Employers Will Shift to Managing Employee Health

January 8, 2014 (PLANSPONSOR.com) – New research sees employers shifting their focus in 2014 from financing the cost of health care to managing employees’ health.

Research from the San Francisco-based Integrated Benefits Institute (IBI) anticipates employers turning away from the tactical and administrative aspects of health care reform in order to tackle more strategic challenges. Thomas Parry, president of IBI, believes this will include addressing the reasons that companies are investing in wellness and high-quality care, as well as the impact of poor health on employee productivity and performance.

“Once employers have determined how they will meet the provisions of the Affordable Care Act, they can take a more strategic approach and concentrate more broadly on managing employee health,” says Parry. “Whatever employers have decided about whether and how they will finance medical coverage, they never will be able to truly relinquish managing employee health given its impact on both cost and performance.”

According to Parry, recent IBI research quantifies how employee health has a direct influence on health care costs and business outcomes. These studies include the negative consequences on productivity caused by employee illnesses and factors such as stress, depression, back pain and metabolic conditions. The research also details the benefits of a positive workplace climate and commitment to a strong company health culture.

For example, IBI research shows that depression affects 10% to 20% of employees nationwide, and reduces quality of life and work productivity. The cost of depression to employers is approximately $62,000 annually per 100 employees in lost work time and medical treatments. With regard to back pain, nearly one in four employees report experiencing it, costing employers $51,400 annually per 100 employees in lost productivity and medical treatments.

The research finds that wellness programs may be most effective in improving employee productivity when integrated with a broader strategy that includes an understanding of how workplace climate influences health. Employees with better work environments—such as favorable workloads, work-life balance, and good relations between workers and managers—were found to have fewer sick days than those with less healthy work environments.

In addition, employees in organizations with a strong commitment to a healthy workplace and a healthy work force were found to spend more time working, working more carefully, and concentrating better than employees at other organizations.

The research recommends that employers take steps to think strategically about managing employees’ health to reduce costs and maximize returns on employee health programs. Such steps include:

  • Knowing where the organization is currently and what has been achieved to date. Employers should work with their benefits-supplier partners to obtain data and determine performance relative to other organizations.
  • Using comparisons to identify opportunities to improve employee health. Since organizations have limited resources, they should start by focusing on the biggest problems—and the biggest opportunities—facing them.
  • Measuring outcomes. Employers should determine beforehand how they will track results, as well as tracking them beyond health care costs alone. Simply saying a program is successful is not enough. Results must be measured quantitatively. Senior management is more responsive to requests for investment when the value of a program is demonstrated in business-relevant terms with metrics demonstrating changes over time.

The Integrated Benefits Institute is an independent nonprofit membership organization, and a provider of health and productivity research, measurement and benchmarking services.

More information about IBI and its research can be found here.