Scorecard Quarterly Commentary

Dan Gold, PhD & Beth Umland, PhD

The basic assumption behind the HERO Scorecard is that EHM programs based on best practices will produce better outcomes – greater employee participation, improved health risks and better medical plan experience. In the 2010 Scorecard Annual Report, we demonstrated that respondents with higher scores also report better outcomes than respondents with lower scores. Now, with a larger database to work with, we can begin to explore the relationship between specific EHM practices and outcomes.
For this initial analysis, we included only those respondents that measured outcomes. Out of all respondents, 228  had measured the impact of the EHM program on medical plan trend and were confident of the results. Of these, 26% reported that their EHM program has had a substantial impact on medical cost trend (more than the cost of the EHM program) and 32% have seen a slight impact (less than the cost of the EHM program). The rest of the respondents (42%) have not seen an impact on medical cost trend from their EHM program.

EHM programs that bend the trend -- what are they doing right?
Respondents reporting that the EHM program has had an impact on medical cost trend (either significant or slight) had an average score of 129 – 35% higher than the average score of 95 among those whose programs have not yet produced a measurable improvement in medical plan trend. When average scores for each of the six sections of the Scorecard for these two groups are compared, in each case employers reporting improvement in medical cost trend had higher average scores. However, the gaps between scores were of different magnitudes, perhaps suggesting that while each element of an EHM program contributes to overall program outcomes, some have a stronger impact than others. Notably, employers with cost savings had an average sub-score for engagement methods (which includes both employee communication and incentives) that was 50% higher than the average for employers without cost savings.

This makes intuitive sense because cost savings are possible only if the workforce is engaged in the EHM program. One indication of the degree of engagement is the participation rate for the health assessment, which often serves as the gateway to other health management programs. Our analysis found that health assessment participation is tied to the use of best practices, as indicated by the overall HERO best practice score. The average health assessment participation rate among employers with the highest scores (above 160) is more than double that of employers with the lowest scores (70 or below).

Looking at the difference in average participation rates between employers with and without a specific best practice in place may suggest which best practices have a particularly strong impact on employee engagement. Based on this analysis, best practices that seem to be tied to higher participation rates include conducting an employee health needs assessment, active participation by senior leadership in EHM programs, using branded communications, and supportive health benefit design. While relatively few employers currently link EHM goals to annual manager performance metrics, those that do report significantly higher health assessment participation rates.
This same type of “gap analysis” can also be used to identify specific best practices that are linked to improvements in medical cost trend. Here, we find that employers that include spouses in key components of the EHM program are significantly more likely to experience improvement in cost trend (68%) than employers that do not include spouses (37%). The use of branded communications is also linked to better cost outcomes, as is having a formal, written strategic plan for EHM. Not surprisingly, employers that include financial outcomes objectives in the strategic plan are much more likely to report improvement than those without stated objectives.

Employee communication emerges as an important key to EHM success
While most of the questions in the Scorecard are matters of fact – for example, asking employers whether they provide face-to-face lifestyle coaching, or whether employees are given a financial incentive to complete a health assessment – in each of the six sections of the Scorecard employers are asked to rate themselves on a 4-point scale of effectiveness for the program component covered in that section. In this analysis, for each of these self-assessment questions we divided employers into two groups based on their response (very effective/effective versus not very effective/not at all effective). As would be expected, in each case employers reporting that the program component is effective were more likely to say they have experienced cost savings. However, the effect was strongest for employee communication. Among those employers saying that employee communication was effective, 72% reported a positive impact on medical cost trend, compared with just 28% of those saying that employee communication was not effective. In terms of potential impact, employee communication was followed by incentives and then by strategic planning.

Conclusion
While this analysis has highlighted a number of specific EHM features, it is important to keep in mind that in each case other factors not controlled for in the analysis also likely influenced the results. For example, the use of one  best practice may be correlated with the use of others that are also contributing to better outcomes. However, the data support directionally that those organizations using certain specific best practices are more likely to report higher participation rates and improved medical cost trend. In examining their own programs for areas to improve, employers might do well to carefully consider best practices that seem to have the strongest potential impact.