Is Your Business Struggling to Keep Pace with Rising Healthcare Cost?

Written By: Terrance J. O'Brien
April 22, 2009

Is your business struggling to keep pace with rising healthcare cots while your overall revenue is slipping?

You are not alone. This is a nationwide trend.  Businesses are at a crossroad and face major decisions on offering healthcare and healthcare benefits.

Options available

• Stop offering benefits – In most cases this is not realistic.  Medical benefits are usually the single most important benefit for most employees and a major reason employees stay with a company.
• Business as usual – If many employers go down the same path the results will be the same. Healthcare costs are expected to double by the year 2015 if corrective action is not taken.
• Find a new road - It requires not only thinking outside the box but also around the corner.

Health and healthcare is an upper management issue not a HR issue.

A survey recently completed by a healthcare advisory firm reported that firms doing a good job of controlling health care costs are more involved in health and health care benefits.

These employers presently see a productive workforce as a critical business advantage and are much more likely to offer cutting-edge healthcare programs.

Innovative employers primary concern is about managing the health and productivity of their employee and dependents. They strongly believe a healthy workforce is a significant advantage in today’s difficult economy.

What do these innovative employers know that you may not know?

They understand the facts.

• Up to 70% of all medical costs and disabilities are the result of preventive conditions.
• Approximately 5% of the population spends 60% of the healthcare dollars.
• 80% of the covered population spends less than 1% of the healthcare dollars.
• Only about 55% of medical patients receive appropriate care.
• Only 5% of the medical expenditures pay for preventing disease and maintaining health.
• 66% of the covered population spend less than $1,000 annually in medical claims.

Two independent surveys – identical results

Survey #1    (115 Companies -  3.7 million employees)

“…….Employers with the lowest comparative healthcare costs have strong clinical programs to improve health outcomes and manage critical risk. By contrast, employers who rely on traditional health benefit procurement strategies have the highest comparative health costs. The use of or absence of a few core practices in employee health management could explain cost differences of up to 50% between two otherwise comparative employers.”  2007 SHPS Health Practices Study

Survey #2    (450 Companies               )

“….Revealed that almost 2/3 of the employers surveyed plan to take more aggressive, multiyear steps to help employees improve their health by increasing education efforts, implementing condition management programs,  and using data analysis and other cutting edge programs to improve health and productivity while holding participants accountable for their behaviors.” Hewitt & Associates Emerging Health Trends 2007

Innovative Employers  - A profile

Company’s successfully containing costs have the following common charactistics

•  Written Health Care Strategy
•  Long-term Focus on Business and Workforce Issues
•  Health-Based and Data Driven Strategies
•  Focus on Quality and Health IT
•  Focus on Managing the Population not the Benefit Plan

Rome was not conquered overnight. 

The problem didn’t develop overnight and won’t be fixed overnight.  Success will be realized with incremental gains over a period of time. 

Employers willing to think around the corner and implement new strategies will benefit by increased productivity of its workforce and lower healthcare premiums.

 
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