When it comes to the most valued staff benefit an employer can offer, health insurance is right there at the top of the list. Being able to provide a comprehensive healthcare package really can help seal the deal when it comes to attracting and retaining the best talent.
But regardless of the size of your business, offering such a premium package can come at a steep price. According to consultancy PwC, over the past decade global growth in healthcare spend has risen between 6.8 and 11.9% per year – consistently several points above general inflation.
This trend is set to continue: healthcare spend per person in the UAE is estimated to be around AED 4,408, putting the region in the top 20 globally when it comes to per-capita country health expenditure.
There are many contributory factors responsible for keeping healthcare costs continually on the rise. An ageing population, poor lifestyle habits, and overall ill health all lead to the increased utilisation of healthcare services. Other factors such as wasteful spending, the high cost of prescription drugs, and increased administration outlay add to the climate of rising costs.
Just appreciating these factors can help you better understand the strategies needed to contain the cost of your employer-provided health benefits. So, let’s look in practical terms at how to help bring down your healthcare spend without compromising on quality of care.
Reduce medication costs
Talk to your healthcare provider about the type of drugs they are using and wherever possible look at the possibility of switching to generic versions.
Talk to your healthcare provider about the type of drugs they are using and wherever possible look at the possibility of switching to generic versions.
Generic drugs are identical to brand name drugs with the same active ingredients, strength and dosage and are strictly tested to ensure that they are the exact ‘bioequivalent’ of the branded version. Branded drugs are more expensive because of high research and development costs. But once a patent for a particular medication has expired (normally between 20-25 years), other companies are free to copy and produce the same drug, bringing the cost down.
The US Food and Drug administration (FDA) estimates that generic drugs can cost up to 85% less than their brand name counterparts. According to the Congressional Budget Office, generic drugs save consumers an estimated USD 8-10bn per year at retail pharmacies. The Wall Street Journal reports that nearly half of the 60 most commonly prescribed prescription drugs will have generic equivalents over the next four years. Now contrast that growing availability with the low usage in our region: according to a 2013 report by Alpen Capital (cited in The National), it is estimated that only 15-20% of pharmaceuticals used in the UAE are the generic version.
So, think about including information about generic drugs in your benefits communications – explaining the differences between generic and brand name medication and encouraging your employees to request generics when getting a prescription.
Cut down on unnecessary testing
Billions of dirhams are being wasted every year on unnecessary medical tests and procedures – all paid for by health insurers. The latest research reveals that UAE residents use outpatient services around 12 times per year – a much higher figure than the rest of the world. Overusing the system in this way drives healthcare costs up.
It’s worth thinking about introducing healthcare workshops so your employees can learn exactly where to find the most appropriate level of care – this could be from a local pharmacy, walk-in clinic, or 24/7 nurse or physician phone lines rather than a visit to the doctor. Urge your staff to use these type of facilities as a first port of call for anything that is non-urgent. Also, encourage them to question doctors about the necessity and value of expensive tests and treatment when basic investigations have not been carried out first.
Reduce emergency room use for non-urgent problems
The overuse of emergency rooms (ER), which are much more expensive than primary care clinics, is becoming an increasing global problem. A 2014 report by the International Journal of Emergency Medicine, found that 75% of ER visits in the UAE are non-urgent. If a patient checks in with a minor complaint, they’re preventing those who really need urgent care from getting it.
The best way to reduce ER use and therefore bring down healthcare costs is to implement wellbeing plans that your employees can access easily. This will help them have a better understanding on how to prevent and manage problems, and cut down on unnecessary ER visits.
Initiate managed care
A managed care system, that focuses on preventative medicine and home treatment, can make a big difference in reducing healthcare outlays. Studies over the past few decades have shown that managed care plans have been successful in inducing price competition and forcing costs down. Using Primary Health Care Centres (PHCCs) that offer a range of facilities (including early diagnosis and treatment of acute and chronic illnesses, health maintenance, disease prevention and counselling) helps take the burden off hospitals and reduces healthcare bills for employers.
