Rising Health Care Costs and Disatisfied Employees. The Role of Marketing.

I read two different but related articles on employee benefits in the May and June CFO Magazine. One article, A Little Less Shifty, is based on a Hewitt Associates survey showing that as health care premiums begin to moderate, employers will reduce the percentage of the cost that employees must pay. In 2004 and 2005 health care premiums grew at about 6 percent each year, yet the average share that employees paid increased from 12% to 13% during these two years. However, this year health costs and the percentage employees must contribute are expected to rise equally at about 6%. The Hewitt survey also shows how employers are increasing their investments in preventative wellness programs as one of several strategies to reduce future health costs.

The other article (actually, a sidebar) titled Trends with Benefits is based on a Kenexa survey that shows most employees are unsatisfied with their employee benefits while most senior executives are thrilled.

One possible reason why employees are unsatisfied is because over the last decade or so they have been asked to shoulder a greater percentage of their health care costs (as the Hewitt survey reveals). And a likely reason senior executives are happy is because they've shifted a significant portion of health care costs to employees. It reminds me of the airline industry at the present moment. To reduce costs, airlines have cut everything from routes to customer service agents to meals and leg room. As a result, many airlines are making money for the first time in years. Yet, while airline execs are thrilled, passenger complaints are at an all time high.

There are some similarities between responding to unhappy employees and unhappy customers. If you take away something of value (e.g., a free meal on an airplane) you can minimize the impact by introducing something of equal perceived value (e.g., free onflight movies). Many employers have minimized the impact of higher health care costs to employees by offering other "benefits" that cost less to the employer but have equal perceived value to employees - e.g., flexible work opportunities, work-life and EAP programs, etc. But this alone is not enough. Companies must also market/promote these new benefits to employees to insure the relationship and value of the two actions is understood. (this is why I like those web-based applications that calculate and show the "total" compensation for employees).

And herein lies an opportunity for suppliers of health care and related wellness benefits. Part of your duel marketing strategy should include positioning your offerings as both a means to reduce a company's overall health care costs as well as a benefit that employees value - and the relationship between the two. For your existing customers, proactively develop communications that help your clients market/promote these key messages to employees. This also helps you to be treated more as a partner than a vendor. I've seen several wellness providers focus on this strategy with good results.

As for the U.S. airline industry? Unfortunately, customers seem to be of no concern.

Posted by Mark Willaman

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