The Numbers Come First
American employers are staring down a 6.7% increase in health-benefit costs in 2026 — the steepest climb in 15 years, according to Mercer. The average cost per employee will breach $18,500. Average family premiums already reached $26,993 last year, per KFF, with workers contributing $6,850 before deductibles even begin. Nearly half of large employers expect plan changes in 2027 that will push even more of that burden onto employees.
Roughly three-quarters of CFOs now rank healthcare among their five biggest operating cost concerns, Mercer found. That is no longer a benefits-department problem. It is a capital-allocation problem.
The Question No One Is Asking
Eugene Litvak, president and CEO of the Institute for Healthcare Optimization and an adjunct professor of Operations Management at the Harvard T.H. Chan School of Public Health, argues that employers are skipping a step every competent CFO takes before any other major purchase: Are we using what we already pay for efficiently?
His target is hospital scheduling. Emergency demand is inherently unpredictable — heart attacks and appendicitis do not book appointments. Elective procedures do. Yet many hospitals concentrate scheduled surgeries and admissions on specific weekdays, manufacturing artificial demand peaks. The result: emergency patients wait for beds, nurses are overloaded, and operating rooms sit idle on other days. What looks like a capacity shortage is, in part, a scheduling problem.
What Operational Discipline Actually Delivers
The case studies Litvak cites are concrete. At Cincinnati Children's Hospital Medical Center, changes in patient flow management improved access to critical care while allowing surgical volume to grow. The financial benefit reached $137 million annually, and the hospital cancelled a planned expansion costing more than $100 million after determining the additional capacity was unnecessary.
At The Ottawa Hospital, operational improvements were associated with approximately 40 fewer deaths and $9 million in annual savings. At St. Thomas Community Health Center in New Orleans — a federally qualified health center serving largely uninsured and Medicaid patients — redesigned appointment operations enabled 80% to 90% of requests for same- or next-day care to be met, with patient satisfaction on access reaching 97%. No new clinic. No new workforce. Better use of what already existed.
The Lever Large Employers Are Not Pulling
Litvak is explicit that this is not a call for employers to practice medicine. Diagnosis and treatment belong to clinicians. But scheduling predictable demand, deploying capacity and managing patient flow are operational questions — the same questions every sophisticated manufacturer, logistics firm or retailer answers every day.
Large self-insured employers carry real purchasing power. When negotiating with health systems, insurers and provider networks, they can demand answers: not just what services cost, but why costs are rising, and what operational improvements have been attempted before asking for higher prices or funding new capacity.
The Editorial Read
Free enterprise runs on one discipline above all others: you do not buy more of something until you have wrung full value from what you already own. American business applies that standard to machinery, software, real estate and labor. Healthcare has been exempted from it for decades — and workers and shareholders are paying the price.
The forces driving healthcare inflation are real: new drugs, an aging population, genuine labor shortages. Operational improvement is not a substitute for necessary investment. But as Litvak frames it, it must come before unnecessary investment. Employers who accept higher premiums without first demanding operational accountability are not managing costs — they are funding inefficiency. The market has already voted on what happens to companies that do that everywhere else.
