As a business leader, it’s not uncommon to rely on intuition or gut instinct when making important business decisions. Unfortunately, this isn’t the most reliable way to run your business. In fact, it can be downright risky without using a data-driven approach.
Utilizing analytics will give you the tools to better understand, verify, and quantify the results of your decisions. In a data-driven company, you can be more confident about the choices you make because you are steering your organization toward success based on facts, not opinion.
According to the Bureau of Labor Statistics, in 2021, employee healthcare costs made up about 7.8 percent of a company’s annual operating budget.
It’s no secret that benefits can be a big expense for an employer, so when it comes to deciding upon a cost-effective benefits package that meets your employees’ needs, you don’t need to go at it on your own. There are several new data analytics tools that will help streamline benefit offerings and cut costs.
You can start the process by surveying your employees to determine their needs and interests and then select benefit offerings based on the survey results. However, there is one thing to consider—how representative of the population is the data you collect?
Automating your data collection is a way to avoid problems that are associated with employee self-reported data. In fact, you should have access to both medical and prescription claims data, so determining your greatest health risks and biggest costs can serve as a gauge for your program in guiding the types of programs and interventions to offer. Data analytics give you the knowledge to better understand the health needs of your unique employee population as well as what’s driving benefit costs. Personalizing offerings helps companies develop targeted initiatives that assists with driving down costs and improving health outcomes.
Thanks to digital transformation, the HR function—which had been slower to adopt AI—is making significant strides through this kind of technology.
When to Apply AI
Guiding employees toward appropriate benefits
By using large sets of aggregated data, HR can find out how employees make decisions and then direct them to benefits plans that make the most sense. Your AI tools do this by analyzing aggregate information about employee behavior, spending, and claims patterns.
How to help HR benefit managers choose the right plans for the company
With very simple inputs, AI is helping businesses pick the correct benefit options. With this new technology, benefit providers can leverage years of information about the plans chosen by employees in certain demographic groups—age, income, or education level, for instance—in order to better understand what kind of plan designs to offer.
Technology could help benefit managers address the following questions:
- Would a high-deductible health plan that includes a health savings account (HSA) or a traditional preferred provider organization plan—or both—provide necessary coverage at an affordable cost? Would it do so for the workforce as a whole and for workers with specific needs or subgroups of employees with common demographics?
- If the employer is offering an HDHP, would the high deductible be more likely to prevent employees from spending on needed care or to reduce unnecessary spending?
- Would adjusting the deductible, either up or down, alter results? Would the affect be meaningful?
- What if the employer contributed funds to employees’ HSAs, and, if so, how large of an annual contribution would make a difference? For instance, would it drive employees using an HDHP to curtail excessive spending while not cutting back on needed care?
To help drive costs down, many employers are offering health and wellness programs to curb benefits spend. The goal of health and wellness programs is to promote healthier lifestyles to employees so that they’re less likely to develop illnesses that drive up claims. When implemented correctly, these programs can also help decrease absenteeism and increase overall morale.
Though there are many factors to consider in the data collection process, your approach should review and evaluate three areas of a health and wellness program: structure, process, and outcomes.
This is where you assess the foundation of the wellness program.
- What are the elements of the program?
- Is leadership supportive of it?
- How is the workplace environment supportive of the initiative?
- What’s your employee engagement strategy?
In this step, you measure how well the program is run and implemented.
- Did the implementation run on time and as planned?
- What (if any) barriers did you encounter?
- How successful was your employee communication strategy?
- Did people engage with the program?
Analyze the impact your programs have on your employees’ health while adding in healthcare utilization and costs.
- Are employees registering for the program?
- Are you seeing the changes your program was designed to target?
- Have people completed their health screenings?
- Do you see a difference in absenteeism, productivity, and turnover rates?
- What does participant feedback look like?
Data informs nearly every decision a business makes, and employee health and benefits shouldn’t be the exception considering the expense. Rolling out a program and measuring its success can be difficult without the proper tools and guidance, but it will make a difference in your health and wellness strategy.
For more information on determining how you can harness the power of data to implement your own program, connect with our benefits team today.