Are you managing your Employee Healthcare Expenses? (Published in the Guardian of 11/10/2016)
Health care costs have been steadily rising for the past four decades and present a major challenge to employers. As a result, executing strategies to contain escalating health care costs has become a business imperative for today’s companies. Four key strategies used by Employers to control costs are:
- Reduce the number of employees
- Eliminate expensive benefit plans in favor of less costly options
- Shift Costs to employees
- Offer Wellness Programs
Why you should care about Employee Wellness Program?
With current economic landscape causing higher health care costs, employee wellness is of utmost importance. For many companies, health costs can use up to 50 % or more of their profits. In fact, the indirect costs of poor health, such as absence from work and reduced work productivity, can result in two or three times the amount of direct medical costs.
Wellness programs are indeed a valuable tool for cutting health care expenses. Proactive approaches to wellness are now widely accepted as both cost-effective and necessary for successful benefit programs. One study found that at least one fourth of health care costs incurred by working adults are attributed to changeable health risks, such as diet, lack of exercise, stress management, tobacco and alcohol addictions
Do wellness Programs save Employers money?
Employers offer the programs to improve health and well being of their employees, increase their productivity, reduce their risk of costly diseases, and improve disease management and prevention.
Workplace Wellness programs are considered a good investment for employers. For example a 2010 review by Harvard economist stated that wellness program returned 3 dollars in health care savings and 3 dollars in reduced absenteeism cost for every dollar invested.
While companies certainly care about the well being of their employees, the primary reason companies maintains a wellness program is to help curb health care costs. Comprehensive studies of worksite health promotion programs showed that companies that implemented realized significant cost reductions and financial gains. The WHO / World Economic Forum Report of a joint event in 2008 cites a comprehensive study conducted in 2003 on the economic return of Workplace health promotion, which concluded that workplace programs achieve a 25-30% reduction in medical and absenteeism costs in an average period of 3.6 years.
Cut your Health Insurance Costs
Health Insurance costs go up with the utilization –when employees use their benefits. Workplace wellness programs help minimize this utilization. An analysis of your health insurance utilization will help identify what is driving the company’s health care costs and then address them by implementing a wellness program with targeted health risk management and health promotion strategies.
Payback for wellness and health promotion is not overnight, but you will see other positive results immediately, such as improved morale and lower absenteeism, which usually results in higher productivity. In some cases, employers might also experience a reduction in work-related injury claims or shorter duration of such claims for individuals who may have had other conditions that slowed their recovery, such as diabetes.
Being able to implement the right wellness program for your employees can be a bit easier when you have access to data from sources such as health risk assessment, health insurance utilization patterns and claims for work related injuries.
Reply back to bhakti@impactafya.com with your feedback and we welcome your suggestions for corporate wellness issues you’d like to see covered in our future columns.
Bhakti Shah, MPH is the Founder and Managing Director of ImpactAfya Ltd, collaborating with Workplace Options and Mayo Clinic, USA to provide Corporate Wellness and EAP Solutions in East Africa. Bhakti is also the Immediate Past President of the American Chamber of Commerce in Tanzania and the Chair for Health Concerns for Rotary District 9211.