As employers in the U.S. seek strategies for addressing increasing health-related costs, a survey conducted by Towers Watson (NYSE, NASDAQ:TW), a global and professional services company and the National Business Group of Health, comprising of 335 medium to large companies* reported that they remain strongly committed to productivity and health improving programs. Numbers are increasing rapidly amongst U.S. corporations who decide to use financial incentives and penalties for participation and measurable improvement to health.
According to the survey, they discovered that between 2009 and 2011 the use of financial rewards in health management programs increased by 50%. Furthermore, 4 in 5 companies stated that by 2012 they plan to provide some kind of financial reward to employees who take part in their health management programs.
By 2012, over a third (38%) of respondents said they plan to use penalties, increasing from 8% in 2009 and 19% in 2011. Although only 12% of respondents said that they currently use rewards or penalties based on outcomes, such as cholesterol levels or target body mass index (BMI), a further 16% plan to adopt this approach for 2012.
Shelly Wolff, senior health care consultant at Towers Watson explained:
“Employers today view health and productivity programs as integral to their overall health benefit strategy and efforts to control health care cost inflation. As companies strive to maximize employee participation in these programs, they are opting for both rewards and penalties. And many are finding these approaches are producing significant results.”
The employee participation rate in companies that offer financial rewards for health risk assessment are 46%, compared with 19% for companies that do not offer rewards. For companies with incentives, employee participation in biometric screenings is 45% and 25% for those without incentives. However, in disease management programs for chronic conditions the participation rates were low among all companies who responded (14%) and show little responsiveness to rewards, this only increased to 16% for those who offered incentives.
Worries regarding the increasing financial cost of sick employees and time off work also fuels the continuing investment in health and productivity programs. As a percent of payroll the survey found that health and productivity costs totaled almost 27%, a 22% increase from 2005 U.S. levels. Furthermore, they discovered that the cost over time increased by almost 70% from 2009 to 2011.
Wolff said:
“The old adage of doing more with less is still a dominant theme. But there’s also a new twist. While employers continue to offer and promote programs to address health improvement, the accountability model has shifted over the last two years from one where managers and employees share responsibility to one in which employees are expected to bear the primary burden.”
The ratio of companies who responded believe their employees should be responsible for maintaining and improving workforce health increased from 78% in 2009 to 83% in 2011. Although the number of companies who believe managers should be responsible dropped from 64% in 2009 to 42% in 2011. Even though there has been a five time increase in the number of employers who believe employees are responsible is still only 10%.
Although 89% of companies claim that health and productivity programs are the core to their organizational health strategy, considerably better business outcomes are achieved in those with effective health and productivity programs.
Results from the survey indicate that companies with effective health and productivity programs are doing a lot more to connect senior leaders to program performance, personalize communications for specific employee populations, target preventable causes of employee absence, engage employees in the management of their with rewards and measure program outcomes.
Top companies achieved:
Less days lost due to unplanned absences and disability – resulting in an annual cost saving, when combined with saving costs, of $27 million for a U.S. company with 20,000 employees and an average pay level of $50,000. Industry-adjusted mean revenues for each employee that were 40% higher than companies that were not as effective, a difference of $132,000 per employee.
Helen Darling, CEO of the National Business Group on Health explained:
“The evidence overwhelmingly shows that the effective health and productivity programs can make a real difference to a company’s bottom line. There are unrelenting pressures on employers and employees today, but improving employee health is an opportunity for a true win-win.”
*The discoveries found in the Staying@Work survey reported in this article are based on the responses of 248 companies based in the United States. Findings based on the responses of Canadian companies will be issued in November 2011.
About the Survey
The 2011 survey is the second biannual North American survey of companies’ health and productivity programs. The survey was designed to identify the approach and tactics companies took with the most effective health and productivity programs and showcases the considerable financial advantage of their efforts. The survey was completed by 335 human resources and/or health benefit managers in the United States (248) or Canada (87) with at least 1,000 employees. The responding organizations employ 7.8 million workers and operate in all major industry sectors.
Written by Grace Rattue