Spectra Newsroom

Healthcare Activism Takes Center Stage

by Ryan Bingham, Partner, Spectra Management

According to the Centers for Medicare and Medicaid Services, healthcare costs are predicted to sky rocket at an annual rate of 6.7 percent between now and 2017. This daunting projection, which appears closely aligned with how today’s volatile healthcare reform legislation is handled, has created a renewed sense of urgency regarding healthcare costs. Employers are scrambling to cut costs and employees are feeling penny pinched.

Increased Healthcare Costs Require Trade-offs

Containing the current angst over the presumed healthcare crisis will require careful review by employers (and their CFOs) and strategic trade-offs to ensure all parties are satisfied.

What many employers are trying to avoid is the “penalty box” approach to health coverage. Some companies have discovered that they can reduce healthcare costs by offering incentives for employees to take care of themselves. For example, Virgin HealthMiles now offers a service that helps businesses measure employee fitness and provides creative rewards for those who achieve specific exercise goals.

Over the years, many Utah companies have used the “incent wellness” approach, such as FranklinCovey which had a gymnasium and health center on its West Valley campus for more than 15 years. And lately, many companies and city officials are recommending biking or walking to work to trim commuting costs and waistlines.

However, some business executives feel this approach is not only unsustainable but also ethically questionable. The question bears asking: is it really the role or right of the employer to determine how their employees lead their lives or how many miles they need to run or what they should eat? There is a fine line between being magnanimous and overly controlling.

 “Lifestyle” Handholding Verses Better Management

There are those who feel it isn’t their role to handhold employee fitness or implement a plan that punishes the employee for habits such as smoking or for any other behavior for that matter.  

According to Josh Hyatt, who wrote “Prognosis Negative” in the February 2009 issue of CFO Magazine, the CFO at Continental Paper took a different tact by carefully examining his company’s plan in painstaking detail to cut out unwarranted costs. One change, was cutting out coverage for gastric-bypass (cost for this procedure runs between $20,000 and $25,000) a procedure that the company and their healthcare consultant concluded often causes complications and rarely produces long-lasting benefits. This plan change along with other cost-cutting measures kept Continental Paper’s increase in healthcare to just 5 percent.

Lastly, another example of Utah-based healthcare innovation (also recently commended by the President of the United States) and improved cost-control management is the Utah Health Exchange, a program designed to connect consumers to the healthcare information and plans they need while giving employers the ability to control costs through defined contributions.

Spectra Managementis redefining employee benefits in Utah. Originally established in 1986, the company has a track record of providing local businesses with innovative health insurance, savings and retirement plans that make sense today—and for years to come.

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