By Matt Ferguson, Chief Operating Officer at Cobalt Benefits Group
Hospitals and healthcare systems face unique challenges when it comes to managing employee benefits. Why? Because they’re both the employer that offers healthcare benefits—and the provider that delivers the care those employees need.
While this important distinction can complicate benefit plan design, it also means hospitals and health systems can have strategic opportunities that don’t exist in other industries. At Cobalt Benefits Group, we’ve spent over two decades pioneering innovative approaches specifically designed for healthcare systems. Here’s what we’ve learned about designing plans that maximize the value of employee benefits, while leveraging their own resources.
Tailoring Benefit Plans for the Healthcare Industry
Our specialized focus on healthcare systems dates back to 2000, when new leadership came to Cobalt. Our former CEO—previously a hospital executive himself—was frustrated in his prior role by an inability to get what he wanted from traditional health insurance carriers and third-party administrators (TPAs). Their systems simply weren’t designed to take advantage of the unique opportunities available to healthcare providers.
From day one, he ensured all our systems could handle features that healthcare providers specifically needed, such as making their owned facilities and physicians a preferential benefit tier for their employees. This “steerage plan” approach, which we pioneered, allows healthcare systems to create different cost-sharing levels that incentivize employees to use the organization’s own resources.
While steerage plans are common today, Cobalt was an early adopter of this approach. Over the years, we’ve continued building specialized capabilities as we’ve gained a deeper understanding of the healthcare industry.
Beyond Basic Steerage: Comprehensive Benefit Solutions
From these early days, our approach has evolved far beyond basic network steering. Below are some examples of how our solutions can be customized to specifically address the unique benefits needs of hospitals and health systems:
Process No-Pay: Smarter Payment Models
Consider this scenario: As a hospital administrator, you’re sending cash to your TPA only to receive a check back for services provided at your own facilities. Our “process no-pay” model eliminates this inefficient money movement, improving cash flow and speeding up accounts receivable processes. This feature multiplies the effective cash flow enhancement already inherent in self-funded plans.
Community Partner Integration
Healthcare systems often want to bring other community partners into their preferred network tier. For example, a small community hospital without oncology services might want to establish a CFO-to-CFO partnership with another non-competing hospital. This arrangement allows their employees to access these specialized services at the same preferred benefit level, creating win-win situations for both organizations.
Pharmacy Distribution Control
Many healthcare systems want to leverage their pharmaceutical purchasing power. Whether through operating their own domestic pharmacy or establishing partnerships with local pharmacy chains at advantageous contractual prices, healthcare providers can extend their 340B programs and GPO pricing to their employee benefits plans. Our PBM partner systems are designed to integrate seamlessly with these arrangements.
Clinical Intelligence and Analytics
At Cobalt, we help employers leverage claims data to make smarter benefits decisions. Our analytical platform provides the clinical intelligence healthcare systems need, with robust reporting to identify opportunities like:
- Prescribing patterns that increase costs
- Instances where doctors refer patients outside the preferred network
- Overall health and risk stratification of the employee population
- Quality and outcomes insight by attributing patients to specific physician panels
This intelligence allows healthcare systems to direct employees to programs they already operate. For instance, if analytics reveal a significant diabetic population among employees, we can help connect those individuals with the hospital’s existing diabetic management program—a resource they already have but aren’t fully leveraging for their own health plan.
Enhanced Member Engagement
In our experience managing employee benefit plans, engagement levels are significantly higher when outreach comes from the employer-hospital than communications from third-party vendors. Why? Because employees are much more likely to respond to (and participate in) programs offered by their own healthcare system.
Hospitals are great at serving the community, but when it comes to their own health plan, it often gets neglected—like the mechanic’s car that never gets fixed. Our approach helps healthcare systems apply the same care and attention to their employees that they provide to the community.
The Right TPA Offers Complete Control and Customization
Healthcare systems using our platform gain unprecedented control over their plans. This includes:
Custom Reimbursement Rates
In a traditional three-tiered plan design (domestic system, in-network, out-of-network), our healthcare clients can dictate exactly what their contractual rates should be for their domestic tier. Some choose to use their Blue Cross Blue Shield network rates, while others create custom rates—whether it’s a percentage off charges or a Medicare-based factor. This flexibility allows them to structure their revenue appropriately for their specific financial goals.
Customized Utilization Management
Healthcare providers often view themselves as the experts—and rightfully so. After all, the specialists at major hospitals are the very professionals writing peer-reviewed journals and defining standards of care. They don’t want an external utilization management program questioning their medical necessity determinations.
Our platform allows hospitals to customize utilization management rules, particularly for services provided within their system. As one specialist from a major cancer center once emphatically pointed out during a review discussion: “I actually wrote the standard of care.”
Generating Real-World Results
The power of our tailored benefits approach is best illustrated through real examples:
During one healthcare advisory group meeting, we identified substantial spending on durable medical equipment from a California supplier. When provided with the attending physician information, the chief of staff immediately addressed the situation. The physician was new to the system and ordering equipment out of habit. This simple intervention redirected spending back to the hospital’s in-house resources at a third of the cost.
In another case, our analytics revealed significant “leakage” of rheumatology care outside the system. The healthcare system was struggling to recruit a rheumatologist in their rural setting. When the CFO saw the million dollars in rheumatology spending leaving their system, they dramatically increased their recruitment offer and successfully hired a specialist. The following year, all that revenue returned to their system.
The Cobalt Difference
Our extensive experience in the specialized nuances of the healthcare industry—from our custom-trained member services representatives to our collaborative approach in healthcare advisory groups—ensures that we understand the unique challenges and opportunities of healthcare systems.
We’re not just a vendor; we’re a partner who sits shoulder-to-shoulder with healthcare administrators, helping them leverage their own resources more effectively while providing superior benefits to their employees. After more than a quarter of a century pioneering benefits solutions specifically for healthcare systems, we’ve built an approach that recognizes the fundamental truth: a dollar spent at a hospital’s own facility is fundamentally different than a dollar spent elsewhere. Our mission is to help you keep more of those dollars working within your own system while providing exceptional care for your most important asset—your employees.