Operational Excellence Depends on Cultivating Talent’s Strengths

HR professionals have been trying to control health care costs by continually tweaking the medical plan designs, which result in shifting more costs to employees but do not reduce the cost of health care. That is why the new focus needs to be on prevention and wellness.

While this is not a new concept there needs to be more focus on it in order for it to make a difference. Some of the moderate plan designs (such as 100% coverage for preventative testing and wellness exams and
intrusive disease management) have not moved the needle enough. Also, discounts to health clubs and gyms as well as smoking cessation support have failed to influence the behaviors of most employees. It is time to take a more direct approach. Watson Wyatt conducted a survey in 2009 to see what the major trends for 2010 would be. There were five trends that were noted:

  • Higher out-of-pocket costs
  • Consumer-directed health plans
  • Consolidation of health plan offerings
  • Closer eye on spousal and dependent coverage
  • Prescription drug benefits
  • Greater use of incentives to stay healthy

The last trend, greater use of incentives to stay healthy, has been growing over the past three years according to the report, How Employers Use Incentives to Keep Employees Healthy: Perks, Programs and Peers, which is conducted by Health2 Resources, a firm providing health care trend research.

“During tough economic times, employees who take control of their health and are more engaged and active in their own health are valuable assets,” says Katherine H. Capps, president of Health2 Resources. “We are not talking about $5 here or there. We are talking about serious investment into productivity, made by employers with as few as 200 employees, for as much as $1,400 a year per employee. Employers are taking control of health care costs by creating smart, effective new strategies to keep employees healthy, and to keep employees at work.”

Employers are not only making greater investments in wellness they are calculating their ROI. The percentage of US companies calculating their ROI on wellness investments has increased from 14% in 2007 to over73% in 2009 with most, 83%, reporting at least a 1:1 return. These companies are rewarding achievement both during the program and continuing after the program is completed. This measurement of ROI has
lead to an increase in investment with the average in 2009 being $329 per employee and ranging from $1 per pound lost to up to a $1,500 reduction in premiums. Another trend is the extension of these types of offering to dependents including disease management programs which have typically not been available to dependents.

These programs must start with a comprehensive confidential health history questionnaire. Two-thirds of all size companies are offering this type of health assessment to their employees and three-fourths of them are also offering incentives for their employees to participate in these questionnaires. These incentives range up to $300 annually with a small percent, 10% to 15%, offering more. While company size does matter in whether incentives are offered, it does not dictate the value of the incentives. Some companies with as few as 210 employees are offering incentives valued at $1,400 a year because they see the benefit to keeping their employees healthy. This benefit not only is health care cost reduction but also shows up in reduced number of sick days and increased productivity.

Programs are being designed to prevent and manage chronic disease. Smoking cessation programs have been around the longest. In this latest survey more than 53% of the responding companies offer some type of smoking cessation program to their employees. Other programs such as weight loss and increased physical activity are gaining popularity as they are continually being linked to more chronic diseases such as diabetes and heart disease. Diabetes management programs are the most popular disease management programs with over 92% of the companies surveyed offering these programs.

The biggest challenge that companies face with all of the preventive and disease management programs is how to keep them going and to keep employees involved. Like any behavior change, time is the key to success. The more you practice a new behavior the more likely it is to become a new habit. However, time is also the biggest obstacle to success. Behavior change is hard and more people cannot keep up the motivation long enough to succeed. Companies need to calculate into their plan design ways to keep the motivation up. This may require an added investment up front but should give a greater return on that investment in the long run.

“Employers are becoming more sophisticated about measuring the return on investment from wellness and disease management programs, and today’s economic outlook dictates that these programs bring a positive
ROI,” says Sean Sullivan, president and CEO of the not-for-profit Institute for Health and Productivity Management. “No other kind of health management program has been given the same scrutiny as health and productivity management in measuring its effectiveness in reducing total health-related costs, including sick days, disability claims and impaired performance at work. Employees are too valuable a human capital investment for companies to take their health and productivity for granted.”

The above quote is the best conclusion I could come up with for this post. As managers of our companies talent we need to be proactive in the approach to preventative heath care and continued wellness of our employees, not just to reduce health insurance cost but to protect our companies greatest asset, its employees. There is a skill shortage that we will really feel when the economy recovers and added to the increase of global competition, HR professionals need to do everything they can
to retain their skilled talent and keep that talent productive. I hope each of you accept these challenges and make a true difference in your companies.

Diane has over twenty five hears of HR experience, twelve of which were at the HR Executive level. As Director of HR Solutions for Kinetix, Diane uses her extensive experience to work with organizations to solve their business issues with talent solutions and working directly with the Executive Team to design an integrated Talent Strategy that aligns with their Business Strategy. Diane is a thought leader in her profession and has been awarded the SHRM-Atlanta Lifetime Achievement Award and the SHRM Nation Pinnacle Award. Connect with Diane on her LinkedIn profile.

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