If you have any questions, please call us at (281) 809-6960 or email us at HBCHmembership@HoustonBCH.org

HBCH Connect Spring 2016 Print

Message from the Executive Director

HBCH held a series of employer-only discussion roundtables in March. Conversations were focused on employer current challenges, perceived opportunities and HBCH value to employers.  Future roundtables will be topic-oriented and be facilitated to allow for direct sharing of information among employers.  We will soon be sending out a survey of future roundtable topics to employers.  Please let us know of any topics in which you are particularly interested in hearing the perspective of other employers and sharing yours.

 One of the things I learned from these discussions is that it will be best to have all employers contribute to one topic vs. separating discussion by employer size.   The concerns expressed by the three different sized employers can be groups as follows:    

•The provision and delivery of high quality benefits when the workforce is geographically dispersed.

•The integration of the inter-related data sets of the health investment portfolio to provide actionable and understandable data in a timely manner that can demonstrate the value of the investments.

•The need for chronic condition management services that demonstrate impact.

•The need to develop effective multi-media communications to engage and educate health plan members.

•The need to make the case to a paternalistic C-suite on the importance of strategically managing he health investment portfolio.

 

HBCH is thankful for all of its members and will continue to work diligently to demonstrate member value. We are pleased with the size ratio of employer members.   More than 60% of our membership consists of employers.  Of these, 34% are large, 31% are mid-sized, and 34% are small employers.  HBCH is truly a coalition for all.  We hope to add at least another 20 employers through June 9 as a result of our 2016 membership drive.   Please spread the word about our growing organization.

Hope to see you soon,

 

Chris Skisak, HBCH Executive Director

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Employers Charging More for Spousal Coverage

Source: Business Insurance, Shelby Livingston, 3/9/16

In 2015, 27% of employers surveyed reported using spousal surcharges for health care coverage when other employer-provided health insurance is available, according to the 2015 Willis Towers Watson/National Business Group on Health “Best Practices in Health Care Employer Survey.”

That number is expected to rise to 56% in the next two years, according to the survey of 487 employers with at least 1,000 employees conducted in June and July of last year.

The survey found that the average spousal surcharge across all employers surveyed is $1,200 per year.

More than half of employers have increased employee contributions to health care coverage for spouses at 56%, with another 25% planning to do so by 2018, the surveyed showed.

And 3% of employers don't offer or have eliminated subsidies altogether for spousal coverage and another 10% plan to by 2018.

Children are not immune to the health plan surcharge: Forty-six percent of employers have increased employee contributions for children's health care benefits more than for employee-only coverage, and an additional 15% plan to by 2018.

Total health care costs for the employer and employee reached $12,041 per employee per year in 2015 and are expected to rise nearly 5% to $12,643 in 2016, the survey showed.

“Given the high cost of health care, companies no longer want their plans to be spouse magnets, which may incur thousands of dollars a year in additional health care expenses when spouses have access to coverage through their own employers,” Randall Abbott, senior health and benefit strategist at Willis Towers Watson in Boston, said in a statement Wednesday. “Assessing the actual costs for spouses and determining how to best manage them can help create more efficient health care plans and avoid or reduce additional across-the-board increases in employee contributions.”

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Employers in "Wait and See" Mode on Approach to Healthcare

Source: 2015 Aon Health Care Survey

Executive Summary

The 2015 Aon Hewitt Health Care Survey of more than 1,000 employers revealed that most companies decided again this year to “wait and see” rather than make significant changes in their approach to health care. This is based on four factors:

1) the recent slowdown in health care costs,

2) a desire to see what others in their industry or geography are doing in the next three to five years,

3) a pause to see how the 2016 elections will go, and

4) senior management becoming more involved in the process and spending time acclimating to the current environment.

Survey results also revealed that companies will continue to focus on the same three areas they have in the recent past:

1) reducing increases in their premiums,

2) increasing employee awareness of their health issues, and

3) encouraging people to use price and quality tools when making health care decisions.

We believe the opportunity cost to waiting is growing each year. There has never been a better time to positively influence the trajectory of health care in the U.S. Employers should begin to:

1) manage and deliver health care at a national, local, and personal level;

2) integrate data and technology to enhance the ability to personalize health and wellbeing and become better consumers; and

3) continue to focus on health to ensure a more productive and engaged workforce.

Three major catalysts for change increase the importance for employers to act now:

1) the health excise tax, commonly known as the “Cadillac Tax”, goes into effect in 2021;

2) a changing workforce that is spread across multiple generations and psychographic segments will demand personalized options to meet their health care needs; and

3) companies now have the option of exiting health care by using public exchanges.

