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CFOs across industries are looking across their business to understand how inflation might impact their company’s financials, according to a survey of executives by asset management firm Mercer.  

Inflation stands at 8.5%, according to The Wall Street Journal. Consumers – and employees – are spending more and getting less.

This is influencing decisions on healthcare benefits, which typically represent the largest expense as compared to other operating expenses.

Executives view health benefit costs as a significant concern, according to the survey, with the majority of CFOs placing it among their top three or five concerns. Sixty-eight percent of survey respondents cited healthcare as a significant or very significant concern, as compared to other operating expenses.  

Sixty-four percent said that healthcare cost growth needed to be at the consumer price index level or below to be sustainable for their organizations. This goal is challenging, given the headwinds against it: higher utilization as people catch up on missed care; the impact of long COVID-19; and new high-cost gene and cellular therapies that point to faster cost growth, according to Mercer. Also, healthcare cost growth tends to lag behind inflation.

WHY THIS MATTERS

When CFOS were asked which cost management strategies should be emphasized to control benefit expenses, they were less supportive of plan design changes than of provider network strategies or clinical management programs, according to the Mercer report. 

This is because plan design changes generally shift cost to employees, giving them a level of dissatisfaction with their job during a time of a tight labor market and inflation.

Mercer recommends that companies consider a multi-pronged approach for cost management, in a portfolio approach for interventions at a segmented level, such as for those with chronic conditions or for inpatient facility expenses.  

THE LARGER TREND

Claims data shows cost trends varied significantly among employers in 2021.

Greater volatility and uncertainty in costs is expected going forward, the report said. Not taking action is not a good option, Mercer said.

Mercer’s report, The CFO Perspective on Health, is based on a survey done from January to early March. The survey had a total of 114 respondents. Eighty-one percent are CFOs, or have a finance or accounting role with healthcare budget oversight.
 

Twitter: @SusanJMorse
Email the writer: [email protected]



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