NFM) managed to save $5 million in health plan costs in 2022 alone. After NFM partnered with Centivo, a health plan provider for self-funded employers, the company moved away from the traditional care model for its 5,000 employees. Instead, it focused on curating a network of healthcare providers that had shown evidence of having the best health outcomes at the best prices. 

"The savings come from good contracts with good [healthcare] providers," says Megan Berry Barlow, chief human resources officer at NFM. "To me, that means visibility. We know the quality of providers and what those providers will be charging."

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This also meant ensuring each of their health plans, whether it was their high-deductible plans or low-deductible PPO plans, centered low to no-cost primary care access. Beyond transparency, the trick to lowering health plan costs is to change utilization, explains Sarah Fitzmaurice, chief client success officer at Centivo.

"Ultization is about driving up good spend, like preventive care and preventive screenings, and driving down bad spend, like ER visits," she says. "We manage both pieces in our model."

Fitzmaurice emphasizes that the solution to lowering healthcare spend isn't necessarily complicated because of the concept itself: it comes down to the age-old saying of quality over quantity. Employers need to design a plan around which providers can offer the best care. But historically only bigger companies, like Disney or Boeing, had the resources and manpower to identify those providers, notes Fitzmaurice. 

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For Barlow, that's how Centivo made the biggest difference — they can identify the best providers and healthcare systems for NFM's employee population. Barlow recalls that 20 years ago, the company couldn't even find a medical provider to help them build a program to help their employees manage diabetes. Now, they know which providers they should have in-network and what programs deserve coverage because they can check not only with Centivo but with the providers themselves.

"There are vendors that tell you different quality metrics for providers," says Barlow. "But for us, it was more important that we could enter into a relationship where we can have a conversation with a provider or health care system and talk about specific things we wanted to do for our population, metrics and outreach."

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Fitzmaurice advises employers to consider if they know the outcomes their health plans are producing for their workforce. This may mean asking for claims data from their insurance carrier, or reviewing their own data to see if employees are using their health plan, and getting better or maintaining their health as a result. Red flags to look out for include low preventative care utilization, high number of ER visits and a rise in chronic conditions. Barlow and Fitzmaurice agree that healthcare costs will continue to climb unless employers demand a different model. 

"This is the perfect example of an employer taking back control of their health care plan to do the right thing by their people," says Fitzmaurice. "They're lowering their spend by offering people access to higher quality providers, and they've had success that's virtually unheard of in today's economic environment."