Although few plan to do this, they have more health care delivery options to evaluate as they justify their approach to sponsoring health benefits. Our Recommendation, Those tasked with leading the health charge for their companies should take these actions now to shape the future:

• Create disruptive (or transformative) changes in your approach by reducing the waste in your system through effective design, network (i.e., centers of excellence), and carrier management.

• Partner with a carrier committed to rewarding providers for value and not volume, and ensure that they will guarantee savings.

• Provide options for equivalent care that is more convenient and affordable, leading to increased availability and use of alternate care options (i.e., telemedicine, nurse practitioners, convenience care, etc.).

• Reap the benefits of empowering a healthier workforce by changing the emphasis from “wellness” to “wellbeing,” and engaging the C-suite and other stakeholders as key participants in developing an active health care culture.

• Prepare to attract and engage tomorrow’s workforce by offering programs that appeal to multiple generations of employees.

• Integrate health care into a “total rewards” approach that increases employee satisfaction and engagement.

This report features select results from the Aon Hewitt 2015 Health Care Survey, includes key insights and highlights specific actions your company may take today to improve its business performance, reduce expenses, attract and retain key talent, and help shape health care policy in the future. For a more detailed discussion, please do not hesitate to reach out to your local Aon Hewitt consultant.

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The Power of the Patient - Centered Medical Home in Workplace Health and Wellness Centers

Source: Ann Bartos Markow, MD, Regional Medical Director, QuadMed, 2016

The patient-centered medical home has certainly captured the attention of the health care profession. And more recently its admirers have included a variety of stakeholders, including employers looking to bring an innovative and value-added approach to their employee health care solutions.

By harnessing the power of the PCMH model in worksite or near-site health and wellness centers, forward-thinking employers are able to implement creative benefit structures that improve the health care delivered to employees. In the employer setting, the PCMH model can not only significantly reduce health care costs, but it can improve population health, and more importantly, sustain those improvements over time leading to long-term health care cost control and a healthier, more productive workforce.

So what is the PCMH model?

It’s best described as a model or philosophy of primary care that is patient-centered, comprehensive, team-based, coordinated, accessible and focused on quality and safety. It encourages providers and care teams to meet patients where they are on their health care journey, from the simplest to the most complex conditions. Unlike the production model of medicine, PCMH encourages, by design, the allocation of adequate time necessary to truly know the patient and the person behind the patient. Right patient, right care, right time.

So what does this mean for employers?

The onsite health center that embraces the PCMH model is in the best position to influence improvements in the health of an employee population. The PCMH model brings together an entire care team to support and care for each patient. The team may include doctors, nurses, health coaches, nutritionists, nurse educators, physical therapists and others. This personalized and holistic approach to care allows employees to not only get the care they need, but it also creates a culture of health, improving their overall well-being and productivity.

So what does that mean in practice?

The impact of the PCMH can be felt in forms as simple as tackling smoking cessation to more complex conditions like hypertension, diabetes and asthma. While physicians in any setting would counsel a patient to stop smoking, the onsite PCMH model would surround the patient with a care team and the resources to achieve success. Using this model, clients have been able to see success levels approaching 90 percent of patients being able to quit or significantly reduce their smoking.

So how can time and a team approach improve employee health?

The PCMH impact on chronic conditions can be even more profound. Consider this. An employer had been managing their own onsite health center and after failing to see the outcomes they hoped for, brought in a vendor partner whose philosophy of care was rooted in PCMH. Within a year, referrals to the chronic condition management program increased by more than 50 percent and compliance increased by 30 percent. One patient stated she learned more in 30 minutes on the phone with her health coach than she had in five years of appointments with her physician. In one year this employer was able to drive down inpatient admissions and ER utilization and achieve a first-year ROI of 1.53:1.

Let’s take a closer look at the PCMH impact at the patient level.

A 51 year-old female with diabetes presented at the onsite health center. She was five feet tall, weighed 151 pounds, had a BMI of 28.1 and an AIC of 7.5 percent. During her first visit she was introduced to the health center’s certified diabetic educator, a dietitian and wellness coach – they became part of her care team. Working together for less than six months she was able to lose 16.5 pounds including six inches around her waist. She had a history of triglycerides over 800 and was able to bring it down to 231, well on her way to getting it below 200. Her fasting blood sugars decreased from 177 to 105 and her A1C decreased to 6.5 percent. She was able to eliminate 75 percent of her diabetes medications and completely eliminate her blood pressure medication by bringing it down to 120/70 after presenting at 132/89. She continues to work to get off all of her medications. By working with her health coach she was able to develop an exercise program she could stick with and the dietitian was able to help her make lasting improvements in her eating habits.

When patients have information and resources made available to them, along with a relationship with their care team, patients are able to take control of their health and move from a reactive to a proactive approach to their health care decisions. They feel empowered to take control of their health and make the kind of changes that contribute to a workplace culture of health and wellness and that results in significant cost savings for their employer.

