General Motors, in 2005, reported their largest quarterly loss, amounting to $1.1 billion, in more than a decade. The loss was largely attributed to the increasing cost of providing their employees and retired staff, as well as their families, with healthcare cover.
The trend towards companies, worldwide, opening in-house clinics in an effort to curb the ever-rising cost of employee healthcare subsidies demonstrates that this drag on corporate earnings is not unique to North America. There is an enormous financial liability associated with employee ill-health and many companies make the mistake of underestimating the true impact of employee ill-health on the sustainability of a business.
The fact that human capital management and financial objectives within organisations do not often correlate has resulted in the inefficient management of employees and their healthcare costs. Initiatives aimed at managing these are viewed as costly and, as a result, detrimental to an organisations bottom line.
"It is, however, essential that employers find ways in which to optimise employee well-being, says Jeanne Swarts, executive director at HWH, as this is the most effective means of curbing the spiralling cost of employee healthcare subsidy spend and overall cost of employment."
Case studies have proved that medium sized companies which take pro-active steps to evaluate, address and manage their employee and employee healthcare risks can save as much as R24 million over a four year period, with an associated outlay cost of approximately R1.8 million.
Initiatives aimed at enhancing employee well-being and, resultantly, reducing healthcare and employment costs, include employee assistance programmes (EAP), twenty-four hour access to health information, as well as HIV and AIDS and disease management programmes.
Combining these with additional employee management facilities, such as absenteeism and healthcare risk management programmes, enable employers to integrate these facilities and manage each employee across the entire home/health/work spectrum. Employees have lives outside of the office, and this is something that needs to be considered when managing them. "It often happens that problems being experienced in one area of an employees life impact on another, and the management facilities mentioned previously enable employers to obtain a holistic view of the employee and thus provide insight into what may be causing absenteeism or excessive medical claims", adds Swarts.
An illustrative case study conducted by HWH and Deloitte Actuarial & Insurance Solutions into a company which changed from their standard healthcare and employee benefit approach to a more integrated, employee-centric one, indicated that absenteeism rates dropped from up to 12% (typical in an unmanaged environment) to a stable 5%. This again demonstrates the benefit of pro-active employee risk management. Figures were based on a company with 800 employees.
Centrally-housed technology systems, proper data management, the analysis and effective determination of long-term liabilities and the provision of intervention strategy advice add further to the overall effectiveness of employee risk management programmes.
"Related services being facilitated by a single provider is more cost effective, enables employers to obtain an integrated perspective of each employee and thus address the root cause of ill-health and absenteeism. This is key to addressing employee well-being and, importantly, the long term mitigation of associated financial risks," concludes Swarts.
About HWH
HWH has created a niche marketplace and offers a practical approach to the concept of employee risk management by integrating all of the programmes and processes that deal with the human capital or human resources of a business. These include data processes, the user experience and business measures.
When it comes to the long term liabilities associated with employees, HWH has broken the mould of conventional thinking in order to achieve real and lasting results in terms of efficiency, productivity and, ultimately, return on investment (ROI).
The result is a happy, more productive workforce, improved, user-friendly data, as well as substantial savings.