Create a New Value Proposition: How Streamlining Benefits Enrollment and Investing in Communication Can Reduce Healthcare Costs
Oct 6, 2009
Stay Focused by Troy Underwood, President of benefitsCONNECT®
Today's economic realities are forcing companies to look for every potential way to cut costs. With the runaway increase in healthcare costs, benefits are often the first place that companies look to make reductions. Recent estimates indicate that healthcare spending is expected to skyrocket from 16 percent of gross domestic product (GDP) in 2008 to 20 percent by 2020—with a majority of the cost going directly toward medical care. More than ever, Human Resources is on the front lines, charged with finding ways to lower healthcare costs—usually by focusing on the actual hard and soft costs associated with delivering quality benefits. For example, many employers are promoting the use of Health Savings Accounts and LIMRA reports that the trend in the market has been shifting from non-contributory (100 percent employer paid) to contributory and voluntary (100 percent employee paid) benefits. Some companies are looking to save money by cutting wellness and/or EAP programs. While these measures have an impact on the bottom line, there are clear trade-offs every company must weigh, particularly when their goal is to maintain peak productivity with a continuously downsized and stressed workforce.
However, not all efforts at constraining healthcare costs have to automatically mean narrowing the scope of benefit offerings, or even dramatically changing how the costs are shared. The current healthcare challenge actually presents a unique opportunity for brokers to provide companies with real solutions that actually cut costs associated with delivering healthcare, without narrowing or diminishing the service provided—indeed, it is one of the few instances where companies can realize both cost-savings and improved service delivery.
Brokers are not only ideally positioned to provide Human Resources with trusted advice on choosing plans and benefit offerings, they can also offer assistance with the selection, implementation, and ongoing support of a best-of-breed automated benefits administration solution that can serve as an important tool to help clients battle runaway healthcare costs. One "hidden" cost is not typically considered a healthcare expense—the actual benefits enrollment and administration process. According to a CedarCrestone report, The Value of HR Technologies: Metrics and Stories, organizations realize an 85 percent cost savings by moving from a manual benefits enrollment process to employee self-service. This investment in automation—and the subsequent savings—are seldom factored into the overall cost of healthcare. Automating benefits enrollment is not just an improvement in Human Resource’s internal processes—it speaks directly to an important phase in the broker/client lifecycle, which begins with plan selection, continues with the enrollment process, and results in the utilization of benefits.
Reduce Administration Costs with a “Best-of-Breed” Solution
The power of technology to improve efficiencies and reduce costs is widely acknowledged—especially in the area of healthcare. A RAND Corporation study reports that America's healthcare system could save more than $81 billion annually and improve the quality of care if it were to broadly adopt computerized medical records. The CedarCrestone report highlights how significant the savings can be when technology is applied to a single internal function such as employee self-service.
For brokers, adding a new tool to their slate of offerings that can help organizations combat rising healthcare costs embeds them further in client relationships and makes them even more essential. However, with the plethora of solutions in the market, brokers need to focus their efforts on identifying those that offer their clients efficiency and effectiveness—on both a resource and cost basis. And, of course, they need to ensure that the solution best meets the client's needs.
When it comes to automated benefits enrollment, best-of-breed solutions need to go beyond streamlining administration. When multiple vendors are involved, as is often the case, it’s critical that different solutions be able to interface on an IT level as well as be compliant with legal requirements, such as HIPAA. From the brokers’ perspective, they must be secure in knowing that the solutions they use and recommend will perform flawlessly and seamlessly. For example, a key feature that is essential in today's environment is a fully automated EDI data exchange, which provides connectivity among employer groups, insurance carriers, third-party administrators, payroll vendors, and brokers—ensuring a seamless, transparent, accurate, and secure process.
It’s also important to remember that any software solution is only as good as the training that Human Resources is provided to ensure that they are familiar and comfortable with its features and functions. This is another area where brokers can add value by not only providing the training, but by being a resource for troubleshooting when Human Resources comes across a problem or finds itself in unfamiliar territory. In some instances, solution providers also offer direct support to the client—especially during intensive times such as open enrollment.
