By Jude Hinrichs and Dan Openshaw
In managing employee benefits programs, organizations are constantly performing a delicate balancing act between guarding the health and wellness of their workforces and their balance sheet.
While many take the easy route to managing rising health benefit costs by cutting benefits or increasing employees’ cost burden, it’s not a sustainable fix. The smarter approach is to learn what’s driving those costs and then act.
Health benefits analytics are a major part of the solution: They provide employers with real-time insights into utilization patterns and healthcare costs. These insights can lead to improved cost containment and smarter multi-year benefits strategies – and a better negotiating position at renewal.
Health benefit data analytics can shed light on high-cost claimants who typically account for a disproportionate share of medical and pharmaceutical costs. Understanding the conditions and trends behind employee health utilization equips employers to help these employees and their families better deal with their medical conditions and mitigate costs. High-intensity care management programs, for example, have been shown to improve health outcomes and cost efficiency.
Analytics also provide a holistic perspective of employee wellness. By connecting the dots between recent medical claims, other healthcare and biometrics data, and wellness program participation, employers can drill down into what specifically drives medical costs and provide appropriate health solutions.
There are plenty of places where healthcare analytics can identify areas to reduce costs and improve employee engagement through better health management. Here are case studies of how data analytics helped turn around two common health plan issues:
Case study #1: When a small group of people account for most large claims: One group of 300 enrolled employees was reeling from health plan costs that had jumped 15% to 20% annually over the previous four years. Analytics revealed that a small group of individuals with large claims were disproportionately driving costs higher. In response, the employer decided to transition to a self-funded health benefits plan. Another move was to opt for a health insurer’s program that provided tools to effectively manage the health issues that were driving plan costs, and more effectively communicating to employees about them. The idea was to re-engage the workforce in improving their health through such tools as an online portal, disease and wellness management programs and telehealth services. The end result: annual savings of $500,000.
Case study #2: When inefficiencies in utilization stem from a lack of access to care. Through analytics, another group with 2,000 enrolled employees discovered that mental health was a big cost driver. Looking at utilization in its entirety uncovered that there were issues in access to care, and uncoordinated delivery meant that some employees got services haphazardly through doctors through the health plan, the Employee Assistance Program (EAP) or telehealth providers. The COVID-19 pandemic accelerated the need to consolidate mental health benefits under a single, well-communicated online service provider. The move has improved efficiency and access to care.
There’s an easy approach to managing health benefit costs and a smart one. Organizations that take the latter route by leveraging the data that reveal who is using benefits—as well as how and why — will do better by their employees and, ultimately, their bottom lines.
HUB International’s employee benefit specialists consult with employers of all sizes and in all industries on every aspect of employee benefits program planning and management.