Ahzam Afzal is the Co-Founder and CEO of Puzzle Healthcare.
Employee healthcare costs continue to be a major challenge for businesses, accounting for 29.7% of all compensation costs for U.S. private organizations. Employer-sponsored health insurance cost organizations an average of $16,501 in 2024. Unfortunately, these prices are expected to rise over the next few years, with a 5.8% increase expected in 2025 alone. This trend leaves employers wondering how they can continue to be profitable without reducing health benefits and putting employees’ health at risk.
One of the biggest drivers of these runaway healthcare cost increases is hospital admissions and readmissions. In many cases, these are individuals with chronic illnesses—diabetes, chronic obstructive pulmonary disease, obesity and heart disease—needing emergency care because they experience infections, stroke, electrolyte disorders, etc., many of which are avoidable with better healthcare. These costs don’t include any post-acute treatment or antibiotics that could increase costs even more.
Considering that one survey found that over half of employees (52%) are struggling with at least one chronic condition, the problem of excessive hospitalizations directly impacts employers. The same study found that 28% of employees are dealing with productivity issues due to a chronic condition. What’s more, about 7.8 million employees missed work in January 2022 due to a medical issue, per the Bureau of Labor Statistics.
Then, there’s the massive financial impact on employers. Employers pay for sick time while employees are hospitalized, which could extend for several weeks depending on the severity of the illness or condition. In 2022, spending on hospital services accounted for 42% of total U.S. personal healthcare spending for privately insured individuals.
In addition, approximately 14.5% of patients discharged from a hospital are readmitted, resulting in additional costs incurred by patients and further time away from jobs and livelihoods, as well as driving up health plan premiums and out-of-pocket costs. Of these readmissions, 27% are easily avoidable with adequate treatment.
This is where employers and healthcare business leaders can step in to help patients and employees receive the best care possible to avoid further complications and help improve patient and employee outcomes across the board.
Employers Playing A Role
Employers are ideally positioned to be at the forefront of supporting employees with chronic illnesses, helping them avoid unnecessary hospitalizations that drive up costs and result in absenteeism. Business leaders should keep in mind that individuals managing a chronic condition can sometimes struggle to maintain perfect in-office attendance as they manage their symptoms or go to medical appointments.
Here are some recommendations:
• Offer flexible work arrangements. Allow more flexibility in worksite arrangements or even reduced work hours or modified work tasks to better accommodate individuals dealing with one or more chronic illnesses.
• Establish a supportive company culture. Business leaders can signal to employees that they should prioritize their well-being, especially during times of heavy work demands, and make use of any mental health benefits offered. Excessive strain and stress can impact individuals with chronic illnesses severely in some situations.
• Offer wellness programs. Preventative measures are the best way to manage a chronic condition. Employers can offer wellness programs that incentivize employees to engage in healthy behaviors or even reward them for hitting fitness milestones (e.g., a number of daily steps). Business leaders can also provide incentives for employees to get preventative care visits and treatment, which is especially important for people living with chronic illnesses.
Healthcare can be extremely expensive for employees and their employers. While emergencies are often inevitable, hospitalizations (and readmissions) can be avoidable. Given the serious implications readmissions have on the cost of care and health outcomes, this should not be overlooked.
Encouraging healthy habits and promoting health and benefits information at the business leader level ensures employees are aware of their benefits and getting the care they need before it is too late. By offering robust benefits, a supportive culture and some accommodations for certain employees, employers can help reduce unnecessary hospitalizations, drive healthcare costs down and create a healthier and more productive workforce.
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