Why Employers Can’t Afford Another Year of Siloed Condition Management

The Perfect Storm: Rising Costs + Growing Chronic Conditions

For large employers running self-funded plans, 2025 was another challenging year, marked by rising healthcare costs, the increasing prevalence of chronic conditions, and ever-growing complexity. According to Mercer, planned healthcare costs per employee are expected to jump 6.5% on average — and up to 9% if no action is taken. That could push employers’ per‑employee medical spend exceed $16,000 annually.

At the same time, chronic diseases continue to take a heavy toll. Some data suggests as much as 90% of healthcare costs in the U.S. are linked to chronic conditions such as cardiovascular disease, hypertension, cancer, diabetes, and mental-health issues. 

For employers, that translates into soaring claims, rising premiums, increased absenteeism, and reduced productivity. 

Despite this, most employers still rely on a patchwork of stand-alone, point solutions — separate disease-management programs, wellness initiatives, high-deductible plans, or occasional benefits nudges. In other words: siloed condition management. That approach is no longer sustainable in the face of a rapidly shifting healthcare market. 

The Hidden Cost of Siloed Strategies

Siloed solutions create several inefficiencies and risks:

• Fragmented care and poor support coordination. Employees juggling multiple chronic conditions may receive help from disparate programs: diabetes management from one vendor, behavioral health from another, lifestyle coaching from another. Without a unified view, critical interdependencies are missed, like how unmanaged depression could be worsening diabetes outcomes. This lack of coordination can lead to redundant treatment, gaps in support,  increased hospitalizations, and frustrated members who are not seeing results. 
• Rising specialty-drug and high-cost claims pressure. As new therapies, including high-cost GLP-1s, emerge, costs are concentrated among a small number of members. If these “claim spikes” are poorly managed by uncoordinated plans, they can potentially trigger steep premium hikes, stop-loss renewal risks, or even plan instability. 
• Productivity losses beyond medical spend. Chronic diseases, and associated risk factors like obesity, inactivity, or smoking, have been shown to increase absenteeism. Employers absorb over $2 billion per condition per year for absenteeism costs associated with hypertension, diabetes, smoking, physical inactivity, and obesity.
• Benefit complexity leads to low engagement and adherence. When employees face multiple uncoordinated tools, they can become overwhelmed, leading to poor adherence, underutilization of preventive care, and reactive treatment rather than proactive management. Over time, this results in worse health outcomes and higher costs, in addition, to investment in tools that are not utilized.

For a large self-funded employer, these inefficiencies are a strategic risk. Rising premiums, unpredictable claims volatility, and unhappy employees threaten both the bottom line and workforce stability.

Why Traditional Cost‑Control Tactics Are Losing Power

In past years, many employers relied on tactics like raising deductibles, shifting costs to employees, or offering high-deductible health plans (HDHPs) to curb spend. 

But increasingly, those tactics are failing to deliver real long-term savings, especially in a world of chronic disease and escalating specialty drug use. According to recent research, high out-of-pocket cost-sharing can even lead to worse outcomes: fewer preventive or wellness visits and more emergency care use when people delay needed care. 

In short: shifting costs to employees may reduce short-term spend, but it often increases long-term risk, especially for chronic conditions.

The Alternative: Integrated, Value‑Driven Condition Management

Rather than continuing to add new point solutions on top of older ones, forward-thinking employers are embracing integrated, value-driven condition management. The goal should be to unify support for chronic care across prevention, lifestyle support, medication adherence, monitoring, and mental health, with comprehensive digital support resources for members.   

Here’s why this matters:

• Better support leads to better outcomes. With a comprehensive view of member data, plans, and care teams can more easily spot trends, tailor personalized interventions, and provide proactive support. 
• Preventive care and chronic-care management can blunt cost inflation. By proactively managing chronic conditions, employers can reduce the future occurrences of high-cost events. 
• Improved employee experience and engagement. Employees benefit from a simpler, more integrated experience, less confusion, fewer apps or programs to navigate, and more holistic support for their health. That can translate into higher engagement, better retention, and greater satisfaction.

How Employers Can Take Action for Success

For employers with large self-funded populations, the next 12–24 months are critical. Here’s a playbook to shift from fragmented cost-control to integrated condition management:

1. Audit your current benefit ecosystem. Catalog all chronic-disease, wellness, and benefit programs. Identify redundancies, gaps (mental health, lifestyle, medication adherence), and potential areas of point-solution fatigue among employees.

2. Quantify the true cost of unmanaged chronic disease. Use cost calculators or consult vendors to understand direct medical spend, along with lost productivity, absenteeism, disability, and long-term risk.

3. Prioritize integrated solutions that manage multiple conditions. Look for programs that offer comprehensive condition management, not just disease-specific modules. This is especially important as comorbidities rise.

4. Evaluate long-term ROI, beyond just short-term cost-savings. Integrated chronic-care management may require upfront investment, but research suggests properly designed interventions can yield meaningful ROI over time. 

5. Embed employee engagement and behavior change. Offer tools that make it easy and convenient for employees to engage (digital coaching, mobile access, coordinated care navigation, data-driven insights).

Why 2025 Is the Inflection Point

Integrated platforms help reduce vendor sprawl, proactively manage chronic disease, and support long-term cost stability, while remaining scalable and employee-friendly.

With employer health-care costs rising rapidly, 6.5% to 9% just next year for many self-funded employers, continuing with siloed condition-management strategies is risky. 

Employers who lead this shift will be better positioned to manage costs, improve employee health, and maintain competitive benefits in a turbulent health care cost environment.

For large self-funded employers, another year of siloed condition management is a growing concern. With chronic disease prevalence increasing, specialty drug costs rising, and health-care inflation showing no signs of slowing, the status quo guarantees rising costs, unpredictable financial exposure, and frustrated employees.

But there is another path: integrated, value-driven chronic condition management. By consolidating support, investing in preventive and ongoing tools, and embracing holistic health strategies, employers can turn what’s been a cost center into a source of long-term stability, better employee health outcomes, and sustainable benefit spend.

If you are interested in exploring a comprehensive solution for your team, contact Lark to get started.