Benefits managers missing out on key cost-saving movesNews added by Benefits Pro on March 5, 2014

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Joined: September 07, 2011

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By Dan Cook

Benefits managers spend a lot of time and energy trying to find ways to lower their corporate healthcare costs, but a new study reveals that they may lack critical data about the quality of the medical professionals and hospitals that serve their employees.

In addition, despite research that indicates wellness plans don’t offer robust ROI, benefits managers continue to view them as major cost-savers.

The study, by medical consulting firm Grand Rounds, queried benefits professionals about their strategies for controlling costs, their views on the major components of medical costs and tracking those costs, their perceptions on the value of wellness plans and other matters related to company health plans.

Grand Rounds provides a “second opinion” service to corporate clients by connecting them with a network of medical professionals who can offer professional consultation on employee health issues to balance local medical professionals’ opinions.

It comes as no surprise that lowering healthcare costs is the No. 1 priority for those surveyed. But when asked how this might be best done, some of the responses suggested that these executives hadn’t been doing their homework.

For instance, 72 percent of those surveyed endorsed wellness programs as keeping their workers healthy and thereby lowering costs. “Adding or changing wellness programs or incentives” was the No. 2 priority cited by respondents for controlling healthcare costs.

Yet a recent RAND study offered evidence that wellness plans contribute little to reducing healthcare costs. RAND concluded that a focus on disease management instead would deliver far more in terms of managing overall healthcare costs for the enterprise.

When Grand Rounds asked respondents whether they actively reviewed reports on physician and hospital quality based upon outcomes rankings, just 48 percent said they had “some knowledge” of these rankings and 12 percent admitted they knew nothing about quality measures of those providing direct medical care to their workers.

While benefits managers may not be focused on provider quality, others are.

Patients themselves are increasingly turning to online resources for information about the performance of their medical professionals, a University of Michigan Medical School study reported. And insurers such as Aetna have been experimenting with “accountable care relationships” that reward high-performing clinicians by directing more covered employees their way.

Responses from 68 percent of those surveyed indicated that they understand that chronic and serious illnesses and procedures to treat them are the main healthcare cost drivers, with 60 percent citing illness due to poor health habits such as smoking. But the trend, again identified in this study, is for benefits managers to pump up wellness plans rather than tackle the health provider quality/outcomes issue. Only 9 percent said they planned to add cost transparency options to their benefits plans in 2014.

Further, when Grand Rounds asked respondents whether they attempted to track the cost to the company of worker absenteeism related to poor health, 88 percent admitted they do no such tracking. Here again, cost data related to absenteeism can be enormous. A study by the Integrated Benefits Institute estimated that the retail industry alone loses as much as $47.1 billion a year to worker absenteeism.

The conclusion: two proven methods to better manage costs — rewarding providers with strong quality rankings and directing more resources to disease management rather than wellness — aren’t priorities for benefits managers, according to this survey.

“Wellness program initiatives can be hugely impactful on employee engagement and overall health. But just as they don’t necessarily affect enterprises’ bottom lines, they may even distract from the bigger and often-overlooked healthcare-related costs,” said Owen Tripp, Grand Rounds’ CEO. “Serious and chronic illnesses account for 68 percent of healthcare costs — but employers only track diagnosis and treatment costs. Why aren’t we measuring the cost of missed days, or even excess time on sick leave when employees receive the wrong diagnosis or treatment?”

The study identified one possible area where those surveyed show signs of interest in integrating a new outcomes-based system into their benefits strategies.

One-third of respondents endorsed “outcomes management platforms” as an innovative way to control health costs. These platforms, according to the study, “focus on the quality of patient care being received, using resources such as a pre-screened network of physicians and digitized patient records to ensure a positive healthcare outcome.”

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