How Human Resources Management Can Reduce Rising Health Care Costs

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With two thirds of all health care costs associated with poor behaviors, changing the behaviors of employees would be a logical and sensible way to reduce or control rising health care costs. Yet, these costs continue to out pace the rate of inflation and drain the bottom line.

Many businesses have the best opportunity to reverse this trend through their human resource departments. Of course this may mean those within and outside of the department may to change their beliefs.

The major belief to be changed is knowledge is power. Having knowledge alone will not change the results. Individuals need to apply what they have learned and may need to do this numerous times before it become a habit where the action happens almost subconsciously without it appears any thought.

By changing this belief to applied knowledge is the source of sustainable power is the first step. Then and only then can the actions (behaviors) changed to deliver the desired results.

Many in human resources management are responsible for Employee Assistance Programs (EAP). These programs range from childcare to exercise to even grief counseling.

The EAP can be the vehicle to dramatically reduce health care costs when the focus turns to behaviors. A secondary reason to focus on behaviors is to look at published studies in health care on preventive care services. The New England Journal of Medicine in a 2008 article found “slightly fewer than 20 percent of [preventive] services that were examined save money, while the rest add to costs.” Other studies from the American Heart Association and American Cancer Society suggested even lower savings of 10% for preventive services such as blood pressure monitoring to measuring cholesterol of high risk heart disease people.

Preventive care does not reduce rising health care costs because it is not directed to the behaviors causing these well-being issues. With three quarters of all healthcare cost associated with one of these four diseases cardiovascular, cancer, diabetes and obesity, the focus on behaviors is the only logical way to reduce this enormous profit draining liability.

One of the best solutions is to put everyone through a self-leadership development process where the focus is on changing beliefs (attitudes) combined with goal setting and goal achievement. When a plan of action is put into place that has been highly emotionalized for the individual, amazing results do happen. Many employees have never invested the time to plan their future. Actually most of these folks along with upper management place more value on the everyday written grocery list than they do for their future plans. These individuals are living for the moment much like the overweight Wimpy character in Popeye who said: “I gladly pay you on Wednesday for a hamburger today.”

What would happen if a organization of 50 employees with half married and half single reduced their estimated annual premiums of $ 435,000 by $ 150,000 in the first year and then continued to reduce the premiums? Using the National Coalition on Health Care (NCHC) 2008 statistics, an annual premium in 2008 for a single employee was $ 4,700. If the employee was married and had two children, the premium increased to $ 12,700. This fictional company would have an estimated health care premium of close to a half a million dollars that is continually rising at twice the rate of inflation according to the NCHC. Seventy percent of $ 435,000 is $ 304,500 and half of that is $ 150,000.

If the EAP focused on behavior changes through a self leadership development process with an investment of $ 1,500 per person, this would deliver a 2 for 1 return on the investment. Even if additional reinforcement was put in place such as executive coaching, the changes in behavior would justify the financial investment.

The Human Resource Department can become the value driven and cost reduction center of any organization by reducing health care costs. Of course it may not be easier, but the results of having a healthy workforce along with increased profitability and potentially a high performance work culture are well worth the effort.