Many large companies are now looking beyond merely providing PMI for their employees. The buzz word now is integrated care, a concept which developed in the US, and is set to have increasing influence in this country.
Lawrence Somerset, a London-based management consultancy specialising in healthcare, has looking at the implications of integrated care for the UK.
Director Susan Sabey says it covers a number of areas. These include taking a sophisticated view of absenteeism costs. This could measure the costs of hiring temporary staff, or suffering lost revenues, against providing private care to an employee who would otherwise have to wait months for NHS treatment.
Integrated care involves taking a co-ordinated approach to buying various insurance covers which could include employers’ liability, income protection and personal accident. It also means making sure that there is active management of claims and a strong emphasis on preventative medical schemes.
A number of blue-chip companies are now investigating integrated care as it is primarily of interest to those who with a minimum of 1,000 employees. But, as this advanced approach becomes more commonplace, aspects of integrated care could be transferred to smaller firms.
Sabey points out that it is already becoming routine for some companies to look well beyond private medical insurance into care services.
For example, a small but successful advertising agency might consider stress counselling, an employee assistance programme and a gym where professional advice on nutrition and exercise is available. But who is best placed to advise on this? If integrated care does take off, it could create a gulf in the health broking market.
On the one side would be the large employee benefit specialists, such as AON, Sedgwick Noble Lowndes and Gissings, who are able to advise on integrated care, on the other, the smaller intermediaries who only specialise in corporate PMI.
While both parties sell health insurance to companies, this is only a part of the employee benefits specialist’s role.
John Dean, AON’s head of national accounts, says his firm will look at the whole range of services beyond PMI. These might include monitoring sickness and absence, income protection cover, employers’ liability issues and occupational health costs, such as screening and personal accident.
He explains that a key benefit for clients is to have one central point of contact to deal with all these areas, one which could also co-ordinate healthcare throughout overseas offices.
Dean, who is a staunch advocate of regulation in the health broking sector, says small intermediaries do not have the expertise to offer these services.
“It is wrong just to look at PMI in isolation, it is a perk rather than the total package,” he says. Dean believes that taking a holistic view of a company, and the reasons it is considering PMI in the first place, can be far more beneficial. “The key cost for a company is absenteeism. If this is reduced there can be substantial cost savings.”
He stresses this does not necessarily mean giving the staff a hard time. “We will find out why staff are taking time off sick. It could be because they only get 15 days holiday a year. It could be because they are doing too many jobs and can’t cope with the pressure.”
Once the reasons for absenteeism have been established, a consultant will then make recommendations. “Whereas a PMI broker might boast that they have managed to save a client 10% by removing psychiatric cover from policies, we might advise this is kept on to minimise stress;’ says Dean.
As a further example, he says a client might be advised to bring a private dentist onto the workplace at regular intervals both as a benefit and a cost saving. This would remove the incidence of staff taking time off for dental care, and, simultaneously, cut down on that handy excuse for taking time off.
Implementing an effective long term integrated healthcare programme can bring numerous benefits, comments Lawrence Somerset’s Sabey.
She says: “The emphasis is not so much on simple cost-saving devices but on looking more deeply at the real costs and benefits. This means taking in a much broader definition of health – and understanding that the structure of a scheme can itself be a source of savings.”
A further development in the large corporate market is self insurance. Some 8% of the corporate market is currently self insured and this figure is rising.
She says that health trusts are increasingly being recognised as a way to structure medical expense provision: “These can provide great flexibility in the types of benefits provided and to avoid insurance premium tax which is expected to rise as it harmonises with other European countries.”
But advising on this is a complex area and maybe beyond the grasp of some intermediaries.
Sedgwick Noble Lowndes is one of the largest specialists in this area. Managing director Mick Jones says: “We can advise clients on tax efficient trusts and see this as a growing area.”
Sedgwick Noble Lowndes is a strong believer in integrated healthcare, but Jones says the market is being held back by “short-termism’.
“It is vital companies apply risk management concepts to their healthcare strategies if to avoid future losses,” he asserts.
The move towards integrated healthcare is favoured by the large PMI providers. Aidan Taylor, corporate marketing manager of Guardian Health, which recently took over PPP, says the aim is to offer large clients a “seamless service”.
He says his company is working towards being able to offer clients a range of services beyond health insurance. Helplines, he says, are an example of this, and he adds that the aim will be to offer major clients a dedicated team to manage all healthcare needs.
“Traditionally insurers have always thought about the product sale, but we must do more than that now. We must provide what our customers want.” But since Guardian wants to work with small intermediaries as well as large specialists, Taylor does not believe in criticising the smaller player. “We believe more brokers should be selling healthcover,” he argues.
Of course using a large employee benefits consultant will cost the client more in the short term. AON’s Dean concedes that his firm’s fees are probably higher than those charged by a PMI broker. But, he says, when looked at over a period of time, it is highly likely costs will be reduced as a result of integrated healthcare advice.
If the concept of integrated care takes off, small intermediaries will be reluctant to take a back seat. Glen Smith is an intermediary at small healthcare specialist, Healthcare Partners, in Bushey, Hertfordshire. He has a number of corporate clients, and says all are highly satisfied with the service he provides.
“In my view, companies who use fee-based brokers will end up paying more and may not get better service. I work hard on my clients’ behalf to get them the best deal, I am not just adding to their costs.” He points out that with many services such as helplines being provided by outside companies, it is still possible for a small intermediary to offer a co-ordinated approach, using the expertise of external providers.
Many intermediaries may feel integrated healthcare is fine in concept but is likely only to be used by multinational firms. However, they would be advised to think again. AON’s Dean believes the principles of integrated healthcare can be applied by companies with as few as 150 staff. Sedgwick Noble Lowndes says it would also be happy to work with smaller companies.
The message for smaller intermediaries it would seem, is to find out as much as possible about their clients’ needs, and then look to provide a service which does not merely look at PMI cover.
As Sabey of Lawrence Somerset summarises: “The greater the understanding of the different requirements of various types of corporates in terms of insurance, service and care, the better the chance of forming a successful market strategy.”