Offense can be the best defense Featured

8:00pm EDT April 25, 2007
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 Kapnick Insurance Group is a member of Assurex Global, an international network of insurance and employee benefit brokers.