Employee assistance programmes (EAPs) first appeared in the US during Prohibition, where they were introduced to wean employees off the demon drink. The days of Al Capone may be long gone, but EAPs continue to thrive on both sides of the Atlantic.
There are currently around 1,200 full EAP schemes covering 2.3 million people – 10% of the workforce – and a further 300 helplines covering 1.8 million people by offering advice on work-related issues as well as personal problems.
The UK Employee Assistance Professionals Association (EAPA) has more than a dozen member companies, while major health insurers Bupa and WPA offer clients sub-contracted services.
EAPA’s immediate past chairman, David Robinson, says the need for EAPs in the workplace is growing as human resources departments focus on resource management rather than staff welfare.
Staff absence totalled 192 million days and cost British industry £10.7bn in 2000, according to the Confederation of British Industry. Some estimate that half of these could be down to stress. “We believe the effect on absenteeism and staff turnover can be quite dramatic, although it can be very difficult to measure,” says Robinson.
The average annual cost for a company with between 100 and 200 staff is £30 to £35 per head. This falls to around £20 for between 1,000 and 2,000 staff and as little as £10 for companies with 25,000 employees and above. “Companies in the US report a major reduction on their health costs, typically between £20 to £50 per employee, which is a great bottom-line incentive. Sadly, figures have yet to emerge for the UK,” Robinson comments.
Providers typically set a minimum programme size, ranging from between 30 to 300 employees. “Service-based industries such as finance, media, consultancy and distribution companies tend to be enthusiastic, as are telecoms and computer companies.
“Traditional manufacturers such as engineering companies are less keen, as are major retailers, who often employ large numbers of staff on a part-time or seasonal basis,” he explains.
Tim Cuthell, corporate support services manager with Axa PPP healthcare Employee Support, says EAPs should be sold as an employer rather than employee benefit. “Employers are happy to spend the money when they see it minimises staff absence and boosts performance by preventing personal problems from spilling into the workplace. This also helps the staff, so it really is win-win,” he says.
Most providers offer face-to-face professional counselling, and may also offer occupational health, stress management, psychology and psychiatry. “IFAs don’t realise the full management potential of EAPs. Our chartered psychologists can help train and support managers dealing with members of staff facing personal problems such as alcoholism or bereavement,” Cuthell points out.
EAPs could even help contain spiralling employers’ liability insurance premiums. The Federation of Small Businesses reports an average 200% increase in premiums this year, as claims against employers continue to soar. Some businesses have faced 500% increases.
“Anecdotal evidence suggests insurers will reduce premiums to companies with an EAP, but the real benefit should be seen as improved performance rather than fewer staff suing their employer,” Cuthell says.
Employer interest was boosted by an appeal court ruling in February 2002 on stress-related illness at work. Judges ruled that “any employer who offers a confidential counselling advice service with access to treatment is unlikely to be found in breach of duty”.
However, Mike Shaw, managing director of EAPs at The Validium Group, says although a programme could limit future claims, companies should not set up a programme solely for that reason.
Validium’s customers range from an investment company with 40 employees to a high street bank with 80,000 staff. “Every company covers all its staff, rather than linking benefits to status, because everybody can suffer from stress, particularly workers at the bottom of the scale who have less power to manage their own life.”
He believes a well-run EAP should pay for itself in reduced absenteeism and increased productivity. “The biggest challenge for providers is measuring the benefit to the employer. Crack that nut and you could make selling EAPs a very simple process.”
Shaw describes setting up a new programme as “more of a consultative process than a sale”, with schemes set up as bespoke packages rather than off the shelf.
“There is a lot of emphasis on management training, putting the EAP into procedures manuals and employees’ handbooks, to help managers advise and refer staff members who are having difficulties to get help.”
Only a handful of intermediaries have taken the plunge. Those experienced in selling private medical insurance (PMI) may be surprised to learn that commission from an EAP provider is the exception rather than the norm.
“We do pay an introductory fee but no ongoing commission, as this would push up prices. The most successful brokers have charged a fee for choosing a provider, rather than expecting us to subsidise their income,” Shaw says.
