Managing Employer Healthcare Costs: 6 Strategies for Smarter Benefits Decisions

Healthcare costs continue to put pressure on employers, and finding ways to manage that spending has become a growing priority for HR leaders, CFOs, CEOs, and business owners.

But controlling healthcare costs isn't as simple as negotiating a better renewal or adjusting an employee health plan. Employers need to understand what's driving their spending, where opportunities exist to improve efficiency, and how their benefits strategy impacts both employees and the bottom line.

At the 2026 Benefits Beat, healthcare industry experts Sarah Michaels, Chief Clinical Officer at Kinetic Health, John Holt, Vice President of Sales and Marketing at Auxiant, and Dr. Patrick Aguilar, pulmonologist, Managing Director of Health at WashU Olin Business School, and former Chief Medical Officer at QuikTrip, joined Caravus Chief Commercial Officer Brett Estep for a discussion on the state of healthcare.

Their conversation explored the challenges employers face and, more importantly, what they can do about them.

Here are six important takeaways for employers looking to make smarter healthcare and employee benefits decisions.

1. Understanding What's Actually Driving Your Healthcare Costs

Before employers can begin managing healthcare costs, they need to understand what's driving them.

While healthcare utilization often gets much of the attention, the cost of individual services and treatments can have an even greater impact on an employer's overall healthcare spending.

Sarah explained that employers need to look beyond aggregate claims totals and start examining what's happening at the individual level.

"I think we no longer have a utilization problem. It's not that more people are even accessing healthcare today that's driving the cost of claims. It is the unit cost per person accessing care that has gone up drastically."

When asked where employers have the greatest opportunity to intervene, Sarah talked about how the cost of individual treatments and services has increased significantly. She pointed to cancer treatment costs as an example, noting that the average cost of cancer treatment has grown from approximately $9,000 in 1980 to $225,000 last year.

She also emphasized the importance of identifying the individuals and conditions driving the greatest share of an employer's claims.

Rather than focusing exclusively on overall plan spending, employers should be asking: Who is driving our claims, what's contributing to those costs, and what can we do about it?

Understanding those patterns is an important first step toward building a more proactive healthcare strategy.

2. Self-Funding Gives Employers an Opportunity to Make More Informed Decisions

For employers evaluating their healthcare funding strategy, understanding the relationship between claims data and cost management is particularly important.

Self-funded health plans can give employers greater visibility into their healthcare spending and more opportunities to influence how their healthcare dollars are used.

John, who works extensively with self-funded employers, emphasized that access to data is one of the biggest advantages employers can leverage.

"I'm a big believer that groups are empowered by using their data to make better decisions within the healthcare space."

When asked whether employers have opportunities to influence healthcare costs, John shared examples of how dramatically the cost of the same healthcare service can vary depending on where it's delivered.

An MRI might cost $500 at one provider and $3,000 at another. The same infusion medication could cost $5,000 in one setting compared to $30,000 elsewhere.

These differences demonstrate why understanding claims data matters.

For self-funded employers, having visibility into claims can help identify pricing variations, recognize spending patterns, and make more informed decisions about where and how employees access care.

Read a real-world example of how self-funding can create opportunities for employers

Self-funding isn't the right solution for every employer, and it comes with additional financial risk and responsibility. But for organizations with the appropriate size, risk tolerance, and support, it can create opportunities to take a more active role in managing healthcare spending.

3. Managing Healthcare Costs Starts With Where Employees Receive Care

Understanding healthcare spending is one thing. Doing something about it is another.

One of the biggest opportunities discussed during the panel was helping employees make more informed decisions about where they receive care.

John explained that employers often spend considerable time evaluating plan designs and renewals while overlooking the cost differences between healthcare providers.

"They need to know before they have a need for care. The point of selecting a doctor cannot be once you're referred to the surgeon or selecting the hospital."

When asked what strategies are actually working to contain healthcare costs, John discussed the importance of educating employees earlier in the healthcare decision-making process.

By the time an employee receives a referral for surgery or a specialized treatment, they may already feel committed to a particular provider or facility.