Reinvest in Benefits Communication
The underlying value proposition for clients is that automation not only the reduces the bottom line costs associated with benefits administration, the actual savings in real dollars can be allocated to other areas that can benefit employees and even multiply the ROI.
For example, employers can reconsider restoring health and wellness programs that may have fallen victim to budget cuts in difficult economic times. Prevention is becoming a critical element in the move to reduce healthcare costs and more responsibility is being placed on the consumer—i.e., employee population—to be proactive and take healthful measures. And if there's any question as to the efficacy of health and wellness programs, consider these sobering statistics: The overweight and obese population is one of the fastest growing segments in American society. Weight-related chronic disease—including diabetes, heart disease, and certain cancers—is the country's second-highest cause of preventable death behind smoking. Finally, these conditions cost the nation $117 billion in direct and indirect costs, including healthcare, treatment, lost productivity, and absenteeism.
However, having the programs in place is only the first step in the right direction. In other words, benefits are not valuable unless employees utilize them and they are not utilized unless they are publicized. Which puts benefits communication front and center. For the broker, being able to offer a communications component brings their role full circle, as the third stage of the client lifecycle is benefits utilization.
From the employer’s perspective, investing the savings garnered from implementing automation in printed benefits communications and online tools that help employees make better healthcare decisions and utilize prevention programs offers a win-win. Increased utilization of wellness programs results in a more productive workforce that, in turn, directly impacts the company's bottom line in terms of lower absenteeism, fewer lost workdays, and lower medical claims.
In respect to education, employees can invest in communications that illustrates the full value of the total benefits being provided to each individual employee and assist them in comparing offering so they can make sound selections that fit their needs. A recent study, conducted by Harris Interactive and commissioned by Unum, noted that employees across all generations consider the workplace their best source of benefits education. Providing educational communications for employees may be especially important since, next to job security, benefits are of utmost concern. According to a recent LIMRA survey, A Subtle Shift: Examining Employee Benefits in the Midst of Economic Uncertainty, more than 95 percent of employers said that they plan to continue to provide the same group, health, and retirement benefits to their employees over the course of this year. Clearly, employers understand the important role that benefits play and, as important, they need to communicate that message to employees.
Bring Value to Table
Curbing escalating healthcare costs is among corporate America's number one priority. Typically, however, cuts that are made represent a tradeoff as companies are almost invariably narrowing the scope of benefits being offered and changing the way costs are shared. However, there is a way to cut costs associated with delivering health benefits that doesn't compromise the scope or quality of the services provided. In fact by streamlining enrollment and improving communication between Human Resources and the workforce, organizations stand to reap both cost-savings and significant efficiencies. While the mantra of "doing more with less" has been overstated—as a dwindling workforce finds itself being asked to do more and more with less and less—this is one case where you can indeed do more with less.
Brokers can now bring more to their client relationships and the healthcare conversation by offering a tool that addresses management's top concern, controlling costs, while concurrently improving internal efficiencies. More than ever, brokers are an essential component of the benefits landscape and an ally in their clients’ challenge to retain a healthy bottom line and workforce.
Troy R. Underwood (President) –Troy, a graduate of UC Davis, has a talent for finding technology solutions for business problems. In 1988 he founded FDI Computer Consulting, Inc. in Sacramento and developed a patented web-based solution for electronic motor vehicle title administration. With great success, Troy sold FDI in June of 2007. In 2001, Troy was approached by the local insurance broker community with a need for a complete online benefits management solution. To better understand the industry and this need, he obtained his California Life/Health license. Now, as president of benefitsCONNECT® (a subsidiary of Transcend Technologies Group)—one of the nation’s leading online enrollment and eligibility tracking systems—Troy strives to provide sophisticated, cutting-edge technology that improves efficiency and benefits communication within the broker community. Troy served as the NAHU region VIII technology chair, is a frequent industry speaker and noted author, and has served for two years as membership chair of SAHU.