Employer’s guide to reducing healthcare costs: smarter MSK strategies for 2026

Healthcare costs are rising faster than wages, faster than inflation, and faster than many CFOs can plan for. U.S. employers already spend about $1.2 trillion each year on employee health benefits¹. By 2031, large employers could see healthcare costs reach more than 9% of their total revenue².

Many organizations feel they’ve done all they can to manage this burden. Common cost-reduction tactics see health plan administrators raise deductibles, increase cost sharing, or narrow networks. But year after year, the same drivers keep pushing spend higher.

One driver is especially hidden: musculoskeletal (MSK) conditions. 

These are injuries and disorders that affect the body’s movement, like back pain, neck pain, knee pain, shoulder issues, and so much more. 

• The U.S. spends more than $500 billion annually on MSK care³. 
• Nearly $91 billion of that is wasted on low-value interventions like unnecessary surgeries and advanced imaging that doesn’t improve outcomes⁴.

This guide breaks down why employer healthcare costs keep climbing, how MSK pain drains budgets and productivity, and what smart plan design can do to fix it.

Why employer healthcare costs keep rising

The rising cost of employer healthcare is not just about expensive medications or rare catastrophic events. 

Chronic conditions drive the bulk of claims. Heart disease, diabetes, and mental health are well known, but MSK issues are the top driver for many plans. Yet, these hidden MSK cost drivers often escape strategic attention. 

It’s easy to think of a sore back or a stiff knee as minor. But left untreated or poorly managed, injuries and pain can become costly repeat claims, surgeries, and lost productivity.

Every year, millions of people with low back pain, for example, get referred straight to imaging or surgery without trying conservative options first. Early, effective MSK care changes that trajectory.

The cycle of escalating MSK care spend

MSK claims often dominate top-spend categories. Referral pathways do not always encourage early physical therapy, which is one of the most effective conservative options.

The employee’s experience with MSK pain

1. Without proactive PT to aid recovery, injuries are left untreated 
2. Problems develop and low pain increases until reaching an acute level 
3. These high pain MSK problems escalate, requiring more invasive treatment
4. Claims accumulate for repeat visits, imaging, injections, and avoidable surgeries.

Roughly six in ten U.S. adults live with a chronic condition. Diabetes and cardiovascular disease get plenty of plan focus. But MSK conditions are the biggest slice of spend for many large employers⁴. Many plan managers miss a huge cost-saving opportunity here as MSK issues are rarely treated proactively³.

The plan manager’s experience with MSK costs

1. When plan design doesn’t address what drives claims, costs climb faster than budgets
2. Cost-sharing and coverage cuts can only go so far
3. Employees pay more out of pocket
4. Employee satisfaction with benefits plans drops
5. Productivity suffers, and absenteeism can even develop
6. Suddenly direct and indirect business costs of MSK issues start to escalate
7. And the claims keep coming

Understanding the cost drivers gives you a chance to change them.

MSK conditions: the cost that hides in plain sight

One strained knee or sore back doesn’t seem like a major expense. But here’s how the numbers add up:

• Primary care visits: Average $136–$265 each⁵.
• Specialist visits: Orthopedic consultations average $419⁵.
• Imaging: An MRI for back pain can cost $500 to $1,500⁵.
• Injections: Corticosteroid injections average $423; hyaluronic acid injections can top $1,300⁵.
• Opioids: An opioid prescription averages $68, but the long-term risk is far more costly⁵.
• Surgery: A single lumbar surgery can cost anywhere from $8,200 to $73,000, with an average cost of $22,890⁵.

Traditional fee-for-service medicine makes this worse. Providers are paid by volume. Patients often bounce between specialists without clear care coordination. Surgery happens when conservative care could have worked. Imaging is ordered because it’s routine, not because it improves the outcome. For employers, this means they pay more for care that doesn’t always help employees recover.

Sword’s MSK Money Pit Report, 2024 shows that 36% of all MSK surgeries are unnecessary. When you look at the average cost of a single lumbar surgery at more than $22,000 on average³, it’s clear how quickly this drains a budget.

