Employers provide the majority of health benefits in the United States and have increasingly been feeling the pinch of increased health care costs. Average annual per employee costs for health benefits rose above $15,000 in 2022, according to Mercer, and show no signs of slowing. In fact, national health spending is projected to reach $2.7 trillion by 2031, according to CMS. Complicating matters is the fact lower quality care is more expensive in the long term, so to make a meaningful impact on value, employers must address quality first, and they are putting an ever-greater focus on that. According to the same study, more than half of large employers say steering employees to higher-performing providers is important to them. But how?

Unwarranted variation in care, which is an inconsistency in health care processes or outcomes compared to evidence-based guidelines, is a huge contributor to high health care costs. One recent study published in JAMA Health Forum showed despite guidelines designed to reduce variation in clinical practice, physicians practicing in the same area lacked standardization in the care they provided, resulting in wide variation in cost for different patients experiencing the same procedure. A reliable data set that highlights physician performance relative to others providing similar care can help create a baseline for what optimal care at the right price looks like. 

Healthy employees take less time off work and are more productive, so tools to help direct employees to higher quality physicians are valuable not only in controlling health care spend, but in creating a positive impact to the bottom line. Most health plans, however, do not provide tools to effectively measure the quality of the physicians beneficiaries might choose. Employers must insist on them.