For example, will increasing a copayment from $20 to $30 truly add value?
Or would decreasing the copayment to $10 incent better compliance with preventive treatment; thereby avoiding the more costly expenses related to a heart attack or stroke?
This new value on investment measurement promotes the right kind of health care utilization and maximizes the employer’s considerable investment in health care.
Protecting the Investment
The Kaiser Family Foundation reports that average premiums for family coverage have increased 113 percent since 2001. Employers’ contributions to those premium costs average 72 percent.
Besides the direct costs of health care, there are indirect costs associated including loss of productivity due to absences, disability and health-related decreases in performance.
The Integrated Benefits Institute estimates lost productivity is an astounding 51 percent of the total cost of health care. Clearly, there is value in a healthier workforce.
Non-compliance is the single most influential factor in the high cost of health care. Employees who skip preventive screenings, do not take their prescribed medications or do not follow their physician’s treatment plan have a significant impact on health care costs.
Estimates put the annual cost of non-compliance at a staggering $300 billion in avoidable health care costs. Companies can no longer accept a system that rewards unhealthy behavior and must find ways to engage their employees in living healthier lives and being compliant with prescribed health care regimens.
Think about it. Individuals who miss mortgage payments suffer lower FICO scores. Speeders receive traffic fines and pay higher car insurance premiums. But, employees who ignore prescribed treatment and embrace unhealthy lifestyles continue to receive the benefit of their health care coverage with no penalties. With the employer covering 70 to 75 percent of the cost, that’s bad business strategy. Something needs to change.
Using health as a business strategy optimizes health care expenditures through high-value health benefits designed to encourage healthier behavior. Healthier behaviors translate to improved health which saves money and allows companies to invest those savings in other areas of the business, which may result in a competitive advantage in the marketplace.
Look at any other type of investment – stocks, real estate or joint ventures – and an ROI analysis is standard operating procedure. Why should it be any different for a company’s health care investment?
The award nominees’ leadership understand the importance of investing in health. 100 percent of the leaders participate in their company’s health and wellness initiatives, and most (76 percent) take an active role in their company’s wellness committee.