Area experts weigh in on cost-saving strategies, program options
and the benefits of preventive behavior.
Q: What is an easy, and often over- looked, way for an employer to reduce
employee health-care costs?
A: 'Ben Franklin got it right when he said that
an ounce of prevention is worth a pound of cure,' says John Schaeffer, president
and chairman of the North Ohio Heart Center. 'The best way to save money is
to actively involve your employees in preventative care by encouraging wellness
through a healthy lifestyle. I advocate the use of positive incentives that
offer employees preventive options and reward them when they meet their goals.'
Q: What challenges and changes do employers face in health-care law?
A: 'Because there is a limited number of physicians,
the price to fill those spots is constantly increasing, which puts pressure
on payers and translates back to higher-than-inflation rate premiums for employers,'
says James J. McMonagle, of council at Vorys, Sater, Seymour and Pease LLP.
'Secondly, with the economic downturn in the last year and the events of Sept.
11, the support for hospitals on the federal and state levels does not have
the same budget priority. Therefore, those hospitals — such as academic institutions
— will out of necessity be required to give more free care. This will translate
to an increase in costs to the insurance companies and ultimately to employers.'
Q: What can midsized companies do to control health-care costs?
A: 'The challenge that midsized companies have
in Northeast Ohio is that they have traditionally not had a group-pooled program
specifically for their size,' says Pat Perry, president of Employers Resource
Council (ERC). The key to reducing costs for them is to work with a combination
of employee education, integrated wellness programs and not jumping from broker
to broker just to save a couple of dollars. We suggest getting into a middle-market
employers group-pooled program, which gives you some control over rate caps,
rate guarantees and also a disease-management program. Overall, midsized companies'
efforts should be to reduce employee claims.'
Q: What are defined-contribution programs, and how do they involve employees in health-care decisions?
A: 'Defined contri- bution puts the consumer to
the forefront of the decisions,' says Jim Hopkins, president of Corporate Plans
Inc. 'The employee defines the contribution that he'll pay and has a menu of
options to choose from. Or the employer sets up a health-care spending account,
and the employees learn to use the dollars wisely. Americans will be better
consumers and more responsible as to where they seek health care if they're
more involved in paying for it.'
Q: Studies show that just less than half of employees trust their employer to design a health-care plan that will provide adequate coverage. How can employers and employees bridge the gap of mistrust?
A: 'There are definitely win-win health-care scenarios
both for employees and employers,' says Joseph LaGuardia, regional vice president
of sales for Anthem. 'One is through a comprehensive benefits plan, where employers
are in a position to develop plans to meet employee needs, but which respects
the costs that the business will incur. There's also consumer education, which
is a key to understanding the costs associated with medical benefits.'
Q: How can companies lower workers' compensation costs ?
A: 'There are a couple of things that employers
can consider for immediate impact in this area,' says Claremont Cappel, vice
president for University CompCare. 'They first need to look at which claims
are driving their premium rates up. A company's premiums are based on a certain
amount of claims that place a strain on their reserves. Another item to consider
is that some claims can be settled, in which case the impact on their reserves
would be less.'
Q: How often should companies review their health-care coverage?
A: 'Health-care costs are increasing at double-digit
rates and are between the third- and fifth-largest expense for each of our clients,'
says Daniel G. Schmidt, senior vice president and director of Acordia. 'Employers
should be constantly monitoring the costs of medical claims so that they can
plan whatever steps they need to have an impact on the increases. Employers
can [reduce] the expense by reviewing what managed-care network they're using,
the efficiency of the plan's design and the expense the employer is sharing
with employees. If the employer waits until a month or 45 days prior to when
the health-care plan renews and then tries to make all of those decisions, they've
given themselves a tough task.'
Q: Workplace stress is often named as a contributing factor to habits such as smoking, poor nutrition and lack of exercise, which can result in higher health-care costs. How can employers combat this?
A: 'Two of health care's biggest costs are due
to smoking and obesity, and any programs that can be instituted to prevent them
will be helpful to the employees and benefit the employer,' says Dr. Lowell
Gerson, professor of epidemiology at Northeastern Ohio Universities' College
of Medicine. 'Companies can institute a walking program during the day, encourage
employees to take the stairs instead of the elevator, and enforce rules that
make it more difficult to smoke.'
Q: What key components go into utilizing process management to control workers' compensation costs?
A: 'There are four key components,' says Dr. Steve
Sanford, medical director for Concentra Medical Centers. 'The first is directing
care where feasible to occupationally trained providers who understand the importance
of early return-to-work. The second is examining and evaluating the worker frequently
in the early phase of the injury to match changes in function with work restrictions.
Third, frequent contact must be made to the employer regarding the worker's
functional status. Fourth is monitoring referrals to specialists.'
Q: Why should an employer investi- gate consumer-based health care as an option?
A: 'Over the last 10 years, we've squeezed all
the costs we can out of that current system,' says Richard Hughes, president
and CEO of MagnaHR Inc. 'In health care, there isn't any incentive, because
everyone is lumped into one big pool — healthy and unhealthy — and the incentive
to manage health-care costs is virtually nonexistent. Consumer-based health
care puts the focus back on the consumer to manage health-care costs more effectively.'
Q: What are cost-saving trends for employers in terms of prescription drugs?
A: 'Because prescription-drug costs are escalating
at an annual rate of upward of 25 percent per year, employers are forced to
look at measures that shift costs to the employees,' says Mark Nolan, vice president
of Herbruck Alder. 'Employers are looking at increasing copays and percentages
in order to have more employee participation in prescription-drug coverage.
Another avenue of cost-savings is to implement a preferred list of brand-name
drugs and to set up a cost structure that gives employees incentives to choose
less-expensive brand names or generic drugs when available.'
Q: What are the advantages of self- insurance in today's marketplace?
A: 'The first advantage of self-insurance is control,'
says Ron Blasko, president of Professional Risk Management Inc. 'Since the employer
is acting as its own insurance company, they're in control of all aspects of
the plan. This leads to the second benefit of self-insurance, which is flexibility.
Compared to a shelf product, an employer can design a plan of benefits to meet
the particular needs of their work force and are not subject to state-mandated
benefits.'
Q: How can health plans help reduce health-care costs?
A: 'Cost-shifting is a simple, but not a wholly
satisfactory way to manage health-care costs,' says Thomas A. Sullivan, president
of QualChoice. 'Raising employees' share of expenses (higher deductibles, co-insurance
and copayments) may meet the short-term goal of lower costs. But this strategy
may not help identify the factors that drive medical costs higher year after
year. The right benefit plan can help the employer promote behaviors that can
lead to better cost management and, possibly, higher productivity and fewer
sick days.'
Q: Is there a magic formula for companies to follow when dealing with health-care expenses?
A: 'From a workers' compensation
perspective, there are two golden rules: reduce your medical expenses and reduce
your lost-time claims,' says William W. Pfeiffer, president and CEO of CareWorks.
'[Partnering] with an MCO that can provide aggressive medical cost-savings can
dramatically impact an employer's insurance premium. In addition, we encourage
all of our employer customers to start developing transitional work programs.'