A managed care system, that focuses on preventative medicine and home treatment, can make a big difference in reducing healthcare outlays.
A gatekeeper who controls and directs medical issues to the relevant first stage of care and treatment is often used with managed care plans. The gatekeeper authorises any referrals, hospitalisations and tests that the patient may require – but can also redirect any patients seeking treatment that seems unnecessary or inappropriate. The available evidence indicates that gatekeeping is associated with lower utilisation of health services and lower expenditures. In the 2015 Dubai Health Authority report, the UAE and Qatar spent 15% and 10% of healthcare funds respectively on ancillary care (diagnostic, therapeutic and custodial services) while countries with a gatekeeper system spent between 3-7%.
Introduce virtual medical appointments
Virtual consultations, where patients can discuss symptoms with a doctor or nurse via a Skype-style consultation, are a convenient and cost effective alternative to face-to-face appointments and could result in savings of just under USD 30bn per year according to a 2015 American study. In the UAE, companies such as Doctor on Demand, Teladoc, Mobile Doctors and Smart Seha all provide this type of service.
Invest in proactive wellness programmes
Some companies can fail to see the ROI of investing in a wellness programme for their workforce, but if implemented properly they can reap many rewards. Not only can such programmes help reduce overall healthcare costs but also help staff to feel healthier, more valued and more engaged and therefore more productive at work.
Workplace wellness programmes can include everything from regular health screenings and educational workshops on exercise, nutrition and dealing with stress – to healthier on-site food choices and subsidised gym memberships. With so many initiative options available, it’s important to work out which one best suits your company, your employees and most importantly your budget. A recent US study found that where organisations implement workplace wellness programmes, employee medical costs fall on average by about USD 3.27 for every dollar spent.
A Gulf Cooperation Council (GCC) Compensation and Benefits Trends study in 2014 showed that over half those interviewed had an employee-wellness programme of some description in place, with many saying they had the intention to either introduce or re-work an existing scheme in the future.
Improve workplace conditions
Providing ergonomic aids designed for efficiency and comfort in the workplace will reduce injury risk and absenteeism. Simple things such as offering supportive and adjustable chairs, or ensuring that screens, desks and chairs are positioned at the correct height, as well as providing adequate natural light, ventilation, heating and drinkable water – all these can contribute to a happy and healthy workforce.
Implement co-pay strategies
Incorporating co-pay clauses into health insurance packages alleviates total costs. According to a major review submitted to the World Health Organization (WHO) in 2011, the introduction of cost sharing did in fact decrease the utilisation of many kinds of medical services. With a co-pay agreement, the employee pays a percentage of the cost every time they make a claim for medical treatment. The insurance company then pays the balance of the claim. Not only does this help share the cost of healthcare claims between employer and employee, it also prompts employees to make a claim only when absolutely necessary. For example, instead of obtaining a prescription for painkillers from a doctor, they would be more likely to buy remedies over the counter for a fraction of the price.
With a co-pay agreement, the employee pays a percentage of the cost every time they make a claim for medical treatment.
Include employee dependants in healthcare packages
In some areas of the UAE such as Abu Dhabi and Dubai, where mandatory health insurance has been introduced, employees’ dependants, who are residents in the UAE and who are not covered by their employer’s healthcare provision, are the individual employee’s responsibility. Offering a total package which includes an employee’s dependants (such as spouse and children) eliminates this extra cost to the employee and provides peace of mind that health provision for the whole family is in place.
Looking ahead at lowering costs together
In this current climate of ever spiralling healthcare costs, it is imperative for employers to work closely with health insurance specialists and healthcare providers to work out the best protocols for delivering both a cost effective and quality care package for their business. Only by working together and adopting highly effective proven strategies to redefine your offer, will you be able to provide the best possible outcome for all.