By Sharon Harwood-Davis, Head of Corporate Healthcare Pricing
Rising medical costs, shifting workforce expectations, and increasing reliance on private healthcare have created a difficult question for employers: how do you keep healthcare benefits affordable while still delivering a valuable employee experience?
Many organisations are feeling the pressure of medical inflation and insurer cost increases, all while the NHS continues to experience prolonged waiting times. At the same time, employees expect (and need) personalised, convenient and comprehensive health support as standard.
The insights from the UK employee benefits landscape report show just how quickly this landscape is evolving. For example, more than half of employers now offer unlimited outpatient cover, and more organisations than ever are actively considering introducing private medical insurance (PMI) as part of their core benefits strategy.
Balancing these forces requires a measured, data-led approach. Below I outline four strategic pillars every employer should consider when reshaping their healthcare strategy.
Four essentials for smarter healthcare benefits
Build your healthcare strategy on insight, not assumptions
A sustainable approach to healthcare benefits starts with understanding the true health profile of your workforce. This means looking beyond claims and drawing together insights from:
- Sickness absence and Day-1 reporting
- Demographics and role-related risk factors
- Utilisation patterns across your wider benefits offering.
According to CIPD data, UK employees now take 9.4 sick days per year, up from 5.8 days pre-pandemic – the highest level in over a decade. Understanding why this absence is occurring enables targeted interventions that reduce cost pressures while improving support for employees.
Prioritise prevention – it’s the most cost-effective form of care
As demand for PMI rises and premium pressures continue, proactive health management becomes essential. Employers can reduce unnecessary claims, minimise long-term absence, and support productivity by embedding services such as:
- Early access mental health support
- Musculoskeletal (MSK) pathways
- Digital GP services and triage routes
- Health screening and lifestyle programmes
A prevention-first approach ensures investment goes where it has the greatest measurable impact, not just where it has historically been spent.
Read more about employee wellbeing, personalisation and prevention
Strengthen governance to keep benefits aligned and cost-efficient
Good governance helps employers ensure benefits continue to deliver value over time. This includes:
- Ongoing monitoring of performance, utilisation and cost trends
- Reviewing benefits regularly to match employee needs
- Avoiding duplicated services, especially when insurers provide extensive extras
- Adapting benefit design in line with health risks and employee expectations
With many healthcare benefits now offering wide-ranging digital and wellbeing services, governance ensures every element is purposeful and cost-effective.
Use technology to combine personalisation with affordability
Digital benefits platforms have transformed the way organisations deliver healthcare support. Modern, cost-effective platforms such as Flexcel make it possible to give employees greater choice without escalating employer spend.
A flexible benefits platform helps you:
- Offer personalisation at scale
- Streamline administration
- Improve engagement through clearer communication
- Embed preventative tools and data-led insight
- Expand choice through voluntary (employee-paid) upgrades
Technology is no longer ‘a nice to have’. It is a strategic enabler for sustainable benefits.
How to build a cost-effective, future-proof healthcare benefits strategy
Here’s a roadmap for employers looking to achieve the balance between cost control and employee experience.
Audit and analyse
Bring together all relevant datasets (claims, absence, demographics, utilisation) and ensure robust Day-1 absence tracking is in place.
Tailor and tier your benefits
Blend employer-funded core benefits with voluntary (employee-paid) options delivered through a flexible benefits platform. Health cash plans can be a lower-cost way to support wellbeing and productivity.
Strengthen your preventative offering
Digitally enabled pathways for musculoskeletal (MSK), mental health and general wellbeing can reduce long-term costs while improving support for employees.
Improve communication and engagement
Use data-led decision support, targeted messaging and simple benefit journeys to empower employees to make smarter choices.
Review and optimise regularly
An experienced employee benefits consultant can help you interpret the data, anticipate risks and refine your strategy in line with business goals.
Can you balance affordability and employee healthcare experience?
Absolutely! By taking a data-driven, prevention-focused and technology-enabled approach, employers can create healthcare programmes that support wellbeing, strengthen retention and productivity, and maintain cost.
My colleagues and I specialise in designing health benefit strategies that balance cost, care and commercial value. Whether you’re reviewing your PMI requirements, exploring flexible benefits, or building a prevention-first wellbeing strategy, we can help.
