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Employers Taking Long-View Look to PHRs

by John Moore | April 07, 2008

Over the past couple of weeks I’ve uncovered a couple of recent reports that add to the growing body of evidence that employers will be one of the key markets for Web-based PHR vendors in the future. Going beyond the simple visibility that efforts such as the employer consortium Dossia platform will bring to the PHR market, employers are increasingly taking a long-term view towards employee health and wellness programs. Employers will increasingly rely on PHRs as a foundational element of their strategy.

Human Resources consulting firm Hewitt released late last week the results of a study it conducted among 500 U.S. employers. One of the most significant findings was that 88% of employers responded that they intend to invest in long-term solutions to keep employees healthy. This was up a whopping 25% over last year’s 63%. Within the report it is also noted:

…more than 85 percent of companies say they invest or plan to invest significant resources in long-term health and productivity initiatives over the next three-to-five years. In addition, almost two-thirds (63 percent) plan to offer incentives to motivate sustained health care behavior change, and 67 percent will utilize health care data and measurements to drive their organization’s health care strategy.

Clearly, based on the Hewitt survey it appears that a properly structured employer-sponsored PHR that provides employees with health and wellness information (and action plans) along with incentives as well as delivering employers key de-identified population health metrics, will go long ways towards helping employers meet their long-term objectives.

Another interesting, and in my view more comprehensive study, is the recent report from another HR consulting firm, Towers-Perrin. Their report, 2008 Health Care Costs Survey, (warning PDF) surveyed 500 large U.S. employers representing some 10 million employees. What is particularly attractive about this report are the comparisons made between employers that are high-performing, versus those that are low-performing. In a nutshell, high-performing companies will pay on average 16% less in 2008 ($8,532. vs $10,200/employee) for healthcare insurance costs versus low-performing companies.

High-performing companies take a very pro-active approach to managing healthcare costs in comparison to their lower-performing brethren by focusing at a nearly 2:1 margin on the following:

  • Motivating employees to manage healthcare purchases responsibly.
  • Support employees capability to make sound healthcare decisions.
  • Focusing on employee health management (e.g., population health analysis, pro-active management of high risks, disease and chronic care management, etc.).

Each of these three can be supported to some degree by the better PHR solutions in the market today

The challenge for employers, however, is still a mixture of gaining employee trust and the need to provide appropriate incentives. Sponsoring a PHR for employees may certainly be a step in the right direction, but how that PHR is presented to employees will make a world of difference as to its ultimate adoption and success. As the Hewit study points out, a significant percentage of employees are still hesitant to trust the motivations of their employers and often do not follow-up on health recommendations without incentives. How employers address these issues will ultimately decide the fate of their internal efforts to control healthcare cost increases.

The California Healthcare Foundation has provided some initial guidance, for employers looking to adopt a PHR platform for their employees. While somewhat perfunctory, this will be of some value to those employers just getting started.

One response to “Employers Taking Long-View Look to PHRs”

  1. […] Employers will increasingly rely on PHRs as a foundational element of their strategy.” Article John Moore, Chilmark Research, 7 April […]

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