Pulling together a cost-effective benefits package that meets employees' needs and keeps them engaged with and loyal to the company can be too much for one HR professional—or even a team of them—to handle. Fortunately, there are several new data analytics tools to help streamline benefit offerings and cut costs.
Health Intelligence to the Rescue
Facing rising health care costs, the workforce management team for Durham County, N.C., wanted to be able to track and report its health care spending and, more important, create data-based strategies for using wellness initiatives to target the chronic conditions among the county's employees that were driving costs up the most.
In 2017, Durham County implemented a health intelligence platform from Springbuk that uses data analytics to help employers manage benefit costs and improve population health. Deidre Gonzales, HR manager with Durham County, said she documented a real return on investment based on benefit changes made in light of the data the analysis yielded.
One of the county's first insights concerned employees with diabetes. "We saw that if we were able to make sure all of our diabetic employees had no gaps in care and were taking advantage of all of the recommended services they needed, we could save close to $500,000 annually," Gonzales said. Durham County partnered with the public health department and its own onsite wellness clinic to institute an incentive program that provided diabetes education and coaching, a glucose meter and nurse intervention.
The program started in November 2018, and in its first eight months, with nine graduates, the county has seen claim reductions of more than $22,000 from helping employees manage their diabetes and avoid hospitalizations. In the eight months prior to launching the incentive program, claims for these employees amounted to $84,506; their claims for the subsequent eight months amounted to $62,318. As the program expands, greater savings are expected.
In another dive into the data, the county found that employees who use its onsite wellness clinic spend $332 less each month than those who do not. Getting more employees to use the onsite clinic could add up to a potential annual savings of $322,000 for the county, Gonzales said.
Technology-Fueled Benefit Administration
Benefits represent a big expense for any employer. Unfortunately, there's a good chance some of the benefits being offered don't represent enough value to employees to justify the expense, especially when other benefits might be valued more. Or perhaps employers are missing opportunities to improve the value and reduce the costs of benefits. That's where technology can play a role.
"A critical component of a successful health and well-being program is the appropriate use of data and analytics," wrote Atlanta-based Shira Wilensky, national practice leader for health and well-being at consultancy OneDigital. However, she cautioned, "data is inherently dumb. If not correctly collected or analyzed, numbers can lead you down the wrong path."
A company can survey its employees to determine their needs and interests and then select its benefit offerings based on the survey results. However, "the most critical question is, how representative of the population is the data [employers] collect?" Wilensky continued. "If only a small percentage of employees choose to complete the survey, the company may make a misguided decision and create a program that is only meaningful and relevant to a small portion of the population."
Automating data collection is a way to avoid problems associated with employee self-reported data. "If you are self-funded, you should have access to both medical and prescription claims data," she pointed out. "Determining your greatest health risks and largest cost drivers can serve as a benchmark for your program and guide the types of programs and interventions to offer."
Keith Falk, OneDigital's Orange County, Calif.-based regional managing director of HR consulting, said, "Digital transformation has already altered much of the HR function, with artificial intelligence and machine learning driving efficiency." Now, he says, the employee benefits area, which had been slower to adopt artificial intelligence (AI), is making significant strides through this technology.
[SHRM members-only toolkit: Managing Health Care Costs]
Alex Kremer, vice president of product development for payroll and benefits platform firm eBacon in Phoenix, pointed to several ways he is seeing AI change benefit administration for the better:
- Guiding employees toward appropriate benefits. "By using large sets of aggregated data, HR can find out how employees make decisions and then direct them to benefits plans" that make the most sense, Kremer said. AI tools do this, he added, by analyzing aggregate information about employee behavior, spending and claims patterns.
- Helping HR benefit managers choose the right plans for the company. "AI is already helping to pick the correct benefit options for companies today, with very simple inputs," Kremer said. Larger benefit providers can leverage years of information about the plans chosen by employees in certain demographic groups—age, income or education level, for instance—in order to better understand what kind of plan designs to offer.
Benefits questions the technology could help benefit managers address include:
- Would a high-deductible health plan (HDHP) with a health savings account (HSA) or a traditional preferred provider organization plan—or both—provide necessary coverage at an affordable cost? Would it do so for the workforce as a whole and for workers with specific needs or subgroups of employees with common demographics?
- If the employer is offering an HDHP, would the high deductible be more likely to prevent employees from spending on needed care or to reduce unnecessary spending? Does this differ among employee subgroups?
- Would adjusting the deductible, say from $4,000 to $2,000 or vice versa, alter these results? Would the affect be meaningful?
- What if the employer contributed funds to employees' HSAs—and, if so, how large of an annual contribution would make a difference? For instance, would it drive employees using an HDHP to curtail excessive spending while not cutting back on needed care?
AI's biggest impact will be in the area of predictive analytics to forecast future costs, said Robert Ferraro, president of Atlanta-based Pareto Healthcare Consultants, which helps employers with self-funded benefits analyze their health care spending data and adjust their plan designs to reduce overspending. "The key step for successful HR teams is to go from mountains of unusable data to precise, actionable recommendations that will optimize their benefits plans," said Ferraro.
Gonzales recommends that HR teams reach out to their brokers or benefit consultants to oversee requests for proposals from technology vendors and compare health care analytics platforms.
HR professionals can leverage technology to better manage benefit selection and administration. By marshaling the power of AI and analytics to improve employee health and well-being, they can potentially achieve major savings for the organization.
Unlocking the Power of People Data
Among global companies that use employee data to report on business operations and performance, 59 percent said they have improved their benefits program by looking at employees' interactions with their benefits platform, according to a survey of 380 HR professionals by Thomsons Online Benefits, an employee benefits and employee engagement software company.
"At present, having people analytics skills within the HR function is optional, but soon they will be imperative," said Matthew Jackson, vice president of client solutions at Thomsons. "The significant budgets that HR teams are handling are simply too large not to track, and the potential for better, data-led decision making is too big to ignore," he noted.
Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.
Related SHRM Articles:
Does AI Have a Place in Open Enrollment?, SHRM Online, September 2019
Data-Driven Benefit-Selection Tools Are Just Getting Started, SHRM Online, September 2019