Business Growth & Strategy

In Employee Health, You Get What You Pay For

Healthcare: Get What You Pay ForIt’s your company’s third-largest expense — and its doubling every decade. Yet what do you really get for all the money you spend on employee health benefits?

It’s hard to retain good employees, of course, if you don’t have a solid benefits package. But are you really getting healthier, more productive employees for all the money you spend on those benefits?

Given that 6 of every 7 full-time employees in the U.S. is overweight or has a chronic health condition that raises their (and therefore your) health costs, the answer appears to be a resounding “no.” And the reason why is not hard to discover.

“Insurance is not the problem,” Warren Buffett told CNBC in March, 2010. “The problem is incentives. We’ve got payment for procedures and not payment for results.”

But you can change this situation. In addition to the obvious no-brainer of implementing a company-wide wellness program for your employees, companies can also partner with providers and pay them for better health results for their employees, not simply more procedures.

In Utah, for example, area employers are already partnering with the University of Utah’s Neuropsychiatric Institute (UNI) for employee mental health benefits. And the results have been outstanding for employers and employees alike.

You might think that mental health costs are insignificant compared to employee health issues like smoking, heart disease and diabetes. But you would be wrong.

According to research from the non-profit Health Enhancement Research Organization, which studies the impact of modifiable behavior on employee health costs, the claims costs of smokers are only 15 percent to 20 percent higher than those of non-smokers. The health costs of depressed employees, however, are a whopping 70 percent higher than those for non- depressed employees!

To bring these costs under control, the University of Utah’s Neuropsychiatric Institute works with the Blomquist Hale Consulting Employee Assistance Program (EAPs) to provide counseling to help employees deal with their work and life stresses. In addition to this front-line prevention intervention, the Institute also offers a strong case management team to ensure that patients who need care beyond the early intervention counseling provided by the EAP can see a doctor or therapist promptly. This avoids a great many preventable — and expensive — hospital admissions.

The program also provides services that make real-world sense — like home-based counseling for troubled adolescents — but that traditional insurance plans rarely if ever pay for.

The results are evident to any CEO or CFO who cares to look. Employer clients have seen reduced absenteeism and greater productivity among their employees — many of them with no health cost increases for years . One client for example, a natural-gas company, is paying the exact same amount for Institute-provided mental health benefits for its 1,700 employees in 2012 that it paid back in the year 2000. In that same period of time, employee health costs for U.S. businesses have risen a staggering 114 percent.

The marketplace is full of similar examples where paying for results, not procedures, makes for both economic and medical sense. The New York Times recently reported on a new accountable care organization that proactively assigns care managers to diabetic patients to assist with managing diet and exercise programs, scheduling appointments, ordering meals for delivery, etc.

Accountable care organizations (ACOs) have been growing in popularity among employers of late, and it’s not hard to see why. As a recent article in the journal Managed Healthcare Executive noted, “There is little doubt the advent of accountable care organizations (ACOs) will reshape healthcare delivery for the next decade.”

But as the article also pointed out, “The commercial market [can] drive the revolution of accountability at a faster pace.”
In other words, it’s up to businesses rather than government policymakers to make the greatest gains in driving more common sense — and better health results — into the health care marketplace.

What if employers paid doctors to keep employees healthy rather than simply pick up the pieces after they get sick?

The answer is we’d all have healthier employees — and a healthier bottom line.


[Darrell Moon is the CEO of Orriant, a wellness program provider serving companies nationwide. He may be reached at]

Category: Business Growth & Strategy

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About the Author: Darrell Moon

Darrell Moon is CEO of Orriant, a wellness program provider serving companies nationwide. He founded Orriant in 1996 to change the dynamics of healthcare and give employers some control over the ever-increasing costs of the healthcare be

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