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September 11, 2018

Transform cost to investment for benefit plan prosperity

When it comes to saving money, one of the first questions benefit plan decision makers ask is “Where can we start cutting costs?” While this is one way to achieve savings, the costs associated with the plan are only half the equation. The other half revolves around employee health and productivity. What if employers shifted their mindsets by viewing these costs as an investment? Then, the focus becomes productivity and the bottom line, ultimately getting the most out of the investment.

Before decision makers can make this mental shift, from cost to investment, it warrants taking a look at some of the common barriers to employee health and productivity and the resulting effects.

High deductible health plans (HDHPs)

It’s important to consider if HDHPs cause patient outcomes to deteriorate. Are employees waiting until they are chronically ill to be seen by a physician in order to avoid paying the high deductible? Additionally, if employees can’t bridge the deductible for their prescriptions or are waiting to fill them, this can lead to the worsening of an existing medical condition or the development of additional ailments.

Presenteeism & absenteeism

Employees who are too sick to work will call out from work, typically. This is known as absenteeism. High rates of absenteeism affect not only productivity but also the bottom line. Even worse, what are employees doing if they are ill, yet don’t take time off of work? They are at work but not working to their full ability. This is known as presenteeism, which comes with a separate basket of negative consequences, including reduced efficiency, workplace epidemics and further productivity loss.

So, how can your investment in your employees result in increased health and productivity?

Preventive care & wellness

Simply put, preventive care is taking steps to stay healthy. Examples include an enhanced health care plan, encouraging employees to go for their yearly well-visit, simplifying the means to receive a flu shot or other vaccination (perhaps at a workplace flu clinic) and implementing a wellbeing program. The goal is to proactively stop illnesses before they start.

Enhanced Rx benefits

As an employer, would you rather fund the cost of statins or incur the cost of heart attacks or strokes? The same question can be asked for smoking-related cancers. It would be more cost-effective to pay for smoking cessation methods. What about diabetes-related diseases? The smart and economical move is to make it easier and more affordable for these medications to be obtained.

Putting it all together

Let’s take a look at cutting costs and reinvesting . . .

Assume a 1,000 member health plan with each member filling 10 scripts per year costing, on average, $100. That amounts to a $1 million drug spend. If the employer were able to identify ways to reduce spending by $100,000 (the first half of the equation), they would have an extra $100,000 with which to do whatever they please. They could add it to the bottom line or reinvest it into employees, possibly reducing co-pays as an incentive for employees to get and take their medications. Seek to garner positive outcomes through medication adherence. This scenario starts with saving just $100,000 and reinvesting it in order to eventually add more than $100,000 to the bottom line. Logic suggests a reduced overall health care spend by way of better patient outcomes.

Shifting from a cost to investment mentality can be summarized as “what is put into employees is what you get out of employees.” Happy and healthy employees are more productive, which ultimately generates more revenue than only cutting costs.


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