While much has been made of measuring the return on investment on health promotion programs, new research by Hewitt Associates suggests that equal awareness should be paid to creating a plan for performance of health care programs and plans.
In the 2010 report, "The Road Ahead: Under Construction with Increasing Tolls," Hewitt's analysts report that an alarming number of employers (58%) fail to implement a formal policy or strategic plan for their employee health care programs, instead taking a "reactive versus strategic approaches to generating more value from limited or shrinking budget pools."
Creating an official game plan for health programs is not out of reach for some employers. The data from Hewitt show 42% of employers have a formal policy or strategic plan for their employee health care programs, a 10% jump compared to employers surveyed back in 2007.
The figures are based on the HR consulting firm's annual health care trends survey of nearly 600 large U.S. companies. The responses were collected between December 2009 and January 2010.
Health benefits experts believe the after-effects of the recession and health care reform will prompt more employers to map out clear and realistic goals for employee health care programs, making sure those expectations tie in with the company's business objectives.
'Move out of the annual-thinking mode'
Employers typically take a tactical view of health benefits, which means focusing on changes in the current year that will take place the following year. "It's the employer that is able to move out of the annual-thinking mode and into a longer-term perspective that is articulating a health strategy," says Jim Winkler, leader of Hewitt's U.S. health care practice.
The health care reform law requires employers to rethink their health benefits strategies. The law, which carries few measures on cost-containment, will simply sharpen employers' focus on addressing affordability, says Rob Webb, CEO for OptumHealth Care Solutions. Companies don't want to see even more substantial increases in their health care costs.
"Increased formalized planning is critical to ensure that progress toward achieving plan goals is being monitored and that appropriate strategic adjustments are made to account for changing business and workforce conditions," the Hewitt report notes.
Depending on how the regulations play out, the health care landscape will change pretty substantially for employers.
Winkler tells clients: "You have been in a waiting game for the better part of last year. The waiting game is over, and you still have a health care cost issue. What is your short- and long-term strategy to addressing the issue?"
Key elements
Instituting a formal health care strategy ensures employers stay on top of their game in tracking the health and productivity of their workforce. The HR/benefits team wants to make sure that the guiding principles behind the health care strategy are supported by key business leaders within the organization, Winkler explains.
Secondly, to drill down on what your employees want out of their benefits programs, conduct a trade-off-analysis survey, he adds. "For example, one question might ask, 'Would you trade a higher cost for dental insurance for a lower out-of-pocket cost on health care?'"
By formulating statistically developed trade-off questions, employers are more likely to obtain robust and credible data on which to build their health benefits strategies.
"Now you bring the two pieces together, the guiding principles and benefit satisfaction data, and start to map out a three-to-five year plan. Anything longer than that [and] you are probably aiming too far out into the unknown, and anything less than that is more tactical," says Winkler.
A well-articulated formal strategy contains costs and benefits-competitiveness goals, benchmark data and strong language showing the company is committed to measuring the outcomes of its health initiatives and programs, says Winkler.
Some employers simply make changes to their health care strategies and plans on a yearly basis solely to meet their budgets. The more sophisticated employers, however, are starting to move into a planning-type cycle, similar to creating a business plan, says Mike Thompson, health care practice leader at PricewaterhouseCoopers.
Planning health care strategies is an extension of business planning, given that health care costs normally rank as the second or third expenditures in a corporation.
Just as a business plan maps out an organization's investment strategies, operational objectives and other corporate goals built around its employees and business, companies need to do the same for health care strategies.
Forward-thinking companies possess a comprehensive strategy for health and health care, focusing on wellness, consumerism and metrics. They want to transform and bend cost trends over time, says Thompson. Still, the health law accelerated the planning process for some, forcing them to think hard about where they want to be in the next five or seven years in terms of health benefits.
As reform takes shape, employers will have to figure out what steps to take to reach a health care strategy that works for both workers and the business.
This means planning a health care strategy within the context of the law, factoring in the exchanges, excise tax, and preventive care and community-based measures.
By establishing a plan for performance, employers can also examine and monitor the changes they will make to their health benefits as a result of the health law, thus ensuring a thoughtful strategy that aligns with their corporate values and goals.
Health promotion programs
With health promotion programs, mapping out a strategic plan entails writing down what is realistic and achievable with health outcomes based on your employee population, says Tracey Moorhead, president and CEO at DMAA: The Care Continuum Alliance.
"Every employee population is different, so the time frame for achieving outcomes needs to be understood. You are not going to see significant impact in health status in three or six months," Moorhead explains.
Before an employer attempts to formalize their expectations for health promotion programs, they must first understand their health cost trends and the consequences of ignoring those trends.
Michael Samuelson, president and CEO of the Health and Wellness Institute, believes he has the winning formula to help employers crave out a strategic plan for their health promotion programs. He insists employers can create a framework based on the "three Ws."
The first "W" represents employers asking "what" is happening now within their organization in terms of health care trends and the consequences of those trends.
"The second 'W' stands for the 'So what?' question, which means measuring trends and their consequences," Samuelson says. "The process entails employers asking: 'So what if we don't do anything about our trends and consequences of those trends?'"
The next "W" is for "What do we do now?" which leads to creating a triage emergency action plan. "Often corporations will create a formal plan without considering the first three steps," says Samuelson.
"Once you have the first three steps in place, you can begin with your strategic plan, focusing on objective and subjective goals around return on investments," Samuelson says. "Finally, once employers lay the groundwork based on those factors and have the support of senior management, then you start rolling health improvement programs."
