How to Lower Healthcare Costs

Wellsource.com

Issue 43

November 7, 2007

A recent study of 115 mid- and large-sized companies revealed that the use of high deductibles is not as effective in lowering healthcare costs as improving the health of employees in the company. The study, called the 2007 SHPS Health Practices Study, was designed to determine if there are specific best practices that lead to lower overall healthcare costs. It found that a comprehensive program, focusing on optimizing employee health and managing risks, is needed for best savings. Other components of a successful wellness program include effective enrollment and eligibility practices, health interventions, cash-based incentives, centralized benefits administration and health analysis, and strong employee communication.

In a news release, the company conducting the 2007 SHPS Health Practices Study reported the following:

• Employers that focus on targeted, clinically based care management programs customized to the needs of their covered population reported an average of 18.2% lower healthcare costs.
• Cash incentives that reward desirable health behaviors strongly correlated to lower healthcare costs by an average of 15.1%. Employers using deductibles and co-pay levels as their primary strategy to drive employee health behaviors actually faced 29% higher costs on average.
• Excellence in benefits administration, including centralized recordkeeping and accurate eligibility management, along with targeted communication, lowered healthcare costs by 12.7% per benefit-eligible employee when integrated with the delivery of health programs.
• Relying primarily on a web-based health program and telephone support in place of a comprehensive wellness program increase healthcare costs by 16.9%.
• Five common health benefits practices correlate with substantial increases in healthcare costs:
• Over-relying on networks to manage cost and quality
• Offering multiple plan designs
• Using deductibles and co-pays to drive health behavior
• Using health benefits to position your company as an "employer of choice"
• Experiencing high levels of turnover.

The presence of just one such practice correlated to an average 21% increase, while all five practices doubled those expenses.

Most companies serious about managing costs and showing savings recognize that they need a comprehensive wellness program that is shown to be effective, including:

• Training and wellness tools for the company wellness coordinator
• An annual health and lifestyle assessment with screening (e.g., blood test, blood pressure, BMI) to identify needs and track improvements in their company
• Helping individuals discover risks and know how to make needed lifestyle changes
• Follow-up by inviting employees to participate in appropriate health improvement programs, referral for medical follow-up if needed, self-help/study programs, online health resources and interventions, and even a health coach to help motivate and assist in making changes
• Motivational activities and incentives to increase participation in the company wellness program
• Frequent health communications (e.g., monthly newsletter, health challenges, email reminders)
• Health tracking program for physical activity, wellness activities, and events, which is tied to incentives, recognition, and rewards.
• Program evaluation and outcomes analysis

The bottom line:

You can lower healthcare costs by investing in the health of your employees.

Reference: Study Reveals Why Some Companies Pay More for Health Benefits than Others. 2007 SHPS Health Practices Study [release]. July 24, 2007.

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