by Brian Connelly, director of product development & strategy, Wendy King, manager of marketing & client engagement,
Doug Layman, executive vice President & CSM, Gilsbar Inc.
You have been reading a great deal about the health care reform package and have many questions about how it will affect your business, and specifically, your self-funded health plan. The good news is that self-funding endured fairly well, considering the breadth of legislation. Even so, we all need to prepare for change over the course of the next eight years, as the laws’ murky, often-conflicting provisions go into effect and regulators try to decipher the details necessary to produce “clearer” regulations.
Back to Basics
While the country’s regulators work to lay out the new laws, this is the perfect time to focus on the very reasons you selected a self-funded arrangement for your health plan in the first place— flexibility and control. This flexibility means you can focus your benefits strategy the way benefits were originally intended, to attract and retain the best employees. When you think of it this way, you’re forced to think bigger than benefits and address a larger human capital management strategy. So, let’s take some time to review the basics, the foundational elements that empower employees to take responsibility for their own health and productivity and keep your business out in front.
CDHC Then…
Over the past 10 years, we’ve been involved with projects intended to help self-funded employers cut their health care costs. The consumer-driven movement was in full swing. Many initiatives were designed to streamline the claims process, data flows, and how best to use debit card technologies and reimbursement accounts. Back then, we were working hard to remove the “consumer” from the true costs. We forced them into plan designs that made sense for the employer. In other words, cost shifting defined under a fancy name.
How many times have we discussed cost shifting in the past decade? “We can raise deductibles here, raise premiums here just a little bit.” The 8%, 10%, 12%, increases that we are experiencing every year just aren’t going away. The discussions about compensation were no longer about the value of the employee. These discussions turned to, “If we have this much increase in premium, it will offset the cost-of-living adjustment were able to give them in their paychecks.”
What we should have been doing was working on ways to invest in our employees and better engage them in the decisions they were making.
CDHP Now…
We’ve learned over the past decade that self-funding and CDHC have to start with the employee, not with the health plan or benefit design alone. Now we’re finally moving away from cost-shifting. We know that we can’t control costs by controlling cost; rather, employers will control costs by engaging employees in a way that enables them to decrease their long-term risk factors. Engage employees where they are and communicate genuine concern through investment in tools, education, and resources.
An effective CDHC strategy must include the incentives to help sick members effectively manage their conditions and motivate healthy employees to stay that way. A consumer-directed strategy will not work (“work” meaning mitigate health care costs) unless you are highly dedicated to employee engagement and health and lifestyle management.
Probably the most important issue in containing employer health care costs will be developing and implementing a corporate health strategy that becomes the backbone for creating a culture of health in your organization.
So Where Do You Begin?
1. Commit to Cultural Transformation
In order to get results, you first have to completely understand your current state and then define what your endgame is going to look like. Getting there, in many cases, will require a cultural change within your organization. Culture change requires unequivocal buy- in and commitment from the top. Senior leadership of any organization has to be on the same page and want to change the culture of the organization. This means the appropriate budget must be committed—both in time and in financial resources.
2. Define Your Corporate Health Strategy
Once leadership commitment is in place, recognize that your efforts are not just a “try it and see if we like it” kind of thing. Your organization must embrace change and steer purposefully along the health and lifestyle management learning curve with determination and long-term thinking. Creating a culture of health should be equally as important as creating revenue or controlling operating expense. It has that kind of long- term impact. Your health strategy even deserves a place in your corporate strategic plan. If it’s not there now, it needs to be—front and center, including documentation of baselines, measurable goals, and objectives. Know your employees’ numbers. What does your aggregate population health assessment tell you? Where is your current employee engagement rating? How are you measuring productivity? Define where you are and draw a concise picture of where you want to be.
3. Communicate, Engage, Act
This is really where the rubber meets the road with any employee initiative, right? The best-laid plans and greatest intentions don’t mean anything if you don’t act on them. That means motivating, incenting, educating, and facilitating change in your people and your organization. As we prepare for the new laws health care reform will bring, your foundation is your relationship with your employees. A steadfast dialogue, early and often, will build trust and increase engagement.
4. Let Community Leadership Flourish
Recent national studies support Gilsbar’s own experience in how to make health and lifestyle management initiatives sustainable within your organization. Along with creating the culture and defining the strategy, you must facility “community leadership.” That means whatever you are doing is driven from the top, but must be owned by the community, or the employees of your organization. Once that community leadership is in place, it becomes the day-to-day steerage for your initiative internally. So our advice to senior leadership is, “Commit, strategize, dedicate the resources, then get out of the way to let your people make it happen.”
