A $5 Copay? Not Anymore
By any measure, healthcare is one of America’s fastest-growing industries, and that means the competition for qualified employees at all levels has never been greater. As a healthcare employer, how does your benefits package measure up against your competition?
“What you’re trying to do is create, through a combination of wages and benefits, an offering that attracts and entertains the kind of employee that you think is ideal for propelling your business or your enterprise forward,” said Bob Levy, chief executive officer of Nashville-based Paradigm Group, which offers employee benefits consulting.
That’s true for any enterprise, Levy added; yet some industries put more emphasis on wages, while other emphasize the “financial security” of far-reaching benefits. “There’s no right or wrong in either approach, it’s just that you might get different results in terms of the composition of your workforce,” he said.
The Standard Offerings
Austin Madison, vice president with The Crichton Group, a Nashville insurance and risk management provider, said the “cornerstone” of benefits remains healthcare coverage, but retirement options, long-term and short-term disability, life insurance and dental insurance also are typical. In fact, he said, dental insurance “has almost become a standard.” The Crichton Group offers “benefits benchmarking,” Madison added, to ensure that its clients remain viable in the recruiting marketplace.
Today’s benefit trends tend toward “voluntary worksite benefits,” he said, such as critical illness or cancer insurance and coverages offered by companies such as AFLAC, which provides financial assistance to help pay the bills when disaster strikes. Such a la carte benefits are sponsored by the employer, but their cost is paid primarily or completely by the employee, usually at a discounted rate.
Madison said an option for long-term care insurance is popular these days, as well. As younger employees witness the retirement and aging of their baby boomer parents, “they realize how expensive that is, and they don’t want to put that burden on their kids,” he said.
Thanks to technology, it’s easier for employers to offer flextime and work-at-home options as standard benefits, and such alternatives are particularly attractive to a younger, tech-savvy workforce, Madison said. Another differentiator in the marketplace is offering tuition assistance or reimbursement for employees working to further their training or education. “That’s a nice benefit that’s above and beyond what most people are doing,” he said.
Of course, the primary driver of benefit costs is healthcare insurance. “The rate of increase in the cost of providing healthcare benefits for the last several years has been in the 8 to 12 percent range each year, which is obviously a rate of increase that’s far in excess of the consumer price index,” Levy said. To manage that runaway escalation, employers are shifting more costs to their employees, and Levy said today’s prospective employees are expecting that.
“Even in a high-demand environment, I think it can be an appropriate strategy to promote health programs that engage the purchaser to a greater extent,” he said. “One of the problems with the historic approach to providing benefits is that people become economically disconnected from the cost of the healthcare they receive.”
Madison said younger employees want control over how their healthcare dollars are spent and are ready to “do some homework” to identify providers that are highly rated for quality care at an affordable price. “That information is out there. It’s just a matter of someone knowing where to find that,” he said, adding, “The days of the $5 or the $10 copay are just gone. They’re not coming back.” The rise in high-deductible health plans and health savings accounts is testament to this trend, he said.
Workers in the healthcare industry are a unique demographic when it comes to healthcare consumption, Levy added. “One thing that’s interesting – and it might even be counterintuitive – related to healthcare benefits is that the rate of increase in cost for medical insurance among healthcare professionals is higher than other industries,” he said. He surmised that the reason might be easy access to care, and it might also be based on need. “They don’t take good care of themselves,” he said. “Sometimes a nurturing personality is so busy taking care of the rest of the world that they don’t leave time to take care of themselves.”
What Matters Most
While a package of benefits is important in luring quality employees, Levy encouraged employers to look beyond traditional offerings and instead to foster a culture that allows employees to thrive.
“People will not pass up on a job because the deductible is $200 lower one employer versus another. There are much more important issues at stake,” he said. “Is it an empowering environment? Is it a welcoming environment? Do I like my coworkers? Do I feel like my bosses hear me and respect me? Do I have a chance to progress and grow? Those are key factors that determine employee engagement and also determine turnover rates.”
Thus, creating such a culture is a cost saver in more ways than one. Happier employees are healthier employees, and they consume fewer medical services. “If an employer can create a culture that supports and fosters and improves someone’s wellbeing, that’s a very strong culture that that employer has created,” Levy said. “Employers that can do that, I think, will be the ones that will really differentiate themselves from the rest.”