Practitioners in the PCMH model don’t know something that other practitioners don’t, but they do have the time and the care team to support patients in a way that the traditional medical model doesn’t. In the workplace, the power of the PCMH is even more significant because of the employer partnership, the ability to integrate other employer wellness initiatives and benefit design, along with occupational health efforts. Together they represent the formula for real population health improvement.

So what about cost savings?

As a medical director working with employer populations for the last 20 years, I have seen the direct impact of workplace health and wellness centers over time on the health of companies and their employees. While new and innovative programs have been added to our scope of services and technology advances have enhanced the provision of team-based care, our ability to demonstrate results has been consistent. And this consistency certainly supports the growing interest among employers in onsite or near-site health and wellness centers.

One of our employer partners recently commissioned an independent third-party evaluation of one of our health and wellness centers to estimate the center’s financial and population health impact. The results are indicative of what can be accomplished when the employer and health center partner are aligned in goals and vision.

Evaluation results:

  • 3.4:1 ROI for three-year onsite health center
  • $7.1 million net three-year savings
  • 15 percent decrease in inpatient admissions
  • 16 percent decrease in ER utilization
  • 39 percent decrease in outpatient services
  • 11 percent decrease in chronic conditions
  • Six percent decrease in prescriptions
  • Five percent increase in use of generics
  • 54 percent unique user penetration rate
  • Unique user penetration rate exceeds market norm of 45 percent and ROI also exceeds market norms

 

Factors that contribute to employer success:

  • Alignment between the employer and onsite health and wellness center provider around the vision and philosophy of whole person care (it’s not walk-in care or urgent care).
  • An employer benefit structure that supports a culture of health and wellness; make it worth it for employees to use the health and wellness center.
  • Engaging employees and increasing utilization is key to generating optimal results – both in cost savings and health outcomes.
  • Providing ample appointment times to facilitate unhurried and thorough visits, at least 20 minutes and averaging over 30.
  • An open scheduling system that allows for same day appointments; helps to reduce unnecessary urgent care or emergency room visits and reduces the amount of lost work time.
  • Delivering an exceptional patient experience. Among our more than 90 locations we maintain a patient satisfaction score in excess of 98 percent – and word-of-mouth promotion increases utilization.
  • Welcoming patients with an existing primary care relationship. While the goal is to have employees consider the health and wellness center their medical home, it isn’t required.
  • Integrating wellness data and occupational health efforts with the PCMH care model for real population health management

 

Dr. Merkow joined her father’s internal medicine practice in 1986 and after it was acquired by a local health system in 1996 she left to join QuadMed. She was the physician leader for the patient-centered medical home care model and later became medical director for the Quad/Graphics health and wellness centers and currently serves as regional medical director and medical director of QuadMed’s chronic condition management program nationwide.

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Linking Health & Well-Being to Stock Performance, Expanding the Value Proposition for Employee Health and Well-Being

Source: Jessica Grossmeier, Vice President of Research, HERO, 2016

The concept that good health is good business has been validated over the years by research linking health risk factors to higher employee health care costs, reduced on-the-job productivity and higher absenteeism. More recently, research has expanded its focus to overall well-being, with some studies showing a correlation between low employee well-being, higher turnover, lower employee engagement and lower employee performance. Now, the latest emerging body of research shows there may be yet another reason to invest in a healthy workforce: improved stock performance.

Earlier this year, three separate but related studies were published that demonstrate a correlation between a company’s approach to employee health and well-being and their corporate stock performance. One of those studies was conducted by the Health Enhancement Research Organization.

The HERO study revealed a distinct correlation between comprehensive, best practice wellness programs and corporate stock performance. More specifically, the study showed companies that scored highly on the HERO Health and Well-Being Best Practices Scorecard in Collaboration with Mercer® (HERO Scorecard) -- which signals an investment in wellness best practices -- outperformed the Standard & Poor’s (S&P) 500 Index over the course of six years.

The study, “Linking Workplace Health Promotion Best Practices and Organizational Financial Performance,” was published in the January issue of the Journal of Occupational and Environmental Medicine and tracked the stock performance of a portfolio of 45 publicly traded companies from 2009 through 2014 that earned top scores on the HERO Scorecard. The performance of these companies was compared to that of the Standard and Poor’s 500 Index (S&P 500) over the six-year study period.

Findings at a Glance

Findings indicate that companies who share the common practice of investing in workplace health and well-being represent superior investments in the marketplace. More specifically, researchers found that this simulated portfolio of companies outperformed the S&P 500 in the following areas:

  • Appreciated 235 percent compared to 159 percent for the S&P 500,
  • Outperformed the S&P 500 in 16 out of 24 (67 percent) quarters during the study period, and
  • Produced a comparable dividend yield of 1.97 percent by the end of the study period, compared to a 1.95 percent yield for the S&P 500.

