A big company practitioner and his provider compare notes on partnership and accountability.
By The Editors
Ken Haderer, executive vice president and employee benefits outsourcing national practice director, Aon Consulting
Don King, vice president of compensation and benefits,
Emergency Medical Services Corporation
HRO Today: How has the healthcare reform debate in Washington affected your planning and corporate benefits program decision making during the past year? Have you changed any benefits offerings?
King: We are very concerned by the proposed legislation. While managing health insurance costs has always been a strategic priority, the proposed employer mandates and minimum plan designs will add additional cost pressures. In a time where we are ever more focused on our expenses, the proposed mandates may present challenges to maintaining our offerings and will cause us to think creatively to find solutions in order to maintain current benefit levels.
Haderer: As the debate continues, Aon’s clients cannot afford to take a “wait and see” approach. We receive regular requests to help employers implement plan improvements in three key areas: driving efficiencies and cost savings; engaging and empowering employees; and increasing participation in wellness or tax-advantaged programs. We’ve seen the following trends emerge: financial rewards for promoting healthy lifestyles; full coverage of preventive services; more effective use of online communications; closer scrutiny of dependent coverage; and greater use of consumer-driven health plans.
HRO Today: How are health and wellness programs coming into play in the workplace? Are they being used? If not, will they start?
King: Managing our ongoing healthcare costs is directly impacted by our organization’s ability to help and support our employees to maintain, if not improve, their health. Providing online resources and tools is only a small part of the effort. Encouraging wellness through wellness challenges and activities is the vehicle to “make it real” for our employees. Our employees are looking to us to help them improve their health not just outside of work but at work. Employees today are overwhelmed with life’s daily challenges. Making time for wellness outside of work is already difficult. Employee engagement, retention, and commitment to the company can be increased if the employees truly believe the company is supporting them to be healthy during work time. It all speaks to the greater focus to create a culture of health at work. Beginning this year and continuing in 2011, we are strategically designing and supporting wellness challenges that will serve as the vehicle to create a culture of health at our company.
Haderer: More leading companies are looking to implement a comprehensive wellness program, which targets all employees and their families, deals with all major health risks, and provides multiple opportunities to engage employees, including health promotion activities located onsite at work. This approach also emphasizes follow-up with and support for participating employees to help reduce their health risk factors. The most successful programs include a significant commitment and “buy in” from senior leadership, from the CEO down. Additionally, these firms integrate health and wellness as an important piece of the firm’s overall strategy for success. As a result, this approach helps organizations build and promote a true culture of wellness.
HRO Today: With an emphasis on preventive health, how do you measure ROI for these types of programs?
King: Preventive health’s ROI is awareness. Understanding how healthy you are and making sure there is a baseline measure to either maintain or improve your health is ultimately the benefit of preventive health efforts. While as a company we are focused on financial ROI, employees want qualitative ROI. Communicating financial ROI is quickly lost on employees. Employees want to feel that the company cares about their health, their family’s health, and supports them to improve their health.
Haderer: The measurement of ROI on preventive health programs is still in its infancy. However, we are beginning to see evidence that successful wellness programs can significantly impact (and achieve real ROI) across two key areas: a reduction in total medical spend and an improvement in the rate of employee absenteeism. Numerous studies show that individuals with high-risk profiles on six leading health indicators (elevated cholesterol levels, elevated use of alcohol, smoking, obesity, high blood pressure, and lack of exercise) experience significantly higher levels of absenteeism and medical costs compared to employees not at risk. There is no debate that behavioral risk factors contribute to the total disability and healthcare costs of a company. As more providers enter the wellness space and offerings continue to improve, the cost of comprehensive health programs has become more competitive. When such a program delivers even a small reduction in sick days, it can quickly pay for itself. Results vary, but many companies are finding that an effective program can see savings of $2 for every $1 spent. Many companies are also beginning to see that investing in a comprehensive health program not only gives them a competitive edge, but also a more engaged and healthier workforce.
HRO Today: With the rising cost of healthcare policies, what are specific strategies that an organization can take for cost containment via benefits outsourcing and benefits management?
King: We continue to look for ways to reduce our administrative expenses, maximize carrier networks and network discounts to offset expected health insurance increases. Communicating the benefits not just during open enrollment but throughout the year helps employees see the value in the offerings and directly contributes to employee commitment to the organization. Outsourcing is a viable way to find administrative savings that can be used to maintain plan designs and still provide current technology, functionality, and administrative efficiencies. Four things I would offer as additional guidance when working with outsourced vendors:
1. Building it does not mean employees will come. It’s easy to fall into a trap of adding all sorts of functionality and online resources. Continuous measurement of employee satisfaction with vendors and website usage can help determine if the company should continue to commit scarce resources.
2. Adding more means more to maintain. Similar to the above, I believe just because we can offer a benefit does not mean we should. There is always a cost to administer a benefit, whether it is hard-dollar costs or having existing resources focused on maintaining a benefit. Companies need to be diligent in defining why a benefit is offered and not offer it just because they can. Gauging and defining a minimum interest/participation threshold is often overlooked. In these times of health insurance challenges, it is important that expectations and reasons for offering a benefit option be clearly defined. By example, if 300 out of 15,000 employees enroll in a voluntary benefit, is it worth the ongoing costs to communicate and administer this benefit?
3. The word partnership should be the first word that comes to mind when you think of your vendors. I’ve said it before, my vendors need to realize that but for an employer verification number, we both serve to support the same customer. My employees should be just as important and treated as if they were employees of the vendor. Making certain you have a partner in a vendor should be the standard that determines if the relationship is successful. While cost is always a determinant, when something goes wrong or a data file fails, can you count on your partner to move mountains to make it right?
4. Payment of Performance Guarantees is a sign of failure. Performance guarantees (PG) should be set at levels that reinforce excellence. If a vendor pays due to a failed PG, the standard may be too high. What is critical is not the penalty but whether they are committed to correcting failure. If you have a vendor that is failing a PG and is content with the penalty, you don’t have a partner.
Haderer: From a benefits delivery perspective, we feel that some of the most successful strategy components include:
• Comprehensive and coordinated health and wellness programs and strategies;
• Tighter eligibility management;
• Going “green” through use of web portals;
• Maximizing the use of tax-advantaged benefits (e.g., FSAs, HRAs, HSAs);
• Achieving health plan migration goals; and
• Streamlining HR administration.
HRO Today: Is wealth and asset management a growing field, given the recent economic turmoil? What’s the forecast?
King: Definitely. Ten years ago, the environment and mindset was that employees did not expect or want employers to intrude on their personal financial planning. Since then and since the market declines after 2001, employees have now turned to the employer for more tools and support in the total financial health arena. One area that we have recognized is that the retirement plan record keepers have retail services that could significantly benefit employees. We as a company have already validated the relationship on the qualified retirement side, so why wouldn’t we encourage employees to benefit from retail services from the same company? Since the market fall in late 2008, it is actually the best time to encourage, on a soft sell and voluntary basis, employees to take advantage of financial planning and retail services offered through our retirement plan partner (vendor). However, it is important to press your retirement plan partner to provide something more to your employees as a value-added benefit because of the existing relationship.
Haderer: The recent economic turmoil has increased the importance of qualified wealth and asset management expertise. Although, we have no “crystal ball” on this issue, we foresee a convergence in the coming years of the two sides of the “wellness” equation: the financial and physical health of employees. Just as leading employers are beginning to take a more comprehensive view of the health risk factors that impact the physical well-being of their employees (and what that means in terms of overall productivity and cost advantages), we believe that more employers will begin looking at a comprehensive approach to promoting the financial well-being of their workforce.