The list of challenges that businesses face going into 2023 is lengthy. Companies are competing for workers spanning five generations who have big expectations for their pay, benefits, company culture and the environment in which they work. With baby boomers retiring, younger workers are driving those expectations – and bringing a heightened focus on environmental, social and governance (ESG) issues, such as climate change. Then there’s inflation, high interest rates, the residual impact of the pandemic on the supply chain, and the potential for the biggest increase in health care costs we’ve seen in many years.
Companies will need to make tradeoffs as they face these and other challenges. Oliver Wyman (our sister company) has proclaimed 2023 a time to experiment, to try new strategies, and to question long-held assumptions. Mistakes may happen, but failure also is an opportunity to learn and to innovate. Now is the time to review what worked in 2022 and assess what risks could arise this year or the next from macro and micro trends -- such as the proliferation of breakthrough gene and cellular drug therapies that will drive cost volatility.
To help make your program more future-focused, here’s our list “must-do strategies” to start exploring now.
- Develop a plan to optimize benefit spend while supporting healthcare affordability. In this labor market and economic environment, shifting costs should be your last resort. Explore strategies like virtual-first care and other virtual programs that can lower workers’ out-of-pocket costs and make care more accessible and even more equitable. With pharmacy accounting for 20% of total health care spend and rising, holistic strategies for managing medical and pharmacy benefits will be increasingly important, especially clinical management of large claims – an effective way to manage cost without shifting cost.
- All paths lead to value-based care. It is time to get on board. Historically employers have favored broad networks to avoid disruption, but – done right -- value-based care is not a take-away. It is the path forward to provide access to quality providers, drive better outcomes, enhance the member experience and make the best use of your health care dollars.
- Mental health continues to be a primary focus for employers, and we are seeing their efforts starting to pay off – our claims analyses show a substantial uptick in people getting care, especially via tele-behavioral health. As you work to expand access, don’t forget about substance abuse. The use of unhealthy coping strategies to combat stress, burnout and worry are evident in higher utilization of supports for substance use disorder, but provider quality is crucial and can be uneven.
- Fill in the gaps. The more benefits offered, the higher employee satisfaction levels are. Everyone expects benefits to address their specific wants/needs – and everyone is special! This doesn’t mean you have to spend more. Focus on making benefits more inclusive and expanding your voluntary benefit offerings.
- Flexibility is key. It’s time to rethink both time-off programs and work flexibility – because they are more important than ever to your employees. Review leave policies (unpaid and paid) for opportunities to improve competitiveness and ensure compliance. Consider unlimited PTO, which is becoming more common. And, spoiler alert, the 4-day work week may become a “thing”.
- Lean in on your benefits strategy to support the broader ESG and DEI goals of your organization. Your current and future employees are paying attention – your actions around ESG and DEI really matter to them. Addressing climate change and its impact on health and well-being should be on your list of future-focused strategies.
In the coming weeks we will run in-depth posts on each of these six strategies, so stay tuned. In the meantime, there are two things you can do to get started:
- If you’re not sure what your employees want, ask them. Understanding your people has become a business imperative. Don’t assume you know what they want. Find out what benefits they value and what they are willing to give up. In this environment of inflation and high interest rates, employers can’t afford to spend money on benefits not delivering value to employees.
- Find out if you are wasting money on programs that don’t work. Be prepared for the reality of cost increases and realize you’ll need to be creative in managing your budget. Evaluating current program performance is a great place to start. Question everything to be sure value is being delivered to employees effectively and efficiently. You may have the right programs but need better navigation and communication to optimize their value.
So here’s to 2023, a new year to experiment, try new strategies, and question long-held assumptions. As you start planning for 2024, think ahead a few years. Some strategies won’t pay off in the short term but have the potential to deliver important results in the future -- if you never implement you never get to the gain. Let’s get started.