Companies in the study ranged in size from 762 to 272,890 employees and came from a diversified collection of industry categories including: consumer discretionary, consumer staples, energy, financial services, health care, industrial, information technology and utilities. The average age of employees within these companies was 42.8 years, and 56 percent were male.

A Growing Body of Work

The two related studies were also published in the January issue of JOEM. These studies were drawn from different populations of employers and used differing methodologies and timeframes, but the outcomes were similar: companies recognized for their significant investment in workplace health and well-being realized higher performing investments.

These studies were conducted by the American College of Occupational and Environmental Medicine -- with sponsorship from the Underwriters Laboratories Integrated Health and Safety Institute -- and by The Health Project. The research methodologies for the three studies were developed by Ray Fabius, M.D., co-founder of HealthNEXT. Fabius is also a co-author on all three papers.

The ACOEM study followed the stock performance of as many as 16 companies that had applied for the Corporate Health Achievement Award over a 13-year period and achieved high scores in the areas of health and /or safety. The simulated investment returns for these companies were significantly higher than average S&P 500 returns – as much as triple in some of the scenarios. In the best-performing scenario, the study group achieved a 333 percent return, compared to an S&P 500 return of 105 percent during the same period. In the lowest-performing scenario of 11 companies, the study group achieved a 204 percent return, compared to an S&P 500 return of 105 percent during the same period.

The Health Project studied 26 companies that had won the C. Everett Koop Award from 1999 through 2014. These companies distinguished themselves by excelling in workplace wellness programming and promoting population health among their employees and covered lives. The study found these companies doubled the return of the S&P index yielding a 325 percent return compared against the 105 percent return from the S&P 500, while returning higher dividends: 2.31 percent compared to 1.95 percent for S&P 500 companies. The price-to-earnings ratio for the award winning companies was lower (17.13) than the overall S&P 500 (18.27), which means the performance of the study group was not based on an overvaluing of the companies.

What Does This Research Mean for Employers?

The combination of these studies reinforces a broader value proposition that links workplace health and well-being to favorable business performance. Better employee health is clearly linked to higher levels of employee productivity and performance, and emerging evidence shows healthier employees are also more engaged in their work and have lower turnover. For health and benefits professionals who want to make the business case for wellness to corporate leaders, this research is one more indication that effectively run companies do, indeed, invest in workplace health and well-being.

This body of work suggests the need for additional research to better determine the connection between workforce well-being and organizational performance. At this point in time and based on the existing knowledge, we can say there is a strong correlation between a company’s investment in workplace health and well-being and its stock performance. There are many factors that were not analyzed in these studies that could influence stock performance, and it may be the case that investment in health and well-being is a proxy for companies that engage in other best practices to achieve their competitive advantage.

What these outcomes do tell us, is that if you are looking to run an effective health and well-being program for your employees and want to see positive financial results, you can emulate the desired results by offering best-practice wellness programs, like the companies in these studies. Each of the studies points to tools that can help organizations identify the elements of best practice programs. The HERO Scorecard provides the most detailed inventory of specific practices while the C. Everett Koop Award publishes information about award-winning programs on The Health Project website. And ACOEM provides information on its CHAA criteria on its website.

Employer Guidance on a Best Practice Approach

The HERO Scorecard is a free, online inventory of evidence-based health and well-being practices. It allows companies of all sizes and from any industry to complete a self-assessment of their health and well-being initiatives including programs, policies, and other organizational support. Upon completion, companies receive an individual score and a comparison of their program based on industry, company size and geography, which is useful for benchmarking and strategic planning.

Companies that score high on the HERO Scorecard report adhering to common best practices, including: strong strategic planning, senior leadership engagement and cultural support for health, a rich and comprehensive set of programs that meet a diverse spectrum of health needs, a comprehensive array of communication and participant engagement strategies, and robust program evaluation and performance reporting. Since its inception, more than 1,700 companies have completed the HERO Scorecard.

Jessica Grossmeier, Ph.D., is vice president of research for the Health Enhancement Research Organization and lead author on the HERO Scorecard stock performance study. She can be reached at jessica.grossmeier@hero-health.org. Raymond Fabius MD, is co-founder of HealthNEXT and can be reached at ray.fabius@healthnext.com for questions specific to the ACOEM study or data analysis associated with the three studies. Ron Goetzel, PhD, is lead author of the Health Project study and can be reached at ron.goetzel@truvenhealth.com.

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HBCH Executive Director Chris Skisak, PhD, explains HBCH mission on "The Price of Business" radio program

Chris Skisak spoke recently on The Price of Business, a nationally syndicated radio program on KTEK-1110 AM.  Skisak appeared with host Kevin Price and co-guest Dr. Geetinder Goyal.  In this 9-minute segment he presents the HBCH value proposition to local employers and supported the need for improved primary care physician services with Dr. Goyal.  Click here to listen.