He further explained that employers can use education and strategic plan design to encourage employees to consider higher-value providers before they need care.

This may include provider incentives, direct-to-employer contracts, or more focused provider networks.

The goal isn't simply to find the cheapest option. It's to help employees access quality care while avoiding unnecessary differences in healthcare spending.

a client example of how alternative surgical contracting can make a difference

4. Healthcare Should Be Viewed as a Strategic Investment, Not Just an Expense

Healthcare is often approached as another business expense to manage, particularly when employers are facing significant renewal increases.

But Patrick offered a different perspective: Employers should consider the long-term value of their healthcare investment, not just the immediate cost.

"There's so much power in taking the perspective that healthcare expenses are a strategic investment, they're a strategic decision and not entirely a cost containment activity."

When asked what employers might be missing from the healthcare conversation, he emphasized the influence employers have in shaping how healthcare is accessed, delivered, and paid for.

Managing healthcare costs is important, but the conversation shouldn't stop there.

Employers also need to consider how their healthcare decisions influence employee health, access to quality care, and long-term outcomes.

A strong benefits strategy should balance financial sustainability with the ability to help employees get the care they need.

5. Healthcare Data Should Help Employers Look Ahead, Not Just Look Back

Claims reports can tell employers a lot about what's already happened. But what if that information could help employers prepare for what's coming next?

Sarah explained that healthcare data is becoming increasingly valuable as employers look for opportunities to identify potential risks earlier.

"The data is there. People struggle to understand how to use the data because especially if you're HR, right, you're not a clinician, you don't know what this data even means half of the time."

When asked how close the industry is to moving beyond reporting what happened toward predicting what's coming next, she said that the information employers need is often already available.

The challenge is knowing how to interpret it and what actions to take.

For example, employers may already have employees with conditions that could qualify for expensive emerging treatments. Identifying those potential risks earlier creates an opportunity to prepare, explore care options, and understand the financial implications before costs escalate.

This is where working with knowledgeable healthcare and benefits partners becomes especially important.

Employers shouldn't have to become clinical experts to understand their healthcare spending. They need the right people helping them turn complex data into meaningful decisions.

6. What CEOs and CFOs Should Actually Be Measuring

Healthcare reporting can quickly become overwhelming, particularly when employers are presented with pages of claims reports, utilization statistics, and vendor dashboards.

But which metrics actually deserve an executive's attention?

Brett posed that exact question to Patrick, asking which five healthcare metrics he would put in front of a CEO or CFO each quarter.

"A solid relationship with a primary care doctor who has time to engage with you on your health problems is unbelievably critical."

When asked which healthcare metrics executives should prioritize, Patrick identified primary care utilization and intra-category cost variation as two particularly important areas.

He explained that strong primary care relationships can help prevent more serious health issues and unnecessary downstream costs.

He also emphasized the importance of understanding variations in healthcare spending within the same category of care.

For example, if employers are spending dramatically different amounts on cardiac care depending on the hospital or provider, understanding those differences can help identify opportunities to improve value.

John added another perspective from the payer side, emphasizing the importance of tracking per-employee-per-year costs, major spending categories, and provider utilization.

Together, these perspectives reinforce an important point: Healthcare reporting should do more than tell employers how much they spent. It should help them understand why they spent it and what they can do differently moving forward.

Taking a More Proactive Approach to Healthcare Costs

There isn't one solution that will fix rising healthcare costs for every employer. Each organization has different employees, healthcare needs, financial considerations, and opportunities to improve its benefits strategy.

But one message from the Benefits Beat panel was clear: Employers aren't powerless against rising healthcare costs.

Understanding claims data, evaluating funding strategies, identifying opportunities for more cost-effective care, and measuring the right things can help organizations make more informed decisions about their healthcare spending.

At Caravus, we believe employers deserve more than a renewal conversation. They deserve a proactive partner who understands their healthcare data, challenges the status quo, and helps them build a benefits strategy that supports both their business and their people.

For more information on our services or our Benefits Beat event, contact us.