Volume 2 Issue 4 - 2009
Technology as an Enabler | Saving with Health & Wellness | Corporate Ethics and Integrity 

Saving With Health & Wellness

How One Company Is Cutting Costs and Improving the Health of Employees

The dilemma

Like many other firms in Asia, a diversified Asian conglomerate with multiple businesses in telecommunications, and telecom-related services was experiencing a continuous rise in the cost of insuring its employees’ health care due to increase in number and cost of health care claims. The current economic downturn exacerbated the problem and increased the need for introducing programs that would reduce costs now and long in to the future.

Traditional solutions would require cutting back on current programs and the company was looking for an answer that would benefit its employees while reducing costs and thus consolidate its position as an employer of choice.

The challenge

Senior executives thought they had found the answer to their dilemma after listening to Dr. Rajeshree Parekh, Aon Consulting’s Regional Practice Leader, Health & Benefits, Asia Pacific discuss global trends in health care. During the presentation, Dr. Parekh contended that one of the most effective ways to control long-term health care costs was to improve the health and wellness of employees. She presented a convincing argument that improved employee health would lead to fewer health care claims and correspondingly lower insurance costs.

Based on this assertion, the company’s head of Human Resources challenged Aon Consulting to prepare a proposal for a project that would lead to a quantifiable and verifiable reduction in its health care costs as a result of actions to improve employee health and wellness.

The team at Aon Consulting was excited about the prospects for this project. As Dr. Parekh said, “Health & Wellness programs are new to Asia but have had a lot of success in Europe and North America. Rational reasoning leads everyone to the conclusion you cannot keep bringing premiums down by just hard negotiation. You have to address the big issue of claims. The only way you can manage claims is to prevent illness, that is to keep everyone healthy. But our client said, ‘Show me the money. If the program costs ‘X’, show me you can bring ‘X+’ in savings.’ We were quite excited when we received this challenge from our client!”

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The consulting process

The consulting process that Aon proposed to identify the best possible solution encompassed four steps:

• Assessment. The first step would be to identify the strategic criteria and priorities of the client health plan. The assessment also would look at how well the client and its competitors were currently addressing these priorities.
• Alternative scenarios. Aon consultants would then propose alternatives to current design, simulate the impact of these plans on costs and evaluate the benefits against the savings
• Proposal for redesign. In this phase, Aon would narrow the scenarios down to the proposal that best met the client’s objectives and priorities. The consultants then would define the implementation process, assign responsibilities, and communicate the plan to assure the buy-in of the proposal by the different stakeholders.
• Implementation. The final phase of the project would encompass advising on implementation, analyzing data and claims, proposing adaptations and redesigning aspects of the program in a dynamic and continuous process. 

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The solution

In the end, Aon Consulting team recognized the importance of proposing a holistic approach that addressed all aspects of employee health care and wellness:

• Manage Purchasing. Managing purchases more effectively would entail aggressive marketing, reviewing current pooling arrangements, bringing in consolidation through harmonization of benefit  programs and taking steps to further improve administrative efficiencies. 
• Manage Delivery. Delivering health care to the individual more cost-effectively requires that the company focus on interventions at the point of service.

Some suggestions proposed by Aon Consulting included putting in place a concept of tiered networks, introducing catastrophic case management and disease management for chronic illnesses. 

• Engage Employees. Aon asserted in its proposal that employees should be encouraged to take greater responsibility for their health. This entailed first raising employee awareness of costs by redesigning benefit plans to introduce transparency and flexibility in selection. Elements of cost sharing would increase employee awareness of the consequences of their actions.
• Maintain Employee Health. Aon proposed that this important but often neglected component should be the first step to the holistic solutions. Aon recommended that the client institute periodic health risk assessments for employees and use incentives to encourage them to stay healthy. 

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The results and challenges ahead

While it is still early days, the prospects look good for a positive outcome that meets the client’s challenge. Dr. Parekh comments that, “We are quite pleased to see that this progressive-thinking client did not just cut back or sit on the fence and say, ‘Let’s wait and see what others are doing.’ They took action to address the root cause of cost increase and in the process maximized gains not just for themselves but also for their employees. We think that these types of programs can become a fantastic avenue for improving health and reducing costs for many more companies in Asia in the future.” 

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Contact

For more information about Aon Consulting’s capabilities and experience in health & benefits, please contact Dr Rajeshree 'Gina' Parekh, Regional Practice Leader, Health & Benefits, Asia Pacific, at rajeshree_parekh@aon-asia.com. 

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