What is your level of experience with data?
Employers recognize that they need health care data to better manage benefits costs, but are at three different levels when collecting, managing, or interpreting this data.
A study indicated that 97% of employers want more data, but more data isn’t necessarily better if you don’t know how to create and apply information. Understanding where you are in your data analytics journey is the first step in deploying a well-defined data analytics strategy.
No matter where your organization stands, chances are you’re looking to do more to meet your benefits goals. To achieve this, it will be necessary to clarify your mission and what you will need to accomplish it.
Build a folder for data analysis
HR and finance managers need to have a clear purpose for using health data to gain organizational support for their program. Once these programs are approved, companies are finding unique ways to use employee health data to help them control costs, become more competitive, and attract employees in a tight job market. Here are some examples of how data analytics helps improve your benefits programs and strategies:
Build a fair benefits package: A recent study showed that employees want expanded benefits that meet basic needs (including housing and transportation); are easy to understand, access and use; and supporting a work culture that de-stigmatizes receiving care. Additionally, the study showed that Black, Hispanic, Latino, Asian, and LGBTQ+ people were less likely to get the care they needed and more likely to consider changing employers for better benefits. Employers can use this type of survey data to expand or evolve their benefits program to meet the demographic needs of their workforce.
Understanding costs and cost drivers: Annual premium hikes, confusing claims and rising prescription costs can leave employers feeling helpless. Data analysis shows employers detailed costs and who and what drives those costs. The Pareto principle is common, whereby 20% of people drive 80% of the costs. Focusing on that 20% can lead to significant reductions, helping employers redirect resources to other strategic priorities. Examples include examining outcomes for specific employee populations and chronic conditions that lead to gaps in care. Additionally, understanding business units or geographic differences helps employers deploy specific initiatives to reduce costs.
Identify financing alternatives: Examining claims experience, large claims, and employee demographics reveals whether companies are financially ready for self-funding, captive programs, or individual HRA (ICHRA) coverage. This data opens the door to financing alternatives that employers had not considered, but which can constitute excellent strategic adjustments.
Improve M&A data economies of scale: Companies expect to save money in a merger by consolidating benefit plans. But it’s hard to find those savings unless data from all business units is combined to reveal hidden issues, cost savings, and opportunities to better serve employees. This information will help align benefits programs, reveal inconsistencies between business units, identify the financial impact of consolidation, and support a common platform for plan performance.
Supporting a Culture of Healthy Employees: the CDC quotes studies that show healthy employees are less likely to be sick or take vacations. When employers use data to dive into benefit usage and costs, they can improve employee health outcomes while enjoying improved productivity, reduced costs, and increased satisfaction. Additionally, tracking wellness program usage with data helps employers assess their investment.
These tangible benefits are a great reason to adopt or improve the use of data analytics. However, real success comes from aligning data analytics with strategic initiatives, including improving profits, DEI and employee engagement, and competitive position. Strategic alignment unlocks the untapped potential of analytics, revealing new opportunities to save money, serve employees, and stay competitive.
Best practices from best-in-class companies
The best companies start with clear organizational goals for their benefits programs, backed by workforce demographics, detailed healthcare costs, and claims experience. Additionally, companies need advanced tools and expertise to manage and disseminate data.
As companies expand their use of analytics, they are discovering new insights. But there is no substitute for experience, as large companies have learned how to collect, analyze and apply information. These leaders are in tune with data patterns and scenarios, driving strategic decisions. But they are also nimble, learning from their mistakes as they keep moving forward.
A study looked at data from 13 large companies that mined the data, surveying 26,000 employees. As a result, they identified individuals with risky health conditions based on claims experience, biometrics, and related data. Employees received communications offering a nurse-led coaching session. This initiative resulted in a 10.3% reduction in medical costs and a 5:1 return on investment for employer health plans and wellness programs.
Additionally, biometric data screening identified employees with chronic conditions such as high blood pressure, followed by an increase in related prescriptions a month later. New tools help HR identify employees who need help while avoiding future complications.
Leaders understand that data collection is not a one-time event, but an ongoing quest to improve employee health while achieving strategic goals. HR dashboards and advanced tools alert employers to immediate issues so they can take appropriate action.
As companies collect more data, they are also required to improve data security and maintain a secure IT architecture. These systems handle the most sensitive employee data, and companies need to have the resources and foundation in place to keep this information secure.
Finally, the most successful companies recognize the human component of data analysis. Although the data reveals trends, people in the organization need to act on them. As empathy, connection, and fairness become norms in business today, data will continue to drive decisions, but cannot replace human actions.
Using Data and Analytics: Next Steps for Employers
Data analytics is becoming a well-honed practice for those who know how to embrace it, learn from it, and use it to their strategic advantage. By combining people, data and insights, you’ll learn how to unlock the true hidden potential in your benefits program.