Proactively Managing Risk and Chronic Conditions: A CFO’s Guide to Saving on Healthcare Costs and Improving Company Culture
As a CFO, one of your key responsibilities is to ensure that your company is operating as efficiently and cost-effectively as possible. One area where this is particularly important is in healthcare costs, which can be a major expense for employers. However, there are strategies that can be used to proactively manage risk and chronic conditions, which can lead to significant cost savings and other benefits.
The Impact of Proactively Managing Risk and Chronic Conditions
Proactively managing risk and chronic conditions can have a significant impact on healthcare costs. By identifying and addressing these issues early on, employers can prevent costly complications and hospitalizations down the road. This can lead to lower healthcare costs, as well as other benefits such as improved employee productivity and reduced absenteeism.
One key metric that can be used to measure the impact of proactively managing risk and chronic conditions is the healthcare cost trend. This metric looks at the year-over-year change in healthcare costs for an employer. By implementing strategies to manage risk and chronic conditions, employers can often achieve a lower healthcare cost trend than their peers who are not proactively managing these issues.
Case Study: Savings on Prescription Drugs and Overall Savings
One example of the impact of proactively managing risk and chronic conditions can be seen in a case study conducted by a large employer in the manufacturing industry. This employer implemented a comprehensive health and wellness program that included strategies to manage risk and chronic conditions.
As a result of this program, the employer saw significant savings on prescription drugs. In fact, they were able to reduce their per-member per-month prescription drug costs by 13% over a three-year period. In addition, the employer saw overall savings of $1.8 million in the first year of the program, with additional savings in subsequent years.
Not only did the employer see cost savings, but they also saw improvements in employee health and productivity. For example, employees who participated in the program had lower rates of absenteeism and reported higher levels of job satisfaction.
Adding to Company Culture and Retaining Top Talent
In addition to the financial benefits of proactively managing risk and chronic conditions, there are also cultural benefits. By demonstrating a commitment to employee health and wellness, employers can create a positive work culture that can help attract and retain top talent. In fact, studies have shown that employees who feel valued and supported by their employer are more likely to stay with the company long-term.
One key metric that can be used to measure the impact of a positive work culture is employee turnover. By implementing strategies to manage risk and chronic conditions, employers can improve employee satisfaction and retention, which can lead to lower turnover rates and the associated costs of recruiting and training new employees.
Here are some statistics on chronic conditions and the financial benefits of proactively managing them:
- Chronic conditions are prevalent and costly. According to the CDC, six in ten adults in the United States have a chronic disease, and four in ten have two or more. Chronic conditions are responsible for 90% of the country’s $3.8 trillion in annual healthcare spending.
- Early intervention can save money. A study by the Centers for Medicare and Medicaid Services found that beneficiaries who received care from an accountable care organization (ACO) had 5.6% lower healthcare costs than those who did not. ACOs are incentivized to provide proactive, coordinated care to beneficiaries, which can lead to earlier intervention and cost savings.
- Proactive management can reduce hospitalizations. A study published in Health Affairs found that a telephonic coaching program for patients with chronic conditions led to a 7% reduction in hospitalizations and a 6% reduction in emergency department visits. By addressing issues early on, employers can prevent costly hospitalizations and emergency department visits.
- Managing chronic conditions can improve productivity. A study by the Integrated Benefits Institute found that employees with chronic conditions are absent from work an average of 1.5 times more often than those without chronic conditions. Additionally, chronic conditions can lead to presenteeism, where employees are present at work but not fully productive. By proactively managing chronic conditions, employers can improve employee productivity and reduce absenteeism.
- Wellness programs can have a positive ROI. According to a study by the Harvard Business Review, wellness programs that include chronic disease management can lead to a positive ROI of $1.50 for every dollar spent. By investing in wellness programs that address chronic conditions, employers can achieve significant cost savings and other benefits.
By proactively managing chronic conditions, employers can save money on healthcare costs, reduce hospitalizations, improve productivity, and achieve a positive ROI on wellness programs. These statistics underscore the importance of taking a proactive approach to managing chronic conditions in the workplace.
In conclusion, proactively managing risk and chronic conditions can have a significant impact on healthcare costs, prescription drug costs, and overall savings for employers. Additionally, it can improve employee health, productivity, and satisfaction, and help to create a positive work culture that attracts and retains top talent. As a CFO, it’s important to consider these factors when making decisions about healthcare benefits and wellness programs and to use metrics to measure the impact of these programs over time.
It would be an honor to help your organization do the same. Reach out to our team at (443) 608-5520.
The Capital Services Team