Health care costs

May 1, 2005
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Health care costs in U.S. are increasing at a rate of 8 to 9 percent each year. With employers paying an average total health benefit cost per employee of $6,679 in 2004, is it any wonder we're seeing a renewed emphasis on health care cost management by corporate executives?

What concrete steps can EHS pros implement to assist the organization in managing its health care costs?

The bigger picture

We need to cast a wider net regarding prevention of illness and injury to include non-occupational as well as occupational settings. Regardless of where the illness or injury occurs, whether employee or dependent, the employer still bears most of the direct and indirect costs for illness and injury.

For instance, nearly 20,000 Americans are fatally injured at home every year. That’s nearly four times the number of fatalities incurred in the workplace. Another 13 million Americans seek medical attention for injuries incurred at home. The Home Safety Institute estimated these injuries cost $387 billion in 1998 alone. By the way, these numbers don’t include the 42,000 fatalities incurred on the highway each year — and most of these are off-the-job as well. In addition to injuries, the employer’s bottom line is also affected by chronic illnesses such as heart disease, cancer, stroke, lower respiratory tract disease, and diabetes account for 66 percent of all deaths in the United States.

EHS pros can begin by using a four-step approach toward health care cost management: analysis, planning, implementation, and assessment.

Step 1 – Analysis

The first step is to perform a risk assessment for each potential illness/injury scenario (i.e., occupational, non-occupational, and dependent). A thorough review of your occupational, non-occupational, and dependent illness/injury cost trends should provide a clear picture of past health care expenditures. The data you use during this initial assessment phase must be accurate and reliable. This assessment should result in identifying those classes of illness/injuries with the greatest per capita costs. Those areas with the greatest outlays should be ranked highest on the intervention priority list.

Step 2 – Planning

Next, develop a strategy for implementing your health protection and promotion programs. This cannot be done in a vacuum, but must include the participation of key stakeholders (e.g., senior management, union representatives, health promotion professionals, dependent representatives, and human resources personnel). This is a critical phase where you need to solicit stakeholder buy-in and commitment for the overall program. Key benchmarks and metrics should be established so success of the program can be clearly evaluated.

Step 3 – Program implementation

Now implement intervention programs such as disease management, case management, health promotion, and occupational health to address those areas identified in Step 2.

For example, Pitney Bowes operates eight medical clinics for employees who had a cumulative 31,000 appointments in 2002; saving considerable amounts of money on doctor visits. In addition, Pitney Bowes operates “Health Care University” where workers can earn credits toward reduced insurance premiums by participating in health promotion programs.

Not all strategies need to be as extensive to have a positive effect on the bottom line. For example, low cost tests ($45) are available to identify people at high risk for stroke. (Stroke is the leading cause of disability in the United States, leaving more than 1.1 million victims impaired.) One provider uses a mobile evaluation facility so the exam can be provided at the work site.

Of equal importance is having a well-established and effective occupational illness and injury prevention program. These elements should include, but not be limited to, health and safety auditing, employee health and safety training, exposure monitoring and the implementation of exposure controls (where indicated).

Step 4 – Assess program effectiveness

The final step in this process is evaluating the success of the program. Program effectiveness can be gauged against the benchmarks and metrics established during Step 2. The assessment should be systematic and measure, among other parameters, each program’s return on investment.

Following this cost-effective four-step program, EHS pros can play a key role in helping corporations manage their health care costs. Integrate health protection and health promotion, and include employee dependents in your programs. Companies using this approach can leverage existing EHS resources as a means to enhance the health of their employees and dependents.

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