Benefits are often employers’ second largest expense
As countless CFOs can attest, employee benefits have become one of the most significant expenses on the profit and loss statement. Notably, these expenses are rising faster than other costs and are inherently unpredictable, making it critical for finance leaders to proactively manage them. In the face of this challenge, CFOs and their teams must adopt strategies that anticipate and control these escalating costs to safeguard their organization’s bottom line.
The CFO’s evolving role of CFOs in managing benefits costs
In the past, CFOs have typically reviewed benefit expenses quarterly and have engaged in the later stages of the benefits procurement and renewal processes. This approach has now transitioned toward more hands-on involvement, with more proactive partnership with their CHRO and HR teams. Monthly expense reviews have become the norm, giving CFOs real-time insights into cost fluctuations and underlying drivers. By keeping a constant eye on changing trends, CFOs can identify and effectively address cost culprits, such as specialty drugs, out-of-network or inappropriate care, and other factors that can spike claims. Regular in-depth analysis enables CFOs and their HR partners to proactively address the root causes of rising costs and implement comprehensive strategies to address them.
Top buying considerations for CFOs
When evaluating the purchase of healthcare benefit solutions, engagement and return on investment (ROI) are critical factors for finance leaders. CFOs seek partners that can significantly, predictably and sustainably enhance both health and cost outcomes. They need a clear view of the solution’s expected benefits relative to its costs, with supporting, statistically valid data and referenceable case studies.
CFOs appreciate the efficiency of comprehensive solutions that can holistically and measurably address multiple issues (vs. procuring and implementing multiple one-off solutions). However, solution partners must demonstrate how the components collectively contribute to improve the health and wellbeing of their populations, while also decreasing overall costs.
For CFOs, engagement is also a key metric, as employee usage is the first and only way to ensure any return on a benefit investment. So comprehensive solutions that deliver high engagement across multiple cost-control levers—including wellbeing, prevention, navigation and advocacy, as well as health plan administration—offer the ultimate value proposition.
Healthcare costs will continue to be a challenge for employers, and CFOs must equip themselves with the insights, strategies and solutions necessary to continually and successfully navigate this complex landscape.
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