BenefitsEngaged Workforce

Occupational Health Services: Broadening the Value Proposition of HRO

Third-party workforce health services can deliver value to outsourcing in an era when HRO providers are seeking novel, value-added offerings for end-to-end buyers

by Bruce Sherman, Ned Cooper

HRO companies uniformly recognize the value that their services provide—in terms of improving company focus, HR operational efficiency, and reduced operating costs. At a very basic functional level, services might include payroll and benefits administration. However, providers are becoming more strategic partners, helping clients align their investments in the workforce with business objectives. Until recently, the traditional domain of HRO has not crossed beyond the traditional responsibilities of the HR department.

At the same time, corporate executives—particularly HR personnel—believe that their employees are their organization’s most important asset. They have begun to appreciate the link between employee health and workplace performance and the need to provide programs that optimize workforce health and organizational productivity.

Yet, despite the focus on the business aspects of employee development, a key service generally lacking in the traditional HRO approach is the strategic role that employee health can play in workforce productivity. Typically, benefits administration has been a cost-containment effort, rather than being viewed as a strategic investment. But it is not surprising that healthier employees experience fewer sick days and are more productive. Incorporation of an integrated workforce health and productivity management approach can help achieve the goal of HRO to better manage operating costs.

Occupational health services are now recognized for playing a well-established role in helping to optimize workforce health and productivity and are most often provided in the setting of an on-site clinic. The clinic can provide a broad range of services, including care of occupational or minor, non-occupational injuries and illnesses, health promotion, preventive care, immunizations, and compliance with OSHA surveillance requirements. All of these offerings help to keep employees on the job and functioning in their optimal capacity.

For corporations with geographically dispersed populations, an on-site clinic is not an appropriate consideration. However, HRO can also incorporate national occupational health provider networks for pre-employment exams, fitness-for-duty exams, and medical surveillance. By so doing, another HR function—as well as additional administrative requirements—can be incorporated into the outsourcing solution, thereby generating greater value for corporate clients.

DECISION TO OUTSOURCE
For an employer that has not previously considered an on-site clinic or other occupational health and wellness services, a needs analysis should be completed prior to engaging these services. Factors including healthcare and workers’ compensation costs, absenteeism rates, and turnover should be critically and objectively evaluated to identify areas of opportunity where a workforce health services provider can offer value. For some companies, an on-site clinic may make sense, and for others, a national provider network may be most appropriate, while still others may benefit from both of these services.

Employers with existing internal employee health departments face a different set of considerations when contemplating the outsourcing of these services. For these organizations, objective evaluation of the current operational scope and effectiveness is perhaps the key consideration in the decision to outsource. In the same manner as described for corporations that are contemplating workforce health services for the first time, these companies may do well to carefully evaluate their experience with workers’ compensation, healthcare costs, and other clinic-related services to assess whether existing services provide value.

In both of these settings, internal management of on-site clinic operations requires a substantial commitment in resources and support services. For most companies, taking on this responsibility is well beyond core business functions. As a result, providers are often contracted to supply these services.

RAITONALE FOR OUTSOURCING
As with outsourcing of traditional HR functions, the use of third-party workforce health services is most successful when the service delivery approach is aligned with the overall business strategy, generating significant value for the employer. It is intriguing to think that only recently have principles of operational efficiency and effectiveness been incorporated into workforce health programs. Perhaps this is the result of respect for the traditional and regulatory barriers limiting access to personal health information. More likely, optimizing workforce productivity has become increasingly critical as employee numbers are scaled back to lean operations.

Regardless of the explanation, the primary objective is to align employee services with business objectives, and in many cases, outsourcing may be the best approach. Incorporation of workforce health services as part of a full-service HRO offering creates additional value through integration and operational efficiency. A careful analysis of the factors impacting the decision to include workforce health into HRO may provide a clearer rationale for this strategy.

• Established Value. While a decreasing number of non-believers remain, workforce health, when appropriately implemented and primarily in the form of on-site healthcare and disability management, has yielded benefit in the form of:

Fewer lost work time cases;
Reduced lost work time for employees off work due to illness or injury;
Decreased workers’ compensation costs—both medical and indemnity;
Less lost work time because employees no longer have to travel off-site for their medical care;
Improved at-work employee productivity due to symptomatic treatment of minor medical concerns.

