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Home / News & IndustryManaged Care Insight and Analysis
Updated: February 23, 2011
U.S. Companies Still Lacking Formal Healthcare Policy To Match Business Objectives

While 95 percent of companies say managing healthcare costs is a top business issue, less than half (42 percent) of employers have a formal policy or strategic healthcare plan in place, according to the annual healthcare trends survey conducted by Hewitt Associates.

"Healthcare is one of the biggest expenditures for a company, yet most organizations don’t have a formal plan that outlines their program’s goals and ties them to business objectives," said Ken Sperling, leader of Hewitt’s Global Health Care practice.

In a survey of nearly 600 large U.S. companies representing more than 10 million employees, the findings indicate that even though 65 percent of respondents said they currently invest in long-term solutions to improve overall health and productivity of their workforce, most companies (80 percent) still planned to focus on improving health and productivity in the next three to five years.

More than half (53 percent) of companies currently have a disease management/health improvement strategy in place, and of those who don’t, 11 percent plan to implement one this year, while another 75 percent plan to implement one in the next three to five years.

Where there is an apparent lack in areas of a health and productivity strategy – such as mental health and absence management programs – there is also the response to make changes.

While just over a third (35 percent) of companies have behavioral health programs (such as an EAP), more than half (58 percent) are planning to do so over the next three to five years.

Although less than 1 in 5 (19 percent) consider absence management part of their current strategy, 56 percent plan to incorporate it over the next three to five years.

Nearly 60 percent of employers said they take the diversity of their workforce into account when they design and communicate their health plans, according to survey results. Which allows them to "change their approach to employee communication, how they provide access to on-site services and how they offer family versus individual incentive programs to drive positive behavior change," said Sperling.

Interest In Lasting Behavior Change

On the topic of behavior change, the Hewitt survey found that only 19 percent of companies surveyed measured employee behavior change as a measure of success of their health and productivity programs.

Most companies (58 percent and 57 percent, respectively) measured program success by how well they managed medical costs or by how well the programs are being utilized. But 53 percent of employers are expected to reverse this emphasis within the next three to five years by planning to measure employee behavior change and/or behavior modification.

"The way employers intend to measure these programs ... are encouraging and shows they are thinking about moving beyond short-term financial tactics," said Sperling. "Measuring clinical changes in health risk, for example, can help employers gauge whether these programs are actually changing employee behaviors and ultimately leading to longer-term cost mitigation and improved employee health."

To encourage employees to participate in the actual healthcare programs being offered, 58 percent of companies surveyed offer incentives to employees and 24 percent even extend these incentives to spouses and family members.

Majority Now Offer Cash Incentives For HRAs

The number of companies offering cash incentives for completing a health risk questionnaire has almost doubled – 35 percent in 2009 to 63 percent this year.

Almost 1 in 5 (18 percent) of employers responded that they already use penalties such as higher benefit premiums or deductibles, and another 29 percent said they will be using penalties in the next three to five years.

"Smoking and failure to participate in disease management programs are the most common behaviors where penalties are deployed," reported Hewitt.

"The harsh reality is that with or without comprehensive healthcare reform, employers remain on course for having the same or greater cost and employee health problems over the next few years as they have in recent years," said Jim Winkler, leader of Hewitt’s U.S. Health Care practice.

Total healthcare costs have more than doubled in a decade — from $4,793 in 2001 to $11,058 in 2010 — and are only expected to increase over the next decade, according to Hewitt research.

"Employers know they aren’t getting results using traditional approaches and are taking steps to reverse that trend," Winkler continued. "However, they still have a lot of work to do to get on a path where they’ll see positive, sustainable changes that really move the needle."

Address: Hewitt Associates, 100 Half Day Road, Lincolnshire, IL 60069-3342; (847) 295-5000,

  This article was taken from:
Directions: Looking Ahead in Healthcare

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