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Home / News & IndustryManaged Care Insight and Analysis
Updated: August 24, 2010
Employers Cutting Costs; Reducing Benefits

According to recent surveys, employers are trying to save money, coincidentally at the employees’ expense.

Grant Thornton, LLP, surveyed chief financial officers (CFOs) at healthcare organizations and compared data with CFOs at non-healthcare organizations.

The results found companies were not focusing on decreasing headcount as a cost saving measure, with 24 percent of healthcare CFOs and 22 percent of their counterparts predicting downsizing. Instead, 30 and 29 percent respectively plan to increase jobs within the next six months.

Over the next six months, do you expect your headcount to:

Healthcare

National

Increase

30%

29%

Remain the same

46%

49%

Decrease

24%

22%


Source: Grant Thornton, LLP

Despite 35 percent of healthcare CFOs and 32 percent of other CFOs reporting they will dispel salary raises in 2010, 19 and 15 percent respectively plan on giving raises.

It appears employers are trying to trim the fat, cutting costs where it’s possible. According to Grant Thornton’s survey, 41 percent of healthcare CFOs will limit stock options, 59 percent of other employers will follow the same trend.

Other cuts employers will be instituting to stretch their budget is bonuses and benefits. Forty-six percent of healthcare organizations will reduce bonuses and 38 percent will limit healthcare benefits, compared to 44 and 29 percent of other employers.

Is your company reducing average costs per employee in any of these employee benefit and compensation areas?


Healthcare

National

Increase

Same

Reduce

Increase

Same

Reduce

401 (k) match

6%

83%

11%

5%

74%

21%

Bonuses

3%

51%

46%

8%

47%

44%

Disability benefits

0%

84%

16%

2%

88%

10%

Healthcare benefits

14%

49%

38%

6%

66%

29%

Life insurance benefits

8%

75%

17%

2%

86%

11%

Salary raises

19%

46%

35%

15%

53%

32%

Stock options/other

0%

59%

41%

5%

66%

59%


Source: Grant Thornton, LLP

A separate survey, "2010 Compensation Data Healthcare," by Compdata surveys found healthcare organizations on average raised the premium of their heath insurance by 9.4 percent.

Sixty-five percent of respondents reported paying more than $9,600 annually for an employee plus family plan.

"Employers have been feeling the financial pinch of increasing medical costs for several years. The economic downturn of the last couple of years has only amplified financial concerns, causing organizations to increase their efforts to find ways to mitigate some of the costs providing medical coverage for their employees," said Amy Kaminiski, director of marketing for Compdata Surveys, collector of pay and benefits data.

Sixty-four percent of healthcare organizations increased the portion employees pay for their insurance though employers still cover more than 70 percent of health benefits.

Forty-five percent of employers increased insurance deductible rates and 30 percent increased employee co-insurance levels, Compdata determined from survey results.

"In retaining top employees, many organizations are finding enhancements to time-off programs may be a viable alternative to granting pay increases," Kaminski said.

Findings from the compensation survey suggested paid-time-off (PTO) plans are how healthcare organizations are maintaining employee morale.

Full-time employees (FTEs) with less than a year of service earn 15.6 days of PTO, part-time employees (PTEs) earn 10.1 days.

Seventy-five percent of respondents indicated they have a PTO policy utilizing employees’ hours worked and time served to calculate accrued PTO.

On average, for those with a formal PTO policy, FTEs with five years of service accrue 25 days, 10 years accrue 28.8 days and 20 years accrue 32 days.

"Until the effects of the economic recovery can be felt, it will remain important for companies to be creative and make the most of their compensation budgets," she said.

Addresses: Compdata Surveys, 1713 East 123rd St., Olathe, KS 66061; (800) 300-9570, www.compdatasurveys.com. Grant Thornton, LLP, 175 West Jackson Blvd., 20th Flr., Chicago, IL 60604; (312) 856-0200, www.grantthornton.com.


  This article was taken from:
Employee Assistance Program Management Letter

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