Best-performing companies achieve significant health care cost savings

A group of best-performing companies has achieved a $2,251 per employee per year (PEPY) health care cost advantage over the national average in 2017 ($9,950 compared with $12,201), according to global advisory, broking and solutions company Willis Towers Watson’s 22nd annual Best Practices in Health Care Employer Survey.
Willis Towers Watson defines best performers based on their abilities to manage cost trends and efficiency, e.g., a company of 10,000 employees could realize savings of more than $22 million annually by implementing a broad set of effective strategies and practices. Willis Towers Watson classifies high-cost companies as those employers with spend above, and efficiency below, the national average. The financial advantage of best performers over high-cost companies is $3,583 PEPY ($9,950 compared with $13,533).
“Best performers understand there is no single strategy for managing costs and improving the well-being of their workforce,” said Julie Stone, a national health care practice leader at Willis Towers Watson. “They evaluate all aspects of their health and well-being benefit strategies and activities, and implement innovative, integrated practices to improve them.”
One area where best performers excel is with subsidization and plan design.

  • 34 percent of high performers implement spousal coverage surcharges when spouses have other coverage available (versus 20 percent of high-cost companies);
  • 21 percent of high performers review health care subsidies within the context of their Total Rewards programs (versus 8 percent of high-cost companies);
  • 77 percent of high performers offer account-based health plans (ABHPs) with health savings accounts (HSAs) (versus 63 percent of high-cost companies);
  • 30 percent of high performers offer ABHPs as the only plan option (versus 6 percent of high-cost companies); and
  • 45 percent of high performers use ABHP as a default option (versus 6 percent of high-cost companies).

“Best performers lead the way in developing health programs that keep costs down by continuously evolving the financial and plan aspects of health benefits,” said Erin Tatar, a national health management practice leader at Willis Towers Watson. “These companies attain their advantage through effective value-based designs, superior network and provider strategies, and activities that engage employees in healthier lifestyles.”
According to the survey, best performers do more to encourage and improve workforce well-being, using a variety of approaches.

  • 53 percent of high performers align the work environment and well-being programs with company culture (versus 16 percent of high-cost companies);
  • 59 percent of high performers sponsor worksite well-being campaigns and offer nutrition education or seminars (versus 39 percent of high-cost companies);
  • 51 percent of high performers sponsor programs or pilots that target specific conditions or high-cost cases (versus 33 percent of high-cost companies); and
  • 30 percent of high performers use a variety of financial and nonfinancial metrics to measure the impact of their health and well-being programs (versus 15 percent of high-cost companies).

Best performers are far ahead of organizations with higher health care costs when it comes to employee engagement in well-being, especially through company social networks. The survey showed that close to half of best performers (47 percent) engage employees through their company’s social networks (key influencers, testimonials and viral messaging), compared with 21 percent of high-cost companies. Forty-two percent of best performers use social recognition to boost engagement in health and well-being compared with 23 percent of high-cost companies, while 28 percent offer wearable devices for tracking physical activity versus 12 percent of high-cost companies.
Best performers are also ahead of peers in adopting new health care delivery solutions.

  • 85 percent of high performers offer health care delivery via telemedicine for professional consultations (versus 67 percent of high-cost companies);
  • 45 percent of high performers use centers of excellence within health plans (versus 29 percent of high-cost companies); and
  • 32 percent of high performers offer onsite or near-site health clinics (versus 18 percent of high-cost companies).

In addition, 57 percent of best performers formally monitor vendor performance through performance guarantees, compared with 34 percent of high-cost companies. The same percentage have a partnership with a third-party data warehouse, compared with 25 percent of high-cost companies.
The gap narrows between best performers’ pharmacy practices and those of organizations with higher health care costs, which may indicate that all employers are hyper-focused on rising pharmacy costs, especially for specialty medications. Best performers still lead the pack in adopting strategies to manage pharmacy cost. More than half (57 percent) evaluate pharmacy benefit contract terms, compared with 49 percent of high-cost companies. And more than a quarter (28 percent) evaluate their plan design to promote the use of specialty biosimilars, when available, compared with only 18 percent of high-cost companies.
“Best-performing employers take aggressive action in areas that can have the greatest impact in their employees’ health care,” said Jeff Levin-Scherz, M.D., North American co-leader, Health Management practice at Willis Towers Watson. “They put employees at the center of their health care strategy and benefit experience, and develop new ways to engage employees in improving their well-being. Our research shows this diligence can create a healthy, high-performance workforce and a competitive advantage for the company.”

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