5. Invest In Employee Health
One of the hardest things for employers to do is to simply get started. Our message to you is simple: Don’t worry about getting it perfect. Don’t worry about whether you’re doing it all right. Just get out of your own way and DO SOMETHING.
Presenteeism costs an employer, on average, $2,000 per employee per year. For every $1 a company spends on medical and prescription costs, it spends an additional $2.30 on health-related productivity loss due to absenteeism and presenteeism.
The facts are all around you. The longer you wait, the worse your situation will become. Make the investment for them—get started with some of these practical starters:
- Know your numbers (not just the ones surrounding your health plan) For example, health risk assessments, lifestyle panel blood testing, biometrics. Know the total health picture of your population—they are the lifeblood of your business.
- Give employees the tools to understand how to improve those numbers including personalized consultations with an RN, nutritionist, or physician, and help them set goals.
- Dedicate a committee or team to corporate health and lifestyle management initiatives and encourage regular meetings, with roles and responsibilities for all team members.
- Encourage on-the-clock participation. A study by Partnership for Prevention—Healthy Workforce 2010 and Beyond showed that restrictive participation policies for onsite health promotion activities such as health screenings, health risk appraisals, and workshops may act as a barrier to participation and therefore have a negative impact on health outcomes and effectiveness.
- Put tools in place to measure accountability, track progress, and reward success.
- Budget for success. The average U.S. employer offering corporate health and lifestyle management programs set aside $350-750 per year, per participant.
Reap the Results
Self-funded employers know the facts. By the nature of your funding mechanism alone, you prove that you take risks because you understand the potential rewards. When you apply that same philosophy to corporate health strategies, you will reap similar rewards. Your employees will be more engaged, healthier, more productive and your overall health care costs will start to come under control.
Here’s an example of real data from one of our many clients detailing the glowing remarks from recent employee engagement assessments. This attitudinal measurement comes after several years of growing its health and lifestyle management programming, introducing an HDHP with an HSA and shifting its focus from benefit design to holistic corporate health strategy:
- 96.3% of employees feel that the employer cares about their health and the health of their families.
- 90.5% feel healthier and more productive as a direct result of working for the employer.
- 81.6% feel that the wellness and engagement initiatives increases the overall value of the benefits plan.
Do you think this company has any trouble retaining and attracting the best employees? None whatsoever. And because employees feel that their employer cares about their well-being, they put forth more of their discretionary effort for the employer.
Bend the Trend
But let’s not dismiss the one big thing you are all still wondering about: health care costs. How does investing in your employees bend the trend? Across Gilsbar’s client base, those employers who have implemented CDHC strategies for their benefits plans, corporate health strategies, and have implemented health improvement programs have seen a year-over-year trend of only about 3.2%. According to data from Towers Watson, the average year-over-year trend across the country is closer to 7.7%, a 4.5 percentage-point difference.
In real dollars, if the average annual amount an employer spends on health care is $9,500 per employee, in five years of doing nothing, this figure could grow to nearly $13,750. Making the decision to invest in your employees by implementing a corporate health strategy, nurturing a culture of health, and bringing back the “consumer” in consumer- directed health care can help reduce this figure to only $11,000 … a difference of $2,750 per employee per year. Now that’s an investment worth making.
Brian Connelly is director of product development and strategy. He oversees the research, design, and strategic launch of new products, services and tools for Gilsbar’s clients. He is responsible for helping build companywide strategic market knowledge, defining new product plans for operations, defining strategic product direction, and creating work-process improvements. He can be reached at 985-809-2261 or bconnelly[at]gilsbar.com.
Douglas Layman is the executive vice president and chief sales and marketing officer at Gilsbar Inc. As executive vice president, he is responsible for Gilsbar’s corporate direction and vision, focusing on its revenue- generating strategies, with an emphasis in human capital management and employee engagement. He can be reached at 985-809-2266 or dlayman[at]gilsbar.com.
Wendy King is manager of marketing and client engagement, where she is responsible for planning and delivering corporatewide marketing strategies and overseeing Gilsbar’s Priority 7 Health & Lifestyle Management program. She has more than 20 years experience in management, marketing, and health promotion. She can be reached at 985-871-1830 or wking[at]gilsbar.com.