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Survey Results of Employer Strategies to Improve Health & Healthcare Value

The results of a recent Benfield /Arthur J. Gallagher survey of employer strategies to improve health and healthcare value were provided to HBCH because it helped facilitate local employer completion of this annual survey. The report graphically describes approaches to managing health, perspectives and strategies to achieving healthcare value, and their role in improving community health. Click here to see the full presentation.

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Summary of Integrated Benefits Survey of Employer CFO's

Please click here for the full survey. Health

Results from the integrated benefits institute’s 2015 CFO survey

Founded in 1995, the Integrated Benefits Institute (IBI) is a national, nonprofit research and educational organization committed to helping business leaders and policymakers understand the business value of workforce health and recognize the competitive advantages of helping employees get and stay healthy. IBI is supported by more than 1,100 member companies representing over 20 million workers.


Acknowledgments

We thank Jean-François Beaulé, EVP Health Plan Design and Innovation, UnitedHealth Group; Mary Tavarozzi, North America Practice Leader–Absence and Disability Management, Towers Watson; Phil Lacy, Health & Productivity Practice Leader, Trion—a Marsh McLennan Agency LLC; and Erin Bill, VP, Total Rewards, The Hartford for their thoughtful comments on this report.

 

Finding the Value in Health

Results from the Integrated Benefits Institute's 2015 CFO Survey

Executive Summary

Chief financial officers (CFOs) are responsible for ensuring that a company’s financial resources further its business strategy. Three times over the past decade and a half, the Integrated Benefits Institute (IBI) has surveyed CFOs and other senior finance executives about how employers invest in the health of their workers—and the expected returns from their portfolio of health benefits.

This fourth CFO survey investigates changes in health benefits since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010 and explores the links among employers’ benefits decisions, their corporate culture and their stated benefits goals. We asked CFOs to think broadly about "health-related" benefits—including health insurance but also other employer-sponsored policies and programs designed to improve enrollees’ health; reduce illness-related absences, underperformance and lost productivity; or otherwise reduce the financial burden of illness on the company—to answer the overarching question: Do benefits strategies such as cost-sharing with employees, investment in health promotion efforts, value-based benefits, specialty pharmaceutical coverage and private healthcare exchanges reflect priorities other than simply managing costs? Their responses can help human resource (HR) and benefits professionals emphasize critical issues when they engage senior executives about the strategic value of workforce health. At the same time, identifying consistent patterns among corporate goals, values and benefits decisions helps point out gaps that might disadvantage a company compared with its peers (and competitors).

The survey was completed by 345 CFOs and other senior finance executives—40% of whom reported their company’s revenues at more than $2 billion, placing them among the Fortune 1000. The results clearly show that while CFOs are strongly cost conscious about benefits, helping employees manage their health and developing high-performing human capital are also important benefits goals. The salience of these goals—and the strength of an employer’s culture of health—sheds light on the benefits decisions that employers have made since the passage of the ACA and the changes they intend to make in the near future.

IBI and CFO Research Services (the research arm of CFO Publishing LLC) collaborated to develop and field the survey via e-mail. IBI performed the analyses and drafted this report.

Authors: Brian Gifford, PhD | Thomas Parry, PhD | Kim Jinnett, PhD

Integrated Benefits Institute

January 2016

 

Survey Highlights

As partners in making benefits decisions, CFOs do not focus single-mindedly on costs. They also consider their company’s business strategy and corporate value system.

CFOs are deeply involved in decisions about their company’s health benefits. Only 15% of CFOs surveyed said that the finance function played no role in their company’s benefits decisions. A majority share benefits decision-making as equal partners with other departments or make all or most benefits decisions; 24% of CFOs said that the finance function’s role in benefits decision-making has expanded since the passage of the ACA, compared with 5% who said the finance function’s role in benefits decision-making has shrunk.

Cost-sharing with enrollees is on the rise since the passage of the ACA. About half of all CFOs surveyed said that their company is increasing its offerings of high-deductible plans for employees and dependents and raising enrollees’ premium shares and out-of-pocket expenses.

Employers remain committed to programs that promote workforce health. More than half of CFOs surveyed said that their company had enhanced their health and well-being programs since the passage of the ACA, while over one-third enhanced incentives for employees to adopt healthy lifestyles or participate in wellness programs. Few CFOs said that their company made changes to the structure of benefits programs such as integrated healthcare and disability, coverage of specialty pharmaceuticals and disability leave benefits.

