This news is even more disappointing when factoring in that the number of employers offering consumer-directed health care plans (CDHP) continues to grow. In the same survey, the number of companies offering high-deductible health plans increased from 33 percent in 2006 to 38 percent in 2007.
A bright spot in the survey was the revelation that some firms are beating the odds and reducing the rate of increase from an average of 8 percent to 2.5 percent. Watson Wyatt Worldwide explored how these firms had gone about achieving that result.
“The best performing companies in the survey were more likely to implement programs that go beyond employee cost sharing,” says Dean Hatfield, senior benefit consultant for the Group Healthcare Practice at Watson Wyatt Worldwide. “They have involved the use of financial incentives, effective information delivery, efficient quality of care, maximum health and productivity, and decisions based upon data and metrics.”
Smart Business spoke with Hatfield about how the best performing companies are achieving better cost management results through comprehensive solutions.
What are the best companies doing to curb the rate of health care cost increases?
One of the most efficient ways for companies to curb their health care trend is by improving quality. When employers looked at the outcomes from medical facilities such as hospitals, they began steering employees toward hospitals and physicians that specialized in the employees’ needs for procedural or condition-related treatments. Consequently, the patients had fewer complications and lower mortality rates.
Rather than shopping for the lowest rate, employers looked at the available data and made decisions based upon medical outcomes. Not only were results better, but costs were lowered.
What other types of data should CEOs look at to help reduce health care costs?
The best companies looked at the data surrounding their employees’ health issues, such as employee absenteeism and the effect of employee wellness on productivity, to help structure their health programs and didn’t just focus on the aggregate cost of their health program.
For example, firms have found that obesity is the cause behind many illnesses and subsequent rising costs, including lost time. So now they are doing a better job of instituting programs that promote behavior changes. They are creating customized communication pieces tailored to defined employee segments with relevant and meaningful messages that teach employees the health conditions that can be improved or even avoided.
How important is employee education for achieving cost reduction?
It’s absolutely vital. The survey results show that most employees don’t understand key terms in their health plans like ‘co-insurance’ or ‘formularies.’ Because they don’t understand how their health coverage works or how they might benefit from selecting cost-effective health care services, employees are not effective cost management partners.
Merely cost-shifting to employees is clearly not enough. You have to educate them so they can become better managers of their own resources and their own health. The data also show that only about 50 percent of the employees read all of the materials provided them about their medical coverage and the other 50 percent only read the enrollment insert or plan changes.
What is the best way to provide information to employees?
The survey says that the most effective way to communicate with employees is by sending information in printed format to their homes (69 percent). Other effective means include providing information in printed format at work (67 percent), via the Internet (62 percent) and in face-to-face meetings (44 percent).
Research is key to making communication messages relevant and meaningful. Face-to-face education sessions are the most effective communication method, and different marketing techniques can maximize the attention spent on health care.
Teaching employees about not just the cost of care, but the value of changing their health behavior, is more effective if the education sessions are live and interactive.
Most employers are focusing on plan design and cost-sharing. It is effective in the short run but not in the long run. The best savings in the long run are being achieved by providing personalized, tailored programs and resources that inspire employees to take action; keeping health improvement behaviors on track; and boosting individual accountability through employee education and promotion of best practices.
DEAN HATFIELD, CEBS, is a senior benefit consultant for the Group Healthcare Practice at Watson Wyatt Worldwide. Reach him at (415) 733-4100 or firstname.lastname@example.org. For more information, visit www.watsonwyatt.com.