Why Some Companies Pay More for Health Benefits

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<p><strong>Louisville, Ky. &mdash; July 24</strong><br />SHPS, a provider of health advocacy and health benefits solutions, has released a health practices study that shows the use or absence of a handful of core best practices in employee health management could explain cost differences of as much as 50 percent between two otherwise comparable employers, even after factoring out differences in location, workforce composition and industry. </p><p>The 2007 SHPS Health Practices Study substantiates that traditional financially based cost management methods are simply not enough to battle rising health care costs. </p><p>Companies with the lowest health care costs focus on optimizing employee health and managing clinical risk rather than manipulating the health benefit. <br /><br />The SHPS study reveals best-practice companies take a laser-like focus on improving employee health, driving positive changes in health behavior with rigorous, clinically based care management programs and cash-based incentives. </p><p>They also reported having strong centralized benefits administration, health analytics and employee communication practices. <br /><br />The SHPS study identified six common health benefits practices that correlate with substantially higher health care costs:</p><ul><li>Managing employee health solely through the use of wellness promotion and education.</li><li>Being unable to assess quality of provider care.</li><li>Offering multiple plan designs.</li><li>Using deductibles and co-pays to drive health behavior.</li><li>Using health benefits to position a firm as an &ldquo;employer of choice.&rdquo; </li><li>Incurring unacceptably high levels of turnover.</li></ul><p>&nbsp;</p><p>&ldquo;After observing that a handful of SHPS clients consistently outperform other employers in controlling health care costs without making cuts in covered benefits, we undertook this study to determine the basis for this phenomenon and share the findings so that employers throughout the country could understand and implement best practices,&rdquo; said Rishabh Mehrotra, SHPS president and CEO. &ldquo;Results of the study provide evidence that traditional methods of cost management, which rely primarily on the management of financial risk rather than clinical risk, are not enough to effectively manage the ever-increasing health care cost trend. In the long run, health costs can be lowered only by managing the health of the covered population.</p><p>&ldquo;Significant improvements in the health care cost trend are achieved when employees improve their clinical status and reduce their need for health care services. Based on the study results, SHPS believes a key issue for many employers is the fundamental misalignment between common health care procurement practices and the actual drivers of higher health care costs. As this realization sinks in, SHPS expects procurement practices to change dramatically, creating both opportunities and risks for vendors. The vendors who succeed will be those that are best able to empower the employer to measure and improve employee health.&rdquo;</p>

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