Employee benefits represent a rapidly increasing cost for businesses across Asia Pacific (APAC), pegging at approximately 15 percent of payroll on an average across Asia. The bulk of these costs relate to medical benefits, the cost of which is rising each year by approximately 18% — and HR is being held accountable.
Increased utilization and cost of care are driving up claims costs and the overall claims loss ratio of an insured medical plan, resulting in increasing premiums. HR must balance controlling the cost of benefits programs against pressure from business leaders to manage employee engagement and satisfaction with the program.
The best approach to handling such a challenge is to take a fact-based data-driven approach. But what does that really mean for HR, a function that generally relies on opinion-based decision-making or anecdotal “evidence”?
The best solution is to tap into the power of your organization’s data to design and manage a sustainable and meaningful benefits program. Your employee benefits data speaks volumes about your business and its employees, and provides you with an opportunity to be an effective influencer in your organization.
HR needs to realize that future success depends on leveraging the right data, making meaningful correlations and driving action-based recommendations.
The Right Data
Employers in APAC typically collect extensive data that covers medical claims history, employee absence, employee physical checkups and/or employee engagement data. However, a 2013 survey conducted in Asia by Mercer Marsh Benefits shows that less than 10 percent of HR professionals actually leverage that information to develop benefits programs that meet their employees’ needs and support their organization’s business objectives.
Bringing Data to Life: Making Information Work for HR
Most of what employers spend on supplementary benefits is driven by medical benefits costs. If HR wishes to understand key benefits cost drivers, and arrive at a point where costs are predictable and manageable, it makes sense to focus first on understanding medical costs, or the “real” cost of care.
For example, what is the average cost of a GP visit and does it differ by diagnosis and industry (see Figure 1)? Is the average number of visits to the doctor by employees higher in the hi-tech sector compared to the finance sector (see Figure 2)? And what are generally the top illnesses (see Figure 3)?
Properly analysing your employee’s health data can uncover specific cost-of-care cost drivers for your market and industry, while providing a comprehensive understanding of the state of your workforce health and the associated risks.
This in turn helps you appreciate the cost implications of these risks, as cost manifests not only in increased claims but also in increased absenteeism, attrition and reduced productivity.
Source: Mercer Claims Data Warehouse, Singapore
The Importance of Measuring Benefits ROI
If the cost of benefits is not manageable, sustainable and predictable; HR will struggle to convince business leaders to continue to fund the program. When it comes to understanding benefits ROI, key decision-makers in the business are looking for a monetary return-based approach — that is, hard data and defined metrics.
A diagnostic modeling tool can assist you to identify opportunities for improvements and cost savings, predicting costs and measuring ROI. With the strategic use of mindful data analytics, HR can innovate and differentiate benefits plans among their peers, thus resulting in real impact on employee satisfaction and justification of employee benefits spends. Ultimately, harness the power of your organization’s data and control the future of your benefits spend.
Author credit: Liana Attard, Asia Zone Consulting Leader, Mercer Marsh Benefits
Feature image credit: freedigitalphotos.net