Business Insurance
Offense can be the best defense
How to handle existing health care needs
By Chelan David
Smart Business Detroit | May 2007
Steve Peck, President
Kapnick Insurance Group, Benefits Division
While all executives are well aware
of the spiraling costs associated
with employee health care, some companies have taken a reactive approach
to the problem. Rather than establishing
programs to keep their healthy employees
healthy, they have focused the bulk of their
attention on employees with existing
health problems.
An effective health management plan,
points out Stephen J. Peck, president of
Kapnick Insurance Group (Benefits
Division), takes a proactive approach. Not
only can such a plan positively influence
employees’ lifestyles while increasing productivity, but costs can be reduced as well.
“If an employer offers a range of programs
along with rewards that reinforce healthy
behavior, employees remain healthy and
the bottom line is improved,” Peck points
out.
Smart Business spoke with Peck about
health management, the importance of
keeping healthy employees in the low-risk
category and what types of savings can be
realized from having a health management
program in place.
What does health management consist of?
Simply put, health management is an
effective tool for employers to control
medical claims’ cost and utilization
through building a healthy work force. A
few years ago, we used the term wellness
programs, but it’s so much more today.
Health management addresses absenteeism, health and prescription drug
claims, presenteeism, disability and life
claims and workers’ compensation.
Why should employers invest in health management?
In light of the fact that workers spend a
significant portion of their waking hours at
work, employers are in a great position to
positively influence lifestyle choices.
Through positive lifestyle choices, an
employer and employee can reduce health
care claims, lower absenteeism and increase productivity. It really needs to be
a two-way street, however, with both
employers and employees actively
engaged in the process.
How can a company most effectively deploy
a health management strategy?
In the past, most programs concentrated almost exclusively on employees with
existing chronic conditions with what
were called disease management programs. I would deem this to be a reactive
strategy. Recent studies have shown that
there is a greater return by shifting focus
to a proactive strategy of keeping your
healthy employees healthy.
Let me illustrate it this way. Businesses
value their existing customer base because
maintaining loyalty is far less expensive
than acquiring new customers. Similarly,
low-risk employees, or healthy employees,
who already have and maintain good
health, can be viewed as an employer’s
existing customers. These employees not
only have lower health care costs, but they
have higher performance and productivity.
If an employer does not maintain a relatively low-cost awareness campaign and program, research indicates many of these
low-risk employees — 2 percent to 4 percent annually — will inevitably join the
higher risk, higher cost employees.
What type of savings and/or return of investment is typical with an effective health management program?
The numbers are very compelling. When
an employee maintains his or her low-risk
status, there is a potential savings of $350
per person per year compared to a savings
of a $153 per person per year when an
employee migrates from the high risk to
the low risk. Additionally, the return on
investment to establish and implement a
health management program averages
about $3.50:$1 in reduced health care
costs, absenteeism and productivity.
What types of programs are there and how
does one start a health management program?
Some of the programs that can be implemented include needs-and-interests surveys, health-risk appraisals, educational
classes, communication campaigns, walking programs, incentive-based programs,
newsletters, spousal meetings and fitness
challenges. There has to be support and
buy-in from the highest level of the company. Without that, most programs will not be
successful. There is an overwhelming
amount of information available to
employers. More often than not, employers
establish an internal wellness committee to
help identify which programs are useful
and to coordinate the responsibilities of
managing these programs.
STEVE PECK is president of Kapnick Insurance Group (Benefits
Division). Reach him at (888) 263-4656, ext. 1147 or
Steve.Peck@kapnick.com. Kapnick Insurance Group is a member
of Assurex Global, an international network of insurance and
employee benefit brokers.