All these expenses stack up for a single condition. Now multiply that by every employee struggling with MSK pain. This is how these costs quietly drain your plan.

How your MSK spend escalates in practice

A simple back strain or knee injury can cascade into thousands of dollars in claims. Consider the typical path: 

• A worker tweaks their shoulder. 
• Instead of quick, early physical therapy, they get sent for imaging, then injections, then maybe surgery. 
• One MSK surgery alone can run from $8,000 to more than $70,000, with an average around $22,890³.
• Multiply that by every shoulder, knee, hip, or back injury in your workforce. 

MSK claims add up. But they also drive indirect costs. 

Claims tell only part of the story. MSK pain reduces focus, increases absences, and drives presenteeism. It also raises risk for depression, anxiety, and sleep disorders.

Employers lose about $2,916 per member per year in productivity when MSK pain goes unmanaged^12.

The good news? Many of these costs are preventable.

Sword Health plans reverse inactivity to increase productivity

Sword Health data shows employers lose an average of $2,916 per member per year in productivity when MSK pain goes untreated. In one study, 68% of members regained lost productivity during care⁶. Members also saw a 64% reduction in depression and a 50% drop in anxiety¹⁴.

A modern MSK strategy should address clinical recovery and the human factors that affect work.

Most plans cover PT, but access is hard. Wait times are long, and clinic schedules are inconvenient. The average wait is 26 days for a physician and 17 days for an orthopedic surgeon⁷.

Why early PT matters: the 3-day window

Most plans cover PT, but access is hard. Wait times are long, and clinic schedules are inconvenient. The average wait is 26 days for a physician and 17 days for an orthopedic surgeon⁷.

• Only 10–16% of people with chronic pain are referred to PT early⁸. 
• Even when they start, 50–70% drop out after a few sessions due to travel, time, and life constraints⁹. 

Delayed PT doubles surgery risk, doubles opioid risk, and nearly doubles total spend compared to early PT¹⁰.

A modern MSK strategy starts early. It steers people to the right care before pain escalates. It removes barriers that get in the way of recovery. Multiple studies show that early access to physical therapy reduces downstream costs.

Starting PT within three days of low back pain onset is associated with:

• 44% lower total costs,
• 53% lower risk of lumbar surgery,
• 55% lower chance of long-term opioid use¹⁰.

Longer-term tracking shows early PT can cut advanced imaging by nearly half and reduce spinal injections by 44%¹¹. Each avoidable ER visit drives up costs. And the opportunity cost is huge: patients in pain miss work, reduce their output, or lose trust in the system when they don’t get relief.

What better looks like: proactive, value-based MSK care

A proactive, digital-first approach to MSK care allows employers and health plans to remove low-value care, encourage preventative and early-access intervention, and work towards eliminating unnecessary surgery,

Sword Health’s model does this by pairing each member with a Doctor of Physical Therapy and an FDA-listed device or technology. 

Members can start care in an average of 6.3 days. They don’t need to commute or take time off work. Sessions happen at home 42% happen outside normal business hours), which makes care so much more accessible¹². Engagement and adherence levels increase accordingly, resulting in stronger health outcomes. 

Real-world impact: a warehouse worker’s knee injury

Picture this: A warehouse worker strains his knee while lifting boxes. He tries to shake it off, but the pain worsens. He waits three weeks to see a primary care provider, who refers him to an orthopedic surgeon. That appointment takes another two weeks. The surgeon orders an MRI, which finds no major damage but recommends an injection anyway.

Six weeks after the injury, he’s still in pain and now considering surgery. Meanwhile, he’s been on light duty, missing shifts, and your company has paid thousands in unnecessary imaging and consultations with no clear resolution.

Now picture an alternative: the same worker is referred to a digital physical therapy program within three days. He gets a personalized plan from a Doctor of Physical Therapy and starts guided exercises at home. The pain improves. He avoids the MRI, injection, and possible surgery. He stays at work, and your plan saves thousands.

How Sword works: smarter care that’s easier to access

Sword combines proven physical therapy principles and expert human clinicians with advanced AI Care. This combination allows people to access care wherever and whenever they want. 

