Under cost pressure, companies unite to cut healthcare spending
Health insurance costs have become a nightmare for companies. In most of them, it represents the second largest personnel expense, second only to payroll. In some cases, even more. The mismatch between price increases in general and so-called medical inflation began in the middle of the last decade. But it has become more noticeable since inflation control. Adjustments in health plans are now equivalent to two or three times the IPCA index, according to a survey carried out last year by the Brazilian Human Resources Association (ABRH) and the Alliance for Population Health (Asap). In informal conversations, businesspeople realized that this cost pressure was common to all. Six months ago, ABRH and Asap - the latter representing consultancies specializing in health management - created a forum, which brings together executives every month to exchange experiences. The most successful ones are companies that have included employee health in their management programs. Companies based in Brazil are responsible for two thirds of what is spent on health in the country, according to data from ABRH and Asap.
Prepared by the two organizations, the survey concluded in the second half of 2017 involved 668 companies which together have 1.3 million employees and 3 million beneficiaries, including dependents. A universe