MANAGED CARE August 2003. ©MediMedia USA
Overseeing the employee benefits department as a financial executive in a previous job taught Frank Gatti a lot about health care. That knowledge is serving him well today, he says. As senior vice president and CFO at Educational Testing Service, the company that sells the SAT test, Gatti is forging a partnership with his human resources managers to make the health of the company’s employees a strategic asset.
“In many instances, CFOs have not gotten involved with health benefits. That’s changing, in large part because it’s becoming such a large component of the cost structure,” Gatti says. With medical insurance premiums climbing, CFOs are taking an interest in everything from plan design to wellness and disease management programs.
But it’s not just saving money on medical care that top executives are interested in when they evaluate health programs. They’re looking at a much bigger picture. Or they should be, says Dee W. Edington, PhD, director of the Health Management Research Center at the University of Michigan. “Companies have to shift from beating on insurers about the cost of health to understanding the value of health.”
Gatti, for example, supports work site cholesterol screenings and mammograms. What he’s after is a reduction in the amount of money the company has to pay temporary workers as well as a boost to employee morale.
“Rather than have our employees lose work time going to doctors for different kinds of tests, that testing can be done on site in a much more productive way,” Gatti says. “And, when employees begin to realize that the company cares about them and wants to provide these kinds of services … there’s a much more positive attitude that enhances the productivity and commitment of the employees to the organization.”
In addition to overall financial and productivity measures, CFOs are concerned about attracting, maintaining, and motivating employees, according to a study by the San Francisco-based Integrated Benefits Institute, a nonprofit organization. That broad view is a cue to insurers, who have begun to work more closely with corporations to institute wellness programs for employees to provide data on how such programs could affect a company’s overall success, researchers and corporate managers say.
That’s good news, because the “true” return on investment of health programs is several times greater than what is saved in medical costs, which is how many programs today are measured, says William P. Molmen, general counsel at IBI. The IBI study, which polled 269 financial executives, finds that while 61 percent of CFOs intrinsically see a “strong link” between health, productivity, and the bottom line, 54 percent say their current programs only moderately improve their companies’ financial performance.
Skeptical of wellness programs
“CFOs come in all sizes and shapes, and the most stringent ones with the sharpest pencils are still very skeptical about wellness programs,” says the University of Michigan’s Edington.
Benefits managers and insurers should present wellness and disease management programs in terms CFOs will appreciate, Molmen says. Measures can include the medical and prescription cost savings such programs will bring as well as how productivity will be affected, says Edington. Productivity measures include time away from work, short- and long-term disability costs, and workers’ compensation payouts. Another measure, which is much harder to quantify, is presenteeism, or how productive an employee is while on the job, says Edington.
“Someone with irritable bowel syndrome is not going to be able to keep his mind on his work nearly as well as someone who has no disease,” Edington says. To arrive at an overall figure CFOs can appreciate, data on all of these measures has to be merged, which is not an easy task, he adds.
CFOs, however, have reasonable goals in mind, says Molmen. Almost half would change a benefits program, which could include offering wellness or disease management programs, if the program demonstrated 6 percent or less productivity increase, according to the study, “On the Brink of Change: How CFOs View Investments in Health and Productivity.”
At Chicago-based Bank One, which runs a number of wellness programs and has published several studies on how those programs affect productivity, management asks two key questions when evaluating a health program: Will it moderate health care cost increases? Will it keep employees at work and healthy?
“Our programs are geared toward major cost drivers and risks for our employees,” says Wayne N. Burton, MD, the bank’s senior vice president and corporate medical director.
Insurers are asked to take part, and sometimes lead, Bank One’s wellness initiatives. More than 95 percent of the company’s workers are enrolled in managed care plans, Burton says. To encourage health plans to focus on keeping employees healthy, Bank One issues report cards to insurers, showing the health of each plan’s population and providing data on the productivity of each plan’s members.
Financial executives recognize that health plans, physicians, and pharmacy benefit managers play a much broader role than just keeping the cost of insurance premiums down, according to the IBI study. Seventy-one percent of CFOs say health plans, physicians, and PBMs can at least moderately affect their productivity goals, while 55 percent of CFOs credit health plans, physicians and PBMs with the ability to minimize a company’s total costs.
Health plans should take note, Molmen says, that CFOs are interested in that potential.
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