A new study of health benefits published in the Harvard Business Review and sponsored by Collective Health shows many corporate leaders give very little thought to what is their second largest expense after wages.
While the ballooning cost of health care is a very real concern for companies of all sizes, many businesses don't seem to view the problem as something they need to cope with, rather than solve.
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After talks with leaders of 150 companies with self-funded health plans, HBR reports concerns about health benefits are often accompanied by "ingrained mindsets about managing them."
For starters, only half of the leaders surveyed say they view their benefits management team as playing a "strategically important corporate role." That finding suggests that many leaders do not look to HR personnel for ways to set the business on a new path, even though the HR department may be the best-positioned to figure out how the company can rework benefits to boost the return on investment in terms of employee recruitment, satisfaction and retention.
"For the most part, managing benefits appears to be about managing spending, rather than returns, as non-cost measures such as employee health and wellbeing are used far less often than pure cost metrics," the authors write.
The good news is that there do not appear to be many executives who are completely out of touch with the significance of health care for the company's future. A narrow majority (58 percent) expect health benefits to be a greater priority in the coming years, while only 1 percent say they expect it to become less important. Thirty-eight percent do not expect it to increase or decrease in importance.
Leaders are also keenly aware of the waste that occurs within the health care system. Eighty-three percent say that they could reduce waste if they had access to better management tools. Only 7 percent say that waste is unavoidable and largely out of the control of employers.
But what those tools are and how they get access to them clearly remains a mystery to many in the C-Suite. The sense of powerless, the authors suggest, is compounded by the increasingly consolidated industry of vendors and providers that self-insured employers must negotiate with on prices.
The way forward for businesses, the authors posit, is to shift focus to "results-oriented" health care metrics. Instead of just looking at the cost, employers need to analyze the effect of benefits on employee satisfaction.
Benefit platforms that allow employers to "track usage and detect unmet needs in the employee population" are likely a key part of the solution, the report argues.
Or, as the report authors put it: "Treating the health benefits function like any other business unit and holding it accountable for results are relatively new concepts, but those who have felt the accumulating pressure and costs of today's market dynamics feel it is the only way forward."
Tevi Troy, CEO of the American Health Policy Institute, also sums it up nicely: "The goal shouldn't be to make unnecessary, redundant systems and practices more efficient; it should be to eliminate the unnecessary and redundant systems and practices that are causing the problems."
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