There is a general consensus that these services can generate a favorable return on investment within two years, if not sooner, depending on the type of services provided. Accordingly, both HRO companies and their employer clients could derive benefit if such services were incorporated into the HRO service offering.

• Medical Expertise. As previously noted, HRO services have not generally included occupational health, largely because this area of expertise is not a core competency for HR. By incorporating occupational health and wellness services into an HRO product, significant workforce health management skills can be brought to bear for data analysis and recommendation of programs and services to help control healthcare costs.

Occupational health physicians can provide considerable expertise in the areas of medical and pharmacy claims analysis, absence and disability management, ergonomics and wellness, and health promotion. HR information systems data, when integrated with occupational health and wellness data, represent a virtual goldmine for occupational health professionals to identify and address the root causes of healthcare expenditures and lost productivity.

• Scope of Services. Occupational health providers can offer more than just on-site healthcare services. Many of them offer other health-related benefits (through strategic partnerships) that, if implemented for a particular employer, are integrated into the employee health offering. These health services can include health promotion, disability management, disease management, EAP, and more.

When provided by a single vendor, the broad scope of these aggregated services represents a simplified employer offering, rather than necessitating an employer to separately evaluate and contract with a number of providers of each of these specialty services. For the HRO provider, aggregation of these services can facilitate data integration, leading to a considerably more efficient implementation of services. When presented with this option, employers have the ability to select from a broad range of previously integrated health-related services that have been vetted by the HRO organization.

Integrated Information Systems and Service Delivery. What may hold the greatest appeal (and greatest value) for incorporating workforce health into the HRO offering is the opportunity for the use of a single, integrated information system, in addition to integration of health-related services. Comprehensive data collection and integration can more effectively identify the root causes of employee illness, injury, or lost work time, leading to effective solutions. For example, without integrated data, it might be difficult for an employer to appreciate that the highest absentee rates are from a particular work area and a previously unrecognized toxin exposure. Or employees may remain out of work due to an ineffective return-to-work program and poor communication with disability case management.

From a health benefits perspective, an integrated system offers employees many touch points from which they can be referred to programs, including EAP, health promotion, disease management, and more. Currently, it is rare that these program providers are aware of the other services and benefits for which employees are eligible. A fully integrated program results in more effective management and enhanced operational efficiency in comparison with current HRO services.

• Sources of Value. In partnering with an occupational health management company, the sources of value for the HRO provider are many. The HRO provider will have a more comprehensive product offering that provides product differentiation and a competitive advantage. The appeal to the customer results from no longer needing to provide employee health services internally or solicit provider candidates for these services. Additionally, employers will receive a comprehensive and integrated offering, such that more inter-program referrals will likely occur, enhancing the value of the contracted services.

More importantly, integration of occupational health and wellness data with HR information systems yields a truly invaluable source of comprehensive data that can be used to identify the contributors and root causes of excessive absenteeism and rising healthcare costs. From this data, and with the available collaboration of workforce health providers, targeted strategies can be developed and implemented to improve employee health and productivity.

Although absence management has been only recently touted as a workforce productivity management approach, when employee health issues are also integrated into the data, absence management becomes just one more piece of a considerably larger workforce health and productivity management solution.

Furthermore, the occupational health provider and the HRO company will both benefit from information sharing because both will be able to better quantify the value of their employer-provided services. Demonstrated value, along with a comprehensive solution, results in enhanced employer engagement over a long-term relationship.

Both occupational health providers and HRO companies have similar value propositions relating to improving workforce productivity and controlling costs. The addition of workforce health services with existing integrated HRO offerings can only help to increase the competitiveness, efficiency, and cost-effectiveness of business plans and processes and better align them with strategic goals.

HRO companies have a choice in the way they incorporate program offerings for businesses. By adding workforce health and productivity management strategies into their offering, providers can increase productivity and help control healthcare costs. This focus can dramatically improve the strategic and sustainable competitive advantage for the HRO employer client and clearly enhance the value of the HRO provider.

Ned Cooper is CFO for Comprehensive Health Services, Inc. Bruce Sherman, MD, is an expert in integrated health and productivity management strategies and quality medical-service delivery.

Tags: Benefits, Engaged Workforce

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