Few CFOs foresee changing their health benefits strategy in the next three years. CFOs who said their company would likely provide benefits to full-time employees through private health insurance exchanges (27%) were outnumbered two to one by CFOs who said that their company was unlikely to do so. For every CFO who said that his or her company would likely eliminate health insurance for part-timers in the next three years, 15 CFOs said that their company was unlikely to do so. Virtually no CFOs said that their company would likely eliminate health insurance for full-time employees in the next three years. Likewise, few CFOs indicated that their company would convert some full-time employees to part-time to reduce ACA obligations or would incur financial penalties under the ACA.

Controlling costs is only one of several goals for employers’ health benefits. Not surprisingly, CFOs are strongly cost conscious about benefits. Almost half cited "reducing and controlling healthcare costs" as the most important benefits goal since the passage of the ACA, while 87% cited cost control as one of their five most important goals. Other important goals included helping employees manage their health and become better consumers of care, complying with government regulations, and attracting/retaining or satisfying talent in the labor market.ibi 2015 cfo survey: finding the value in health | 3

Employers’ benefits goals shed light on actions taken since the passage of the ACA. CFOs who said that their company’s health benefits had important human capital goals—such as competing for talent in the labor market—cited less cost sharing with employees and a lower likelihood of eliminating coverage for full-time employees in the next three years. Employers with benefits that had important business performance goals—such as improving customer service—were less likely to increase cost sharing for employees and more likely to enhance coverage of specialty pharmaceuticals and disability leave. Finally, the importance of improving enrollees’ health was linked to enhancements in health promotion efforts and the provision of high-deductible plans in concert with value-based benefits and specialty pharmaceutical coverage.

Employers with a stronger culture of health show a greater commitment to health promotion efforts and less willingness to change their health benefits strategy. CFOs who described their company as having a stronger culture of health were more likely to say that their company enhanced its efforts to improve workforce health—such as incentivizing healthy lifestyles and wellness participation and providing value-based benefits and specialty pharmaceutical coverage. Employers with stronger cultures of health were also less likely to say they would eliminate health insurance benefits for employees or dependents.

Employers that recognize how illness impacts productivity appear less likely to change their health benefits strategy. CFOs who agreed that illness impacts employee absences and who disagreed that illness-related underperformance was unquantifiable were less likely to say that their company would eliminate health insurance benefits for full-time employees in the next three years, would provide benefits through private health insurance exchanges or would incur penalties under the ACA.

Improving measurement of benefits outcomes could strengthen the business case for workforce health. Overall, only 23% of CFOs reported that their company made any assessment of whether its benefits are producing positive results. The most common assessment method was whether employees participated in programs (14% of all employers and about 60% of employers that make any assessment), followed by employee satisfaction with programs. Only 6% of employers calculated the return on investment (ROI) of their health benefits.

 

Introduction

The research literature provides strong evidence that workers’ illnesses take a toll on their productivity and that a healthy workforce offers competitive business advantages.1 The large percentage of firms that invest in workplace wellness and health promotion programs2 indicates clearly that human resource (HR) and benefits professionals have gotten the message.

Like any portfolio of investments, health benefits—including health insurance but also other employer-sponsored policies or programs designed to improve enrollees’ health or otherwise reduce the financial burden of illness on the company—must be managed with attention to both costs and returns. Nonetheless, many employers still base their decisions about workforce health primarily on the costs of healthcare benefits without considering fully the strategic value of healthy employees.3 This disconnect between the amount employers pay for healthcare benefits and what they get in return—high-performing workers who can contribute to the value of the firm—jeopardizes the momentum for workplace health, well-being and productivity initiatives. Shifting more of healthcare’s rising costs to employees might look good on this year’s financial statements but will do little to improve the quality of companies’ goods and services in the long run. For that, employers need workers who are on the job consistently and feeling healthy, engaged and mentally alert enough to perform at a high level—all of which is compromised when employees engage in unhealthy behaviors or forgo necessary and beneficial care they feel they cannot afford.4

The chief financial officer (CFO) is responsible for ensuring that a company’s financial resources further its business strategy. This responsibility places the CFO at the intersection of the costs and value of a healthy workforce. Previous Integrated Benefits Institute (IBI) surveys of CFOs5 investigated such topics as the information financial executives find helpful in making decisions about health benefits and their assessments of illness-related business costs, such as healthcare spending, sick-day and disability wage replacements, and the costs of replacing the absent and underperforming employees’ lost output.

Nonetheless, while those studies provided valuable insights about making the business case for a healthy workforce, they were focused squarely on costs. Now that most of the employer provisions of the Patient Protection and Affordable Care Act (ACA) are in place—with significant uncertainty remaining about the excise tax on insurers of high-cost employer-sponsored health plans—the focus on costs without regard to the strategic intent of benefits increasingly seems misplaced.

