Study Uncovers Proven Strategies for Employers to Simultaneously Curb Rising Healthcare Costs and Strengthen Benefit Offerings

Gallagher’s Best-in-Class Benchmarking Analysis identifies how high-performing organizations are designing total-compensation approaches that improve employee engagement, productivity and drive overall organizational wellbeing

Record-low unemployment has forced employers to double-down on benefit offerings to attract and retain employees. At the same time, escalating healthcare costs are taking larger portions of operational budgets. Findings from Gallagher’s latest Best-in-Class Benchmarking Analysis, which involved an evaluation of 1,936 employers, identified proven strategies that allow employers to excel in HR management and healthcare cost control.

Data collected from 1,522 midsize (100-999 full-time employees) and 414 large (1,000 or more full-time employees) employers showcases best practices and common philosophies among top-tier employers. Only eight percent of midsize employers and seven percent of large employers were considered best of the best, having achieved best-in-class status for both healthcare cost control and human resource management.

“Attempting to win the war for talent by solely focusing on wage increases is ineffective and not sustainable,” said William F. Ziebell, CEO of Gallagher Employee Benefits Consulting and Brokerage. “The Best-in-Class Benchmarking Analysis demonstrates that successful employers take a more proactive and structured approach to planning, developing and implementing comprehensive benefits and HR programs. In doing so, employers can develop a winning formula to attract, reward and retain the right talent and position the company as a destination employer.”

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Best-in-Class Employers Arm Employees with Tools to Reduce Healthcare Costs 

Because rising healthcare costs negatively impact both the organization and the workforce, best-in-class employers have successfully teamed with their employees to reduce expenses in this area. In an effort to provide employees with a better understanding of specific treatment costs, both midsize and large best-in-class employers are more likely to equip their workforce with healthcare decision-support tools that allow employees to compare different service provider and treatment costs and plan for upcoming expenses. In both employer groups, these strategies help support employees’ physical, emotional and financial wellbeing.

In 2019, large employers named best in class for healthcare cost control were more than twice as likely to say their organizations did not increase cost sharing in any way in 2019. To achieve this, large best-in-class employers were strategic about identifying and removing waste and unutilized benefits from their systems. This allowed employees to make more responsible and well-informed healthcare decisions. To further eliminate unnecessary costs, the large best-in-class group frequently offered second-opinion services that focus on better outcomes to ensure the correct diagnosis and optimal treatment plans.

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Best in Class for HR Management Invest in Their Employees for the Long-Term

Rather than treating compensation and benefits as simply the “cost of doing business,” the best in class for HR management believe the organization is investing in its workforce and supporting career wellbeing in a way that will improve engagement and boost productivity. For both midsize and large best-in-class organizations, this meant a greater likelihood of spending $15,000 or more annually for each eligible employee’s benefits package.

Even more than the dollar amount, the best-in-class organizations were focused on the intended outcomes. To drive higher participation rates, the best-in-class midsize employers were more likely to use financial incentives, such as contributions to employees’ HRA, HSA and FSA accounts. This group was also more likely to offer an array of elective options, such as autism treatment and infertility services or fertility treatment.

Like their midsize counterparts, the large best-in-class group was focused on keeping employees healthy to reduce costs and improve productivity. Over the last year, the large best-in-class group was more likely to include biometric screening, weight management and physical activity programming. This group was also more likely to include a financial wellness component, providing employees with access to financial literacy and education offerings.

“Each employer has a unique set of needs, opportunities and challenges, which is why best-in-class organizations take a longer term, strategic approach to build cultures of total wellbeing,” Ziebell said. “Gallagher developed the Best-in-Class Benchmarking Analysis to underscore the advantages of creating multi-year benefits and compensation strategies that can empower organizations to minimize turnover, maximize engagement and unlock cost efficiencies.”

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