Annual health insurance costs continue to increase with no end in sight, and businesses need to confront the harsh economics of today’s environment by looking for ways to keep costs in check without having to scale back benefits or shift costs to their employees.
With health care benefit planning season in full swing and open enrollment right around thei corner, now is a critical time of year for employee benefit managers and company decision makers. A close evaluation of what your company spends on health care coverage is key, and making the proper adjustments to your plan(s) could have a significant impact on your bottom line.
To that end, here are five steps business leaders should consider when analyzing a current plan’s performance in preparation for 2007:
Create a "report card," using your own employees’ health data.
Often times, companies will throw the "hottest" benefit strategy at their plan after a double-digit increase in claims. However, as with anything, what works for the average employer might not be the best fit for you – because nobody’s "average." To do it right, you must develop a customized report card with your own health care claims data that identifies opportunities for your specific plan(s).
Reduce unscheduled absences.
Unscheduled absences – due to illness, long- and short-term disability and workers’ compensation – can have a significant impact on your company’s total health care costs. In fact, 4 percent of a company’s payroll can be lost due to unscheduled absences, according to a study by Mercer Human Resource Consulting. Recent studies have also shown that a $1 investment into an absence management program can have up to a $9 to $12 return on productivity. There are multiple ways you can reduce unscheduled absences and benefit the bottom line. Steps might include coordinating your health management programs with long- and short-term disability and workers compensation, or implementing a disease management program with an absence management focus.
Focus on the true price of health care.
Regularly evaluating your provider network and pharmacy benefit management options is an easy way to find the low-hanging fruit in health care due to the wide variation in price in the current marketplace. While significant discounts from health care providers sound great, the best discount in the world is useless if the mark-up is high.
Make the most of the "80/20 rule."
Studies have shown that approximately 20 percent of a company’s employees will generate 80 percent of the company’s total health care costs. Employees who incur a company’s major health care costs are those who have complicated and chronic illnesses. However, the conditions and diseases, which drive costs from one company to the next, can be very diverse, depending on things like location, age of your employees, and the industry that you are in. Therefore, understanding what your "20" look like is the best way to determine things such as which wellness vendor, health risk assessment, or disease management program(s) make sense for you.
Communicate simply and frequently with your employees.
With the market penetration of consumer driven health plans, it is imperative to provide your employees with information without overwhelming them. Some strategies involve helping employees weigh the pluses/minuses of new plan options by giving them everything they need – plan designs, premium deductions, claims history, "plan calculators" – in a customized brochure or Web portal. Arming your employees with cost-saving options via Web-based tools that offer provider price and quality comparisons along with prescription drug pricing is also important.
Companies that take a top-down approach when it comes to analyzing and selecting their health care plan have healthy employees and manageable costs – while still offering a competitive and meaningful benefits package. That’s a win-win in the constantly changing, high-cost world of today’s health care industry.
