September 19, 2016
By Florin Selaru
Regulatory Burden of Providing Health Benefits
It would be an understatement to say that small businesses are important for the US economy in general, or the State of Maryland, in particular. Small and medium businesses (less than 500 employees, for the purpose of this classification) employ half of the private workforce. Also of high interest: businesses with 19 or fewer employees (smaller number of employees for which statistics are available from the US Small Business Administration) employ almost 20% of private workforce employees in the State of Maryland. Under the Patient Protection and Affordable Care Act, however, an employer with less than 20 employees, is not mandated to offer health insurance to their employees. Given that in 2014 the average family premium was $16,800 (which amounts to approximately $8 an hour, for a typical 40-hour work week), it is not hard to imagine that mandating small businesses to cover health insurance for their employees would probably crush a significant number of them. To make matter worse, according to health insurance specialists, self-funding (otherwise known as self-insuring) is not traditionally an option for companies with less than 500 employees since a catastrophic health event cannot be absorbed. Interestingly, some studies report that small businesses pay 18% more for health insurance benefits when compared to large businesses. The future certainly doesn’t look brighter either. Healthcare costs are expected to rise at an accelerated rate between now and 2020. Here, I will make the case that Corporate Concierge Health is an emerging benefit that can save money, as well as keep employees more engaged and more productive.
Advantages of Providing Health Benefits
It is clear that small businesses find it difficult to impossible to afford paying for health benefits. What is less clear, however, is how important it is for them to provide health benefits to their employees. A Society for Human Resource Management (SHRM) study found that the happiness of employees with their employers is salient for retention of top talent. This study found that 62% of employees rank health care/medical benefits as very important. In a marketplace where “two-thirds of organizations report difficulty filling full-time positions,” providing health benefits is of paramount importance. One of the questions arising from these data, then, would be: how are small businesses (including Clarii Health) supposed to retain good employees? How are small businesses expected to build a company culture of respect towards employees? Another good question would be: how are human resource (HR) specialists expected to solve this problem for small businesses?
There is no easy answer. According to SHRM, flexibility benefits (such as telecommuting, which increased a staggering 3-fold in the past 20 years) are less costly to provide than health benefits. Recent technology advances, plus the lower cost of flexibility benefits compared to that of health benefits probably explains the tremendous increase in companies offering telecommuting options. Another benefit that saw a recent significant increase (from 54% in 1996 to 72% in 2016) is wellness resources and information offered to employees. The likely explanation for this increase is arguably a favorable benefit-cost ratio.
Benefits of Corporate Concierge Health
Is there another venue for keeping employees happy, healthy and productive? A fairly new addition to the HR toolbox is a corporate benefit called Corporate Concierge Health. Although there are similarities to concierge medicine or boutique medicine, Corporate Concierge Health is distinguished by a significantly lower price point, focus on technology, and clear identification of services that are medically relevant, rather than services that may be afforded only by few well-off patients. Michael Porter (of Porter’s Five business strategy fame, as well as Professor at the Harvard Business School) is a prominent proponent of bundled services in healthcare. In the primary care realm, practices such as Iora Health, Qliance as well as Clarii Health in Columbia, MD, bundle a set of primary care services under a fixed monthly fee. In essence, patients have access to primary care for a flat monthly fee. Why does it work for patients? Because of increased and faster access to their doctors, which often obviates the need for urgent care visits, or emergency room visits, or convoluted and time-consuming visits with a physician in a fee for service practice. Clarii Health patients have the opportunity to reach out to their primary care doctor 24/7 in person (office visit), or remotely (phone, text message, app). Patients also enjoy guaranteed same or next day appointments for urgent issues, as well as longer visits with their doctor, so all their concerns and health issues are addressed comprehensively and in a timely manner.
Benefits of Corporate Concierge Health from Clarii Health
Patients at Clarii Health certainly enjoy the benefits of excellent primary care as well as the transparent billing process (flat monthly fee). In order for small employers to enjoy the benefits of Corporate Concierge Health, however, its implementation needs to make sense financially and in terms of benefit, relative to cost. For a small business to cover (in full or in part) the cost of Corporate Concierge Health/primary care for their employees, the price needs to be acceptable and the benefits need to increase the employees’ productivity while making the company more competitive in the marketplace. It is worth noting that Clarii Health’s Corporate Concierge Health plans start at $24.95 monthly per employee. While not inexpensive, the price point is certainly lower than that of primary care at a traditional concierge clinic. In terms of results, a reduction of 50% in missed days at work is common, as well as a dramatic reduction in ER visits, specialist visits and laboratory and radiologic testing. Is this important for a small business? Certainly, the Integrated Benefits Institute (IBI), a national, non-profit research and educational organization concluded decisively. There is abundant literature demonstrating beyond any doubt the competitive advantages of healthier employees in terms of overall cost of the workforce, absenteeism and superior performance on the job. There is even data approximating workforce illness costs in the US to $576B annually. A staggering 40% of this large amount, or $227B to be more precise, is due to lost productivity resulting from absenteeism (employees missing work) or presenteeism (reporting to work while their illness is keeping them from performing well on the job).
Is your business ready to reap the benefits of Corporate Concierge Health?
We don’t think that Corporate Concierge Health impacts all small businesses equally. However, for select small businesses where employee job satisfaction, productivity, and health are paramount, there are probably few – if any – alternatives to this emerging benefit. Lastly, one of the many benefits of Corporate Concierge Health is a higher employee retention, which could allow a small business to keep highly specialized employees (technology, defense, IT) on staff instead of seeing them defect to a larger employer in search of health benefits.