Heads of companies don’t need to be told how important it is to keep a firm control over costs. But what about healthcare which is often perceived as a particularly expensive benefit for companies to offer?
A report from earlier this year projects that the cost of healthcare globally will increase by more than 9 per cent in 2016, while the forecast for the Middle East and Africa is an average jump of 12.2 per cent. So it’s not surprising employers can feel as though this is somewhat out of their control.
But there are solutions, with many businesses already using innovative ways to bring down the figure spent on healthcare without a decrease in quality or amount of care made available.
So what is it that these companies are doing? What changes are they making in their approach to healthcare? And how much money are they saving?
1. Pharmaceuticals: Brand name vs generic
So let’s start with a big one. The cost implication of using brand name drugs is huge. In 2015, a Thomson Reuters study concluded that worldwide sales of pharmaceuticals totalled more than $1.1 trillion and this number is expected to go up.
There is an immediate saving to be made here with zero reduction in quality: Using generic rather than branded drugs. The US Food and Drug Administration reports that the average cost of the generic equivalent is around 80-85 per cent cheaper. What is incredible is that branded pharmaceuticals and their non-branded or ‘generic’ counterparts have the same active ingredients, strength and dosage. They can vary in the inactive ingredients such as the dyes, binding agents and flavourings – elements that have no any effect on how the drug actually works. In fact they are subject to a number of tests that ensure they are the exact ‘bioequivalent’ of the branded drug.
The only major difference between branded and generic drugs is the price.
If your healthcare provider is using the branded version of a drug, there is a substantial saving to be made by opening up a conversation with a view to switching to generic versions.
Particularly here in the UAE where it is estimated that only 20 per cent of pharmaceuticals used are the generic version – while the US by comparison uses generic medicines 80 per cent of the time.
2. Health and wellness programmes
Another development that can be implemented within your company is a health and wellness programme. Having such an initiative for your employees falls into the ‘long-term’ bucket when it comes to saving money, but giving the workforce discounted access to gyms, better food options, help to stop smoking and general health education/advice can improve the overall health of those employees – and therefore reduce claims in the future.
Often savings from these areas are noticeable within the first year.
Yes, it may mean an upfront financial commitment – installing a healthy workplace culture could include changing the menu in staff restaurants, employing counsellors and funding routine medicals. But the rewards to both employer and employee of a healthier culture are clear – boosting employee attendance (fewer sick days), creating a happier workforce with better productivity and retention, plus a reduction in expensive medications and claims.
3. Adopt an occupational health programme
When it comes to employee illness and absence, becoming an organisation that is proactive rather than reactive creates the potential for cost efficiency by living the ‘prevention is better than cure’ model.
Having an occupational health specialist (or team of specialists) gives your organisation the ability to assess and manage risk in the workplace and identify better and healthier ways of working. With these assessments and reports, your business can begin to make better decisions and shape a safer and healthier working environment – and therefore reduce the amount of absences from work due to stress, accidents, illness and injury.
Typically, an occupational health programme will cover several aspects of the working environment such as:
• The identification of hazards to employees – seeing they are addressed appropriately to ensure a safe and efficient workplace.
• The control, analysis and assessment of staff absences with recommendations on improvement initiatives.
• Provision of appropriate ‘return to work’ pathways for employees who are recovering from a serious illness or injury.
• Early detection and intervention of both physical and mental illness.
• General health and wellness management.
4. Virtual doctors: Technology in healthcare
Harnessing the latest technological advances can also reduce an organisation’s healthcare spend. Patients have the technology at their fingertips to contact doctors through their laptops, tablets and smartphones – and various online companies have set up solely to provide this online medical assistance through websites and apps.
The big plus here for employers is that if such a service is provided to staff as part of the healthcare package, the amount of time they spend away from work (alongside loss of productivity and associated costs of a doctor visit) could be reduced considerably.
Although replacing a one-to-one consultation with a video chat is not always a suitable substitute, it would reduce the number of ‘routine’ visits. What do we mean by routine? Well, studies conducted by the UCSF School of Pharmacy and the Stanford Graduate School of Business conclude that in the US between 40 per cent and 50 per cent of physician visits could be conducted as virtual appointments. This equates to cost savings in the United States annually of approximately $11bn – and those savings are amplified to nearly $28bn when moving a number of possible visits to specialists online as well.
Since roughly half of all appointments to clinics and surgeries could be moved to a virtual service with no loss of care, that means employers are currently paying twice as much as they could be for their employees’ doctor appointments.
5. Employ a “gatekeeper” function
A very effective way to lower costs is to implement a ‘gatekeeper’ function that controls and directs a lot of the incidences of illness to the appropriate first stage of care and resolution. Since the most common ailment for a doctor visit is a cough, a gatekeeper can help eradicate a number of unnecessary visits to a physician.
A gatekeeper is often associated with managed care plans that provide a pathway method to healthcare. Here, the gatekeeper will authorise any referrals, hospitalisations and tests that the patient may require – but also redirect any patients seeking treatment that seems unnecessary or inappropriate. The gatekeeper acts as a filter, making sure that adequate care is available, and that the company’s healthcare expenditure is managed responsibly.
Innovations that are readily available
Healthcare plans are valuable benefits for employees and they make an employer attractive to talented people.
But if not controlled properly by the employer, they can spiral out of control and result in expensive claims from employees who take advantage of the care available and seek expensive or unnecessary treatment, comfortable in the knowledge that the company is picking up the tab.
Having a total view over your company’s healthcare landscape is the solution: Seeing trends, understanding on a deep level where there is unnecessary expenditure, and where cuts can be made without compromising the level of care. This all comes together to benefit employer and employee.
In the end, it’s a way of approaching it like any other aspect of your business – with control and peace of mind.
Stephen MacLaren is the regional head of Distribution Human Capital and Benefits at Al Futtaim Willis