For one thing, though the ACA’s financial penalties for not covering employees are far lower than most health insurance premiums, survey after survey shows that employers remain committed to offering health benefits rather than paying fines and subsidizing their employees’ enrollment in public healthcare exchanges.6 For another, while cost-sharing is becoming more common, so are workplace efforts to help employees get and stay healthy.7 The finding that employers are largely covering their part-time workers as required by law rather than reducing hours8 is another reminder that human capital considerations remain part of the benefits cost equation.

Clearly, CFOs pay attention to costs as they oversee the performance of their firm’s portfolio of health benefits. But is managing costs their only concern? What other returns do CFOs anticipate from their firm’s benefits portfolio? And how might that portfolio change as new benefits options, such as private exchanges and specialty pharmaceutical tiers, gain traction?

 

Detailed Survey Findings

IBI partnered with CFO Research Services, a unit of CFO Publishing LLC, to survey 345 CFOs, controllers, directors, VPs of finance, treasurers and other senior finance executives at firms of a variety of sizes across a range of industries.9 Forty percent of respondents represented firms with at least $2 billion in annual revenues, placing them among the Fortune 1000 in 2015.10

The major goal of this study was to better understand employers’ financial and strategic goals for their health benefits11 from the CFO’s perspective. We asked CFOs a battery of questions about how their company approaches workforce health as a business strategy. Topics covered included the following:

The top goals for their health benefits since the passage of the ACA

The overall culture of health at their company

Their impressions of how employees’ health impacts their job performance and the performance of the business

Their standards for a credible business case linking health to job performance

We also asked CFOs about changes their company has made to its benefits since the passage of the ACA. Topics covered included the following:

Cost-sharing (high-deductible plans, out-of-pocket amounts and premium amounts) for employees, dependents and retirees

Health and well-being programs and financial incentives for enrollees to make healthy choices

Enhanced benefits, such as disability and value-based arrangements and specialty pharmaceutical coverage

Finally, we asked CFOs about their company’s likelihood of changing its health benefits strategy by taking actions traceable to the ACA’s policies and regulations. Topics covered included the following:

Providing healthcare benefits to full-time or part-time employees or retirees through private health insurance exchanges

Eliminating healthcare benefits for full-time employees, part-time employees, dependents or retirees

Converting some full-time employees to part-time to avoid some ACA regulations

Incurring financial penalties under the ACA

To establish that CFOs can respond knowledgeably about their company’s health benefits in relation to productivity, we also asked about the finance function’s role in benefits decision-making and how their company assesses whether their health benefits are achieving positive outcomes.

 

 

CFO Survey Finding #1

CFOs are deeply involved in decisions about their company’s health benefits.

More than half of all CFOs play an important role in making decisions about health benefits. Over 40% of CFOs participated more or less as equals with other departments, while 14% made all or most benefits decisions. Only 15% said that the finance function played no role in benefits decisions. The remaining CFOs stated that they primarily approved benefits budgets while other departments set priorities and made decisions about benefits and policies.

Importantly for the focus of this report, CFOs’ roles making decisions about health benefits have expanded since the passage of the ACA: 24% of respondents said that the finance function’s role in decision-making has expanded, compared with 5% who said the role has shrunk.

 

Cost-sharing with enrollees is on the rise since the passage of the ACA.

CFOs report that cost-sharing for employees, dependents and retirees is on the rise since the passage of the ACA. Between 44% and 50% of all CFOs said that their company increased12 its offerings of high-deductible plans for employees and dependents and raised enrollees’ premium shares and out-of-pocket expenses. The responses for retirees’ cost-sharing are between 22% and 26% but are similar in impact when taking into account the number of CFOs stating that their companies did not offer retiree benefits.

 

Employers remain committed to programs that promote workforce health.

CFOs stated that their company enhanced some benefits that can support workforce health but left more-established benefits largely intact. More than half said their company adopted or enhanced its wellness and health improvement offerings. Between 37% and 41% enhanced or adopted financial levers to encourage enrollees’ healthy choices, such as linking premiums to lifestyle factors and offering incentives for participation to encourage enrollees’ efforts to engage in their health. About one-quarter of CFOs said that their company adopted or enhanced value-based benefit designs. Few CFOs said that their company made changes to benefits such as integrated healthcare and disability, coverage of specialty pharmaceuticals or disability leave.

Nonetheless, the proportion of CFOs who said that their company reduced or eliminated coverage of specialty pharmaceuticals—10% of the total—equaled the proportion who said that they enhanced or adopted such benefits.

 

CFO Survey Finding #4

Few CFOs foresee changing their health benefits strategy in the next three years.

Relatively few CFOs said that their company was likely or very likely to change its health benefits strategy by taking actions over the next three years that correspond to new opportunities or requirements traceable to the ACA.