• Each member is matched with a Doctor of Physical Therapy (DPT) who creates a personalized plan
• They use Sword’s FDA-listed computer vision or motion tracking device, which provides real-time feedback on form, movement, and range of motion
• The matched DPT prepares the plan to suit the patient’s specific health goals 
• Real-time AI-generated feedback gives the expert clinicians the input they need to update plans as the patient progresses
• This added flexibility, accessibility, and accountability is what increases engagement and adherence rates

Why access and equity matter for your total spend

MSK pain doesn’t care where someone lives. But access does. Rural workers, hourly employees, and underserved communities often get left behind when care depends on clinics and commutes.

Sword’s virtual-first model removes these barriers:

• 27% of Sword members live in high-SDI areas (Sword Health, 2025).
• Care is accessible on any phone, tablet, or computer.
• Sessions are discreet, private, and fit diverse needs.

Sessions happen at home, on the member’s schedule. 42% of sessions take place outside business hours, and 23% happen on weekends¹². This makes it easier for shift workers, parents, and time-poor employees to stick with care over longer periods of time.

When people can actually use their benefits, engagement goes up. Better engagement drives better outcomes. And that means fewer expensive claims down the line.

The revolutionary prediction engine preventing avoidable healthcare costs

Sword’s Predict engine analyzes claims and histories to flag members at high risk for unnecessary surgery. Employers can intervene early and guide these members to conservative care before costs escalate.

Predict can surface risk months in advance¹³. The result is fewer unnecessary surgeries, less waste, and more predictable outcomes.

Design your employee healthcare plan for value

Cost containment should not mean cutting benefits. It should reward care that works. Value-based design aligns coverage and incentives with proven outcomes.

Employers that see the biggest MSK savings tend to:

• Remove barriers to early PT and make conservative care the first step.
• Use predictive analytics to guide high-risk members into proven pathways.
• Choose vendors who share risk through outcome-linked pricing.

Sword’s model fits this approach. You pay for results, not just participation.

Do not rely on prior authorizations or session caps as your primary lever. These delay care and increase abandonment. Costs rise as conditions worsen.

Don’t push MSK care into general wellness without clinical oversight. To deliver ROI, MSK care must be high quality and clinically guided. The better path is digital-first MSK care integrated into your value-based design.

When you guide members to the right care, waste falls and outcomes improve. Sword Health shows that the highest-quality MSK care can also be the most cost-effective. Better engagement, clinical oversight, AI-powered prediction, and proven ROI help you spend less without cutting benefits.

FAQs

Why are employer healthcare costs rising so quickly?

Employer healthcare costs continue to rise due to inflation in medical services, high-cost chronic conditions, low-value care such as unnecessary imaging and surgeries, and fee-for-service payment models that reward volume instead of outcomes¹⁵.

What chronic conditions drive the highest employer healthcare spend?

The top cost drivers for employers include musculoskeletal (MSK) conditions, diabetes, cardiovascular disease, and mental health. Among these, MSK conditions are the number one spend category for many large employers, yet they often receive the least strategic attention¹⁵.

How much do musculoskeletal conditions cost employers?

The U.S. spends more than $500 billion annually on MSK care, with nearly $91 billion wasted on low-value interventions such as unnecessary surgeries and imaging³⁴. For employers, MSK costs extend beyond claims, driving an average of $2,916 per member per year in lost productivity when pain goes unmanaged⁶.

Why is early physical therapy important for cost savings?

Employees who start physical therapy within three days of low back pain onset have 44% lower costs, 53% lower risk of surgery, and 55% lower chance of long-term opioid use compared to those who delay care¹⁰. Early PT reduces unnecessary imaging, procedures, and prescriptions while speeding recovery.

How can digital MSK care reduce healthcare costs?

Digital MSK programs make therapy accessible at home with AI guidance and clinician support. Sword Health achieves an 81% completion rate and saves employers an average of $3,177 per member per year¹². By engaging more employees and reducing unnecessary interventions, digital MSK care lowers both direct and indirect costs.