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PEO Solutions for Healthcare Industry

Updated: Apr 13, 2022

As the healthcare industry continues to face increasing costs, many medical practices are starting to explore areas where they can cut costs. Medical practices, like most small businesses are starting to feel the pressure of employee salary increases, rising employee health insurance costs, and constantly changing labor laws. By partnering with a Professional Employer Organization (PEO), a medical practice may be able to reduce their employee related costs and administrative burden.

What is a PEO?

PEO stands for Professional Employer Organization. PEOs are a type of outsourcing option for a full array of HR services including payroll, employment taxes, employee benefits, risk management, workers’ comp, and other employer administrative functions. When a business partners with a PEO, they enter into a co-employment agreement. The PEO becomes the professional employer of your workforce whereas you maintain control of all organizational decision making, your employees’ job functions and day to day tasks. A client service agreement (CSA) will be reached to determine which functions get outsourced.

What is co employment?

Co-employment can be described as the contractual client service agreement (CSA) that allocates certain responsibilities between the PEO and the client company according to NAPEO, the governing body of all PEOs nationally. The PEO will assume responsibility for some employment related functions like processing payroll, administering employee benefits, and securing workers’ compensation coverage just to name a few. As the business owner, you would still be responsible for the day-to-day operations including the hiring or firing of employees, business operations, and financial decisions. A PEO just acts as an extension of your HR team. Each client service agreement may vary from client to client along with the services the PEO is responsible for.

How can a PEO benefit my practice?

Relieve administrative burden

Due to the co employment agreement, when a smaller practice joins a PEO, they immediately become part of an organization that has thousands of employees. The co employment agreement allows the PEO to handle much of the administrative burden of providing human resources, processing payroll, administering employee benefits and worker’s comp coverage, on behalf of the client company. This allows the client company to focus on other aspects of their business, like, patient care billing, collections, and finances. Utilizing a PEO not only saves time, but many clients also realize savings in administrative overhead.

Employee Benefits

Because of the unique co employment relationship and the vast number of employees in a PEO, they are a great alternative from other traditional benefits providers. Since there are typically thousands of employees in a PEO network, PEOs can offer higher quality benefits packages at a cheaper cost. This is due to economies of scale. PEOs leverage their massive employee count by purchasing large group plans and administering them on behalf of their clients. PEOs are able to offer the same benefits as Fortune 500 companies for a fraction of the price.

Workers Comp

Similarly, to employee benefits, PEOs provide workers comp insurance by taking advantage of their employee count to purchase large group plans. One of the differentiators of PEO worker comp plan is that any claims are counted against the PEO’s experience modifier. This makes the PEO have a financial incentive to ensure a safe working environment for its clients. Because of this, many PEO clients experience lower unemployment and workers comp rates as well as lower employee health insurance costs.

Health Insurance Plans

Smaller medical practices may not be accepted under certain health insurance plans due to age, gender or overall health status of its employees. However, in a PEO partnership, that same group, when pooled with the other employees of the PEO, may “fall below the radar” and be accepted into the plan. While the increasing cost of providing health insurance may be inevitable, by joining a PEO, employers will be able to significantly reduce the rate of increase.

The Cornerstone Advantage

It’s clear that PEOs are a great option for companies in the healthcare industry. Not only do PEOs help your bottom line, but they also save you a lot of time. A PEO is also the easiest option when considering outsourcing. Why would you want to deal with multiple organizations for payroll, benefits, insurance, etc. when it is much simpler to use one organization who can provide all those services?

Like other PEOs, Cornerstone will help you save significantly on employee benefits, automate your payroll, lower your experience modifier, and help with certain employee related compliance. However, unlike other PEOs, our focus is on excellent customer service.

Other PEOs will just add you to their system and send you an invoice. At Cornerstone we assign a professional customer service rep to work with your account. This not only adds more of a human touch, but it also allows us to create custom solutions unique to your business. Got questions? We have a rep to help you answer them. A problem occurred? You have a rep who understands your business and can create an effective solution.

Contact us here for a FREE consultation.


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