For example, about 27% of CFOs said that their company would likely provide benefits to full-time employees through private exchanges, but they were outnumbered two to one by CFOs who said that their company was unlikely to do so. Virtually none of the CFOs said that their company would likely eliminate health insurance for full-time employees. For every CFO who said that his or her company would likely eliminate health insurance for part-time workers, 15 CFOs said that their company was unlikely to do so. Likewise, few CFOs indicated that their company would convert some full-time employees to part-time to reduce ACA obligations or would incur financial penalties under the ACA.

 

CFO Survey Finding #5

Controlling costs is only one of several goals for employers’ health benefits.

We asked CFOs to rank the top goals for their company’s health benefits since the passage of the ACA. Not surprisingly, CFOs are strongly cost conscious about benefits. Almost half cited reducing and controlling healthcare costs as the most important benefits goal since the passage of the ACA, while 87% cited cost control as one of their five most important goals.

However, CFOs also assign high levels of importance to such goals as helping employees manage their health and become better consumers of care, complying with government regulations, and attracting/retaining or satisfying talent in the labor market.

 

A factor analysis revealed that the importance CFOs assigned to some goals corresponded in predictable ways to the importance of other goals.13 The correspondence patterns indicated three distinct categories of goals, described in the table below.

The items that characterize each category can be combined into scales indicating that the overall goal is less important or more important for a particular employer.

Employers with more-important human capital goals for their health benefits emphasize improving workforce productivity and recruiting and retaining talent in the labor market and de-emphasize complying with government regulations.

Employers with more-important business performance goals for their benefits emphasize improving the company’s customer service and business processes and de-emphasize reducing/controlling healthcare costs.

Employers with more-important enrollee health goals for their benefits emphasize helping enrollees manage their health and become better consumers of care.

CFO Survey Finding #5 (continued)

TABLE 1

GOALS FOR EMPLOYERS’ HEALTH BENEFITS FALL INTO THREE DISTINCT CATEGORIES

Benefits goals

Places greater importance on:

Places less importance on:

Human capital goals

 Improving workforce productivity

 Attracting/retaining/satisfying talent in the labor market

 Complying with government regulations

Business performance goals

 Improving the company’s customer service

 Improving the company’s business processes

 Reducing/controlling healthcare costs

Enrollee health goals

 Helping enrollees become better consumers of care

 Helping enrollees manage their health

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Yet Another Business Coalition Forms to Tame Health Costs

Yet Another Business Coalition Forms To Tame Health Costs

Bruce Japsen ,

A new coalition of 20 large employers said they have formed a new business coalition known as the “Health Transformation Alliance” in effort to reign in the rising cost of healthcare.

While the Wall Street Journal breathlessly described it as a move that could “ripple through the world of employer-provided health coverage,” it is just one of a number of similar, overlapping efforts that have so far failed to keep the rate of employer medical cost increases even on par with general inflation.

The group joins an already crowded field of national and regional coalitions of employers including regional business groups on health including the Business Roundtable, the National Business Coalition on Health and the National Business Group on Health. Of the 20 companies that are part of the Health Transformation Alliance, 14 of them are all part of the National Business Group on Health.

The new group said it will focus on “reforms to the supply chain that are designed to reduce redundancies and waste.” Like the other coalitions, they will also “share expertise” with a focus on making the “current multilayered supply chain more efficient.”

The average amount that employees need to contribute toward their healthcare has increased more than 134% over the past decade, according to Aon Hewitt

The Health Transformation Alliance includes companies like American ExpressAXP -0.02%, CaterpillarCAT +0.60%, Shell Oil and Verizon. “Even the most successful companies won’t be able to afford the rising costs of healthcare in the not too distant future,” Kevin Cox, the chief human resources officer at American Express said in a statement.

The alliance is the brainchild of the American Health Policy Institute. Its president, Tevi Troy, a former health official in the administration of George W. Bush, said the employers involved will come together to share data on costs, prices and health outcomes from medical claims information submitted from each alliance member. Troy said the alliance’s effort also has “buy in at high levels of the corporations involved” thanks to input from each company’s chief human resources officers.

These days, many employers reduce their healthcare cost burden by shifting a larger share of health costs onto their employees. The combined premium and out-of-pocket costs will surpass $5,000 for the first time next year, according to an analysis from Aon Hewitt

But health coalitions working with employers already say the Health Transformation Alliance cannot just focus on costs if it’s going to succeed. “Employers should be thinking not only about how they can work together to drive prices down, but also how they can push to improve quality and change the payment and delivery of care,” says Karen van Caulil, board chair, National Business Coalition on Health, and President & CEO, Florida Health Care Coalition. “Our coalitions have been doing this work for years in their respective markets and have the regional intelligence and boots on the ground to make a difference. Many of the companies engaged in this new alliance are not involved in the regional coalitions and we would welcome them to play a more active role to bring about change in the communities where their employees live and work.”

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