95% of UK Employers Do Not Know if Health Care Benefits Do Their Staff Any Good
22 June 2007
Just 5% of employers calculate the return they get for their investment in healthcare benefits, according to the Employee Benefits H.S.A. Healthcare Research 2007.
Just 5% of employers calculate the return they get for their investment in healthcare benefits, according to the Employee Benefits H.S.A. The research, which was published in June 2007, found that a further 22% of UK employers do not know how much they spend on health care staff perks such as private medical insurance, health cash plans, employee assistance programmes, health screening, income protection and well-being initiatives.
The low proportion of employers calculating return on investment for health benefits may be due to the fact that it can be difficult to calculate an accurate return on these products. For example, employers may find it obvious that sickness absence levels have fallen, but difficult to determine how much of this drop is due to an organisation’s health care benefits, compared with their other complementary initiatives such as a clamp down on bogus absences or well-being strategies such as healthy eating and increased gym membership.
But even if they are not doing it, more employers are becoming aware of the advantages of calculating the return on their health care spend. More than a fifth (22%) of the respondents aim to track the return on these products in the future, which is a slight increase on the 18% which planned to do so in the 2006 Employee Benefits HSA Healthcare Research.
Unfortunately less than half (41%) of respondents think that their employees understand the value of the health care benefits they receive. This suggests that further communication of these products is needed, particularly where employers are funding those at the more costly end of the market such as private medical insurance. Ensuring staff are aware of the value of their package will help with issues such as recruitment and retention, as well as an organisation’s image as an employer within its sector.
The 2007 research showed that an increasing proportion of employers are able to estimate the percentage of payroll that they spend on health-related benefits with more than 77% were able to put a value on the cost of providing healthcare perks for their workforce.
But this still leaves more than one-in-five respondents unable to do so, which is surprising given the rising importance of demonstrating a return on investment on benefits across the board. The percentage of respondents providing health-related benefits for less than 1% of payroll has remained steady at 26%. Where there has been some movement is in the number spending between 1% and 2% of payroll, which has increased to 25% from 17% in our 2005 research. Similarly, overall the proportion that outlay between 3% and 5% is 20%.
The need to remain competitive has risen up many employers’ agendas and is now cited as the third most important determinant in the purchase of health care benefits. It has leap-frogged ahead of employee demand as a factor influencing purchasing decisions, suggesting that some employers may offer health care perks over and above what is expected by staff if their competitors do so.