HR Can Demonstrate Value by Becoming More Strategic

You’re already under pressure to control benefits costs, so the news that employers should expect a 6.5% increase in health spending in 2018 (PwC’s Health Research Institute) has your head spinning. How can you manage your benefits programs when you’re at the mercy of external forces like Big Pharma price gouging and medical costs that outpace inflation?

The first thing you need to do is think about your benefits programs more frequently than during the renewal process once a year. Your company relies on data to make strategic decisions every day—sales and marketing, operations, quality, safety, investment, development, etc. Human resources should too.

When you become more strategic, you can use your human capital program data to:

  • Understand what healthcare and other programs are actually costing your company.
  • Uncover what is driving those costs.
  • Benchmark your programs and costs in your region and industry.

Understanding Your Healthcare Costs

You rely on insurance vendors to provide reports of how your benefits programs are performing. But how often do you get those reports? Are they timely? Is the data current?

If you have multiple vendors providing medical plans, you get singular views of each program’s performance. It’s hard to assess overall program performance or compare offerings. You also can’t see correlations between medical and other human capital programs. You can’t tell if program changes impacted member health and your costs in the short- and long-run.

How much do you know about your benefits approach?

  • Has switching to a high deductible health plan increased workers’ compensation or disability claims?
  • Did plan design changes lower costs, but cause member health to decline?
  • Should you carve out your pharmacy benefit?

If you’re like most HR professionals, you answered “no” to the previous questions because you don’t have a 360-degree view of your population.

You’re monitoring, not managing, your benefits and human capital programs.

What is Driving Your Healthcare Costs?

If you’re relying on segregated, static vendor reports, you can see what’s happening, but you can’t see why issues are occurring. How do you know what program changes to make to reduce costs or improve health?

Take injectable medications for example. If members are receiving injectables in the hospital setting, it’s costing the company and members a lot more than if they received those same services at a physician’s office or in-home. Simple education and steerage could immediately reduce healthcare costs. But if you didn’t know injectable site of care was an issue, it would continue to spur costs. Or you might have made a program change that did nothing to address the right issue.

How are your benefits programs impacting your company and employees?

  • Are members filling their prescribed medications to control their chronic conditions?
  • Is member non-adherence to care plan or medication regimens impacting productivity, absenteeism, and presenteeism?
  • Is poor health impairing worker safety?

If you can’t answer questions like these, you don’t approach benefits management strategically.

You need to take control of your data and put analytical insight to work for you.

Benchmarking

Static vendor reports provide a high-level view of how each program is performing. But relative to what? It’s not just your own programs you should be interested in. You need to understand how your human capital programs are performing within your region and industry.

If your benefits programs are not as good as others in your region or industry, you could be losing out on the best talent or face a higher turnover rate. This is especially true in the current tight labor market. Conversely, if your package is more far robust than others, you may have identified a way to reduce costs.

How do you compare?

  • Do you know what types of health plans other employers in your region offer? In your industry?
  • How healthy are your employees compared to others in the region/industry?
  • Are your healthcare or medication costs comparable to others in your region?

If you don’t know how your programs stack up to the competition, you could be impacting recruitment and retention efforts.

Benchmarking human capital program performance can give you a competitive advantage.

When you become more strategic, you can use the insight gleaned to do more than contain healthcare costs. You can improve health, keep safety programs on track, improve recruitment and retention efforts, etc. And you become a more valuable asset to your executive team.

Sashi Segu

Sashi Segu

Sashi Segu, Counsel, has participated in cases and provided legal expertise on HIPAA, ERISA, privacy, compliance, and other healthcare-related fields. Sashi left Innovu in March 2019 to pursue other interests.

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