Chronic costs Featured

8:00pm EDT May 26, 2009

Every CEO sees the need for a health plan. Without one, recruitment of top talent becomes very difficult, and employees spend too much time worrying about potential health issues and how they will pay the resulting bills.

But once you decide to get a health plan, things get complicated. Which plan is right for your company? The options out there vary considerably. At one extreme are the plans that put 100 percent of the costs on the employees, while at the other extreme are the plans that are 100 percent funded by the company.

Most plans fall somewhere in the middle, and that’s where the CEO needs to step in. A large part of your culture is based on your benefits package, and probably the biggest element of that is your health insurance. What you pick says a lot about what kind of corporate culture you want to have.

If you pick a plan with a lot of benefits and the costs are mostly picked up by the company, that sends a certain message to your employees — or potential employees. Some CEOs are perfectly happy with a basic plan, in which a fair portion of the costs are carried by the employees. That too, sends a message about how you value your work force. Employees generally have an idea of how well their employer is doing. If you are wildly successful but offer a poor health plan, that tells them that you are not all that concerned about them and gives your competitors a potential recruiting advantage. Is it worth losing talent for a no-frills health plan when for a few dollars more, you could have at least been on par with the rest of your industry?

If you are committed to a good health plan, you may want a “Rolls Royce” package, but if you are on a limited budget, you have to make choices. You have to do the best you can to provide the highest level of coverage for your employees.

When you are a smaller company, you may have no choice but to offer a bare-bones package. But as you grow, your plan should get better to mirror your success. The important thing is that, as CEO, you get involved. Do not delegate the final decision to someone else, because your health plan has major cultural and economic ramifications for your company.

If the message from your office is about how much you care about employees and the human resources manager cuts health benefits by 50 percent, that’s a major conflict in message that could severely damage your culture. That’s why it’s important to be involved in the process.

In this economy, the temptation will always be to cut, and that’s understandable. But there may be other options available to you. Shopping around for a better rate might help, but if you have employees located in multiple states, the market is limited and the price difference may be negligible.

The other strategy is to focus on the root causes of your health costs. Work with your existing provider to find out where your money is going and what it offers to help you control it. This is another factor to consider when looking at plans. If one provider is slightly more expensive but offers a free or low-cost comprehensive package that will help your employees be healthier, your overall costs may be a lot lower in the long run.

While things like wellness programs may seem like hype, a study of a workplace wellness program found that during a two-year period, employees in the program missed three fewer days of work, meaning a return of more than $15 for each $1 spent on the program. Other studies show that for every $1 spent, you save about $4 in health care expenses and $5 in improved productivity.

If you pick the right plan and put an emphasis on good health, the message sent to your employees will be clear: You care. And healthy employees are a key factor to achieving a healthy bottom line, even in an unhealthy economy.

FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or