Before employers shift more healthcare costs to workers, they should ask hospitals a question

American employers face a dilemma: either absorb rising healthcare costs or pass them onto workers. According to Mercer, health-benefit costs are set to increase by 6.7% in 2026, surpassing $18,500 per employee. Nearly half of large firms anticipate changes in 2027 that will increase employees' out-of-pocket expenses. Before burdening workers, employers should first ask healthcare providers a question similar to how they evaluate other suppliers: Are we using what we already pay for efficiently?

Companies wouldn't simply purchase more machinery for an inefficient manufacturing process, nor would a CFO invest in a major capital project without verifying the necessity of the shortage. However, employers often fail to apply the same scrutiny to healthcare spending. Consider hospital capacity. While emergency demands are unpredictable, elective procedures are scheduled.

Some hospitals cluster surgeries and admissions on certain days, creating artificial peaks in demand for beds, nurses, and operating rooms. This scheduling issue can lead to emergency patients waiting for inpatient beds, overloaded nurses, and delayed surgeries. Addressing this artificial variability can improve access while allowing surgical activity to grow.

At Cincinnati Children's Hospital Medical Center, patient flow management changes resulted in $137 million in annual financial benefits and prevented a $100 million expansion. Similarly, The Ottawa Hospital experienced approximately 40 fewer deaths and $9 million in annual savings through operational improvements. These success stories highlight the importance of determining whether existing capacity can be utilized more effectively before investing in additional resources.

While healthcare is a significant operating expense, companies have the leverage to negotiate greater accountability from healthcare providers. When negotiating with health systems, insurers, and provider networks, employers should inquire not only about service costs but also about the reasons behind them. They should ask if avoidable peaks in scheduled admissions contribute to the problem and whether operational improvements have been attempted prior to accepting higher prices or additional capacity.

This approach should not involve micromanaging medical decisions but focuses on scheduling predictable demand, deploying capacity, and managing patient flow. Better access to care can be achieved by examining how existing capacity is utilized, as demonstrated by St. Thomas Community Health Center in New Orleans. Implementing redesigned appointment operations enabled 80% to 90% of requests for same- or next-day care to be met, with patient satisfaction reaching 97%.

Before increasing costs, employers should ensure they are getting maximum value from existing healthcare investments. There will always be a need for healthcare investments, but operational improvement should come before unnecessary expenditure. The question employers should ask before passing healthcare costs to workers is: What are we paying for that we could be using better?