Wellness and Cost-Containment

One of advisors’ key responsibilities is to deliver renewals. For some clients, renewals can be challenging, particularly if it means double-digit cost increases for their health and dental plans. As advisors, we can recommend tactical claims management strategies, such as changing a coinsurance variable (e.g., from 100% to 80%), increasing deductibles, or changing entitlements. But as important as these tactical changes can be, and they do have an impact on plan members benefits entitlements (which can change the employee’s claim spending behaviour), they don’t really address employees’ underlying health issues.

And it’s those underlying health issues that are the real cost drivers for a benefits plan. Although some may view increasing premiums as the problem, they’re just a symptom. What’s driving costs are employees claims (drug, medical, dental), which in general are a symptom of disease, whether temporary, acute or chronic. And more drug claims means more employees dealing with health-related issues.

As more and more employers start to make this connection, they’re looking for strategic cost-containment strategies to positively address employee health and reduce long-term costs. I spoke to Antonio Zivanovic, CEO of Corporate Occupational Solutions Inc., a wellness provider in Vancouver, to discuss how employers can strategically focus on claims management strategies that will reduce health care costs over the long term.

Daneil Wofson: I find there’s a lot of misconception among employers about promoting fitness and wellness with employees. What is the difference between a perk-based fitness program and a corporate wellness program?

Antonio Zivanovic: A perk-based program has minimal employee and employer accountability. Employees submit receipts they believe are connected with fitness. As a result of reduced employee accountability, a perks-based fitness program doesn’t often meet the objectives of the company. It lacks measurable results-oriented components. A program like this loosely serves the needs of the individuals it was designed to serve.

Strong wellness programs should include elements that can be objectively measured to produce results. First, develop program objectives and an evaluation plan, then collect data, then analyze and compare this info and other important statistics to health and drug costs (which can be provided by the group insurer).

DW: I understand the need for a wellness program for a large employer with thousands of employees. Why would a small to medium-size employer start a wellness program?

AZ: A wellness program will reduce risk, increase profitability and productivity, and improve recruitment and retention of top candidates. It will help businesses differentiate themselves as a top employer. A wellness program will also provide a strategic long-term cost-containment strategy, while affording employees to take an active part in managing their own health care issues. As employees become more aware of those issues, they can take corrective action to minimize drug-related costs and improve their health.

DW: What risk is an employer minimizing by sponsoring a wellness program?

AZ: Very simply, spiralling health care costs. Many employers are faced with double-digit cost increases each year. If health care costs increase 15% each year, the employer’s cost will double in about five years. Unless something is done to address employee health, an employer will be faced with an untenable situation.

DW: What happens to an employee who has poor health or is dealing with a chronic illness?

AZ: An employee that has a chronic health condition, such as diabetes, depression or heart disease, may consume more medication. They’re sick and potentially absent from work more frequently, which reduces productivity and negatively affects profitability and morale. Productivity levels also drop when employees are worried about chronic conditions. There can also be a lack of engagement leading to poor job performance. It can bring a whole team down and be very toxic.

DW: I often see depression, diabetes and heart disease as leading cost drivers in employee benefits plans. If a small to medium-size employer is seeing double-digit increases, how can a wellness program help?

AZ: It’s the convenience factor of going to one vendor to coordinate all activities and initiatives and to minimize the responsibilities of the HR team in managing these programs. It’s about understanding the communication process involved in health and wellness programming, and about looking at primary disease states and medications to minimize current and projected costs based on employee demographics. A health program can educate the workforce and create awareness to address these issues. Also, great onsite health care services that typically aren’t accessed at work can be provided on an individual or group basis.

DW: What is the benefit of a biometric assessment?

AZ: Almost 60% of our society is clinically “overweight or obese.” Biometric assessments help educate, inspire and empower employees with personal health information so that individuals can take a proactive approach to managing their own health. Having people understand their health status is an important first step in making a change and addressing their issues. Education creates awareness and importance.

DW: What is the benefit of an ergonomic assessment?

AZ: Many employees often see a highly trained and skilled paramedical practitioner (such as a massage therapist) to treat their symptom (e.g., back pain). These claims show up in the plan sponsor’s paramedical spend. The treating therapist often does a great job at treating the symptoms. However, more often than not, the root cause of upper back pain and strain of a sedentary office worker can be related to a functional limitation or faulty ergonomic set-up. An ergonomic assessment can help address the root causes and reduce long-term paramedical costs by removing these challenges for an employer. I think it’s safe to say that most of us have experienced discomfort from working at the computer for extended periods of time.

DW: What prevents an employer from initiating a wellness program?

AZ: Most companies fear that they’re going to throw money haphazardly at a program like a perk-based fitness reimbursement program, or launch a wellness program and have everyone get excited about it only to have it die a few months later. The majority of programs we see today lack cohesive objectives, which are the foundation for success. HR and management frequently perceive that they’ll have increased responsibility and workload. A great wellness program will actually decrease the workload on HR and management by making it simple and streamlining efforts.

DW: What are the components of a successful wellness program?

AZ: A successful wellness program should consist of employee education sessions, biometric appraisals, ergonomic assessments, online elements and various initiatives that focus on health promotion. The characteristics of a good program will reduce risk to the client and increase productivity. The program should be delivered onsite and be complemented by some online services. At the end of the program, it should be evaluated to determine if it met the objectives that were initially laid out.

DW: Where are wellness programs headed?

AZ: Programs are trending away from giving an employee an allowance. Wise employers are moving toward educating their employees around the value of their benefits program and compensation package. A wellness program can help employees understand the cost pressures associated with their health status. It’s imperative to link objective assessments and biometric appraisals to certain cash incentives. This will help employees become aware of their current health status and ideally take responsibility for their lifestyle choices.

DW: How do employers initiate a wellness program?

AZ: I’m a big fan of running pilot projects. A great first step is to speak with your benefits consultant to determine if your wellness provider and broker can work together and share empirical data (from the insurer). Start small with a clear budget in mind. Track and measure results and then expand the offering to meet the needs of employees.

Mark Bajus - CEBS, CLU, CFP - is the Director, Group Benefits for BF Partners. Learn more about Mark.