Small Businesses Increasingly Self-Funding Health Plans; Opportunities Exist for Innovative Hospitals

Self-funded health plans, which have been long used by large employers to control healthcare costs, are increasingly being considered by small- to mid-sized businesses, according to a recent report by United Benefit Advisors.

According to the report, healthcare reform has prompted many employers to reexamine their employee benefits and their costs. While cost-sharing and cost-shifting are common strategies, some small and midsize employers are taking an even bigger plunge into an alternative method of funding that once was feasible only for big companies: self-funded healthcare plans.

"There has been a trend over the past decade of small to midsize employers moving toward self-funding, but we are seeing this now more than ever," said Robert Calise, principal at Cornerstone Group of West Warwick, R.I., a member firm of United Benefit Advisors. "Since healthcare reform, smaller companies under 200 employees have shown an increased interest in self-funding, which offers more control over the dynamics of the plan."

The 2010 UBA Employer Opinion Survey also points to a move toward self-funding. The survey found that while 17.5 percent of respondents currently have a self-funded plan, an additional 12 percent said they would like to implement that funding strategy someday.

This trend is noteworthy for hospitals, because self-funded health plans provide opportunities for hospitals to partner with employers directly on innovative programs, such as bundled payments and care coordination programs.

To receive the full report, “Small Businesses Blaze a New Trail with Self-Funding,” contact your local UBA Member Firm.


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