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Rigorous management holds the line on health care costs: per-employee costs nearly 20% lower in high performing companies

Towers Perrin's 2008 Health Care Cost Survey projects that the average corporate health benefit expenditure will be $9,312 per employee. What's particularly relevant to Workers' Compensation is that there are significant cost differences for companies that actively and effectively manage their programs. These companies will have per-employee costs of $8,844, 20% lower than the $10,320 per-employee cost in low performing companies.

The savings can have a tremendous impact on a company's profits and competitive advantage. So how do the successful companies manage their health plans and delivery processes? The answers have clear implications for Workers' Compensation and show why the management practices of both programs should be tightly aligned.

According to the survey, high performing companies show a deep commitment to managing their programs in ways that benefit the company and the employees. They have clear strategies in place to drive improvements in employees' overall health and wellness, identifying problems early and taking advantage of opportunities for improvement by understanding the current state of their benefit program and the health care system overall.
Specifically they have:
• A clear focus on and commitment to supporting employees' health and health care decisions
• Well articulated strategies and rigorous metrics for evaluating program effectiveness
• Critical program performance factors in place
• Benefit designs that encourage transparency and accountability
• Rigorous – and effective – communication and decision support programs that successfully engage employees and help build a culture of health in the organization
Dave Guilmette, Managing Director of the Towers Perrin Health and Welfare practice, notes that “as companies ask their employees to become more accountable for their health care consumption and participate in cost-control initiatives, the companies themselves must become more accountable to employees by providing the resources, support tools, education and communication initiatives that employees need to be successful consumers of health care. High-performing companies are far more committed to implementing these measures…and, we believe that is the reason they are so much more successful.”

Similarly, those employers that apply these same principles to Workers' Compensation will enhance their competitive advantage.