Bespoking your client’s healthcare proposition will give them more bang for their buck says Sam Barrett
Tailoring employee healthcare benefits to the needs of a workforce can supercharge their effectiveness. But, while a growing range of options are available to help those looking to bespoke, a more radical approach may be necessary to harness the full power of flexibility.
The benefits of pulling together a bespoke set of healthcare benefits are certainly compelling. A carefully constructed suite of benefits can help an employer achieve business objectives such as improving employee engagement or reducing sickness absence.
“We do find bespoking works best when it’s aimed at a defined cause or driver,” says Brian Hall, sales and marketing director at BHSF. “An employer might increase dental cover to address a shortage of local NHS dentistry or increase therapy cover for manual trades or employees who drive.”
As well as addressing specific issues, tailoring benefits can also increase employee appreciation. For example a younger group of employees who would typically make few claims on a medical insurance scheme may be happier with dental insurance or a healthcare cash plan they can use at least once a year.
With some forms of tailoring, for instance a healthcare trust or a bespoke cash plan, having the organisation’s name on the marketing literature can make a significant difference to employees’ perception of it, with knock-on financial benefits.
“When there’s a degree of co-branding involved, you tend to see employees having more respect for the cover,” says Axa PPP healthcare intermediary distribution director Paul Moulton. “They see it as the employer’s rather than the insurer’s, which can have a positive effect on claims spend.”
Given these benefits, Buck Consultants consultant Simon Crew believes more companies should consider bespoking their healthcare package.
“Every company and employee is different so it’s logical that you should tailor benefits,” he says. “The degree to which an organisation can tailor will vary depending on size but it makes sense to have a benefits package that fits its requirements.”
As Crew says, the amount a company can tailor comes down to size. Full benefit flexibility is really the reserve of the large corporate, with the unique set of benefits available on a healthcare trust demonstrating the level of tailoring on offer for the big boys.
But while choice is more restricted for smaller companies, a growing number of options are now available to this segment. “New registrations in the medical insurance market have pretty much stalled so the insurers are responding by making their products more flexible,” explains JLT head of healthcare and wellbeing Richard Colver.
Modular products are now the norm for small companies with most medical insurers offering a core set of benefits with further cover options that can be added as required. For example Axa PPP Healthcare’s Business Health Select plan offers groups with between six and 74 employees a core set of benefits including in-patient and out-patient treatment. This cover can then be enhanced with three additional levels of out-patient cover and a further six different benefit options including therapies, mental health and dental and optical cover.
Evidence of this increased flexibility is also reported by insurers. Moulton says that his company is increasingly bespoking options around the medical insurance. “We’re seeing more employers asking us to integrate our plans into their existing healthcare benefits,” he says. “As an example we get a lot of requests to allow an organisation’s GP or occupational health department make referrals directly.”
Medical insurance products are also addressing one of the key motivations for bespoking – helping employees return to work quickly. Plans such as Axa PPP Healthcare’s Back to Health and Bupa’s Business Fit are targeted at the conditions that keep employees out of the workplace, enabling them to get treatment quickly and return to work.
For example Bupa’s Business Fit, which is available for groups of 20 employees plus, includes benefits specifically for the two main causes of long-term absence – mental health conditions and musculoskeletal problems. These include a treatment planning service and physiotherapy to treat musculoskeletal problems and a mental health support line and access to counselling and out-patient treatment where required.
Tailored cash plans
Cash plans are opening up to more bespoking too. While many of the providers will only consider tailoring benefits for large groups – for example, Simplyhealth head of employer marketing Howard Hughes says his firm will only provide full bespoking for groups of 1,000 plus as the standard plans already offer a good level of flexibility – others will go lower.
For example Westfield Health allows groups of as few as 20 to build their own plan through Mosaic. This enables them to choose from 19 benefits and services with the only requirement that they select at least two core benefits, which are optical, dental, therapy treatments and consultation.
BHSF is also happy to flex its products for smaller groups, tailoring benefits for groups of 35 plus. But, although Hall says there is interest from employers looking to bespoke to address a business issue, often the motivation is a bit more basic.
“A lot of bespoking tends to be around achieving a price rather than addressing key employer concerns,” he explains.
This may simply be a reflection of the times, with companies trimming back benefit expenditure to survive the recession. However Hughes believes it may indicate a more fundamental issue with bespoking. “There’s some appetite for bespoking with new customers but we find the market’s generally fairly conservative,” he explains. “If an employer is keen to save money they’ll take steps such as introducing an excess, reducing hospital choice or removing cover for dependants. They’re very reluctant to chop and change healthcare benefits.”
With a little more cash on the table, many are hoping employers will reconsider the way they package their healthcare benefits and take a more strategic approach to tailoring rather than looking at bespoking products in isolation.
“Employers need to start again with their benefits choices,” says Crew. “Many think this will cost them money but it can often be a matter of redirecting the existing healthcare spend.”
His approach has three key threads. As well as putting in place benefits such as life assurance that an employer feels it has a duty to provide to employees, he also recommends thinking about objectives the organisation wants to achieve, for instance reducing absence or improving retention rates. The final component is to ask employees what they want in their benefits package.
“Involving employees in their benefit selection improves engagement, leading to a sustainable increase in productivity,” he adds.
Looking at the benefits an organisation provides in this way also ensures that any overlap is kept to a minimum. Doubling up is becoming increasingly common as insurers add free benefits such as employee assistance programmes to their plans. Additionally, where an organisation has complementary benefits, there may be an opportunity to secure a discount. For instance, as it picks up some of the early intervention aspects of income protection, some group risk insurers will offer a discount if medical insurance is in place.
Having a more integrated approach can be more effective too. Colver says that to make a tailored healthcare strategy really effective you have to go beyond simply offering access to treatment. “Providing access to treatment is really only like using a sticking plaster to solve a problem: you really need to find out why it happened in the first place,” he says. “If employees are getting a lot of back problems, there could be a common cause such as poor ergonomics or bad lifting techniques. This could be addressed through occupational health.”
Systems can also require an overhaul to ensure healthcare benefits respond effectively. Capturing details on absence and using this data to flag up instances where an employee would benefit from an early intervention can help to target treatment and reduce absence.
But, Colver says, this is rarely the case. “Employers’ systems are around five years behind where they need to be,” he says. “We will often recommend a new approach to enable them to use the data more effectively. Monitoring data enables you to both provide trend analysis but also react quickly to a problem.”
As an example of how important it is to be able to analyse data, he points to a manufacturing company, which introduced a new production line. Its analysis showed there was an increase in musculoskeletal problems so, in addition to providing employees with treatment, it looked at the new working conditions. This found the production line height had changed, which was addressed, resulting in a reduction in musculoskeletal problems.
Communication can also be a vital ingredient when it comes to bringing a healthcare strategy alive. As well as helping to explain the thinking behind the benefit choices, for instance improving employee health and wellbeing, it can also improve usage. This can be particularly important for benefits such as employee assistance programmes where usage is particularly low as employees often perceive them as a tool to help with stress. “If an employer puts in the effort to bespoke healthcare benefits then make sure they communicate them properly,” says Crew. “Without proper communication, they’ll never realise the true value of their healthcare strategy.”