Axa PPP healthcare also pays introductory commission, says Cuthell, and, in a few rare cases, ongoing commission. “We have traditionally worked with healthcare intermediaries, but many EAP providers sometimes see them as a threat and are uncomfortable with paying commission,” he explains. “Some felt that a number of intermediaries simply sold on cost without examining how the service was provided and could be tailored to the individual organisation.
“Some are wary of intermediaries. They don’t want to operate along traditional commission lines, and don’t like intermediaries playing different providers against each other when arranging cover, as this drives down prices and damages quality and delivery. In most cases, the intermediary must negotiate payment from the business instead.”
Some larger intermediaries have sold more lucrative PMI and tossed EAPs into the package. At an average £20-£25 per employee, it can be just 5% or 10% of the cost of comprehensive medical insurance.
“Giving away the product compromises and downgrades the service, and creates unfair pricing advantage over specialist EAP providers. The cost of delivering a good scheme is quite high, and we don’t want to see quality undermined,” Cuthell says.
If providers are sometimes suspicious of intermediaries, the insult is sometimes returned. One specialist healthcare intermediary, who asked not to be named, describes EAPs as “paternalistic, huggy and trendy”.
“I have one or two corporate clients who use these programmes, but I don’t get involved. They are not lucrative enough. Insurers are pushing them hard, but I prefer to look at cash plans, which are good value and offer a range of benefits as well as telephone helplines,” he argues. “Most of my clients feel EAPs are bringing issues into the workplace that are best left outside. Encouraging people to think too much about their problems can be counter-productive.”
Specialist healthcare intermediary George Connelly of Health Care Matters works primarily at the individual and smaller end of the corporate market and has little interest in EAPs. “These are essentially for larger corporates. I wouldn’t imagine smaller companies would get involved,” he says.
Jan Lawson, partner at the Private Health Partnership, has happily sold EAPs for several years and says they “work well as a niche product, although nobody is going to get rich quick”.
“Our clients have generally been very satisfied. They appreciate the seamless link between telephone counselling and face-to-face psychiatric help, and believe it can help reduce the likelihood of a tribunal claim for stress. Larger corporates find it helps them identify and tackle problems in large, diversified workforces,” says Lawson.
Companies paying claims-related PMI premiums sometimes find EAPs can keep costs down by resolving difficulties and nipping problems in the bud. “At £25 per employee, it is quite a cheap way of showing concern for your staff, and being seen to show concern,” she says.
Lack of commission means the product works best when sold to fee-paying clients. “It is useful for making sure you are covering all your client’s employee healthcare needs, not just those based around insurance.”
Selecting a provider
When choosing a provider, Lawson recommends choosing a company with a strong infrastructure and back-up facilities, and its own pool of regularly-vetted counsellors, to ensure high and uniform service standards.
Marco Bannerman, head of corporate sales at Bupa, says its EAP offering is an increasingly important part of its healthcare proposition. “We are making a strategic shift away from just providing PMI to offering more preventive services, tackling stress and reasons for sickness absence, and finding solutions.”
In January, Bupa Wellbeing, run by EAP provider First Assist Group, will be extended to small and medium-sized businesses. “A small company scheme may have just 20 members, yet the company might employ 500 people. The EAP can cover all of them, plus spouses, children or anybody living in their household,” says Bannerman.
Like many providers, Bupa doesn’t pay commission, so brokers must seek payment from the employer. “It adds value to their corporate offering and helps to build a strong client relationship,” he adds.
Insurer WPA offers an EAP to its large corporate clients, a basic service with telephone-based legal, medical and stress counselling advice.
After a surge in interest following the September 11 terrorist attacks, when companies with US links started putting in place counselling services, and a further bubble between February and June following the appeal court ruling, demand for EAPs has slackened.
Businesses are currently more likely to cut costs and freeze headcounts, but EAP providers are confident that the market will pick up soon. In most cases, it seems, intermediaries who want to get involved must be prepared to seek payment from their business customer rather than the provider.
To contact the EAPA, call 0800 783 7616; Email firstname.lastname@example.org or go to www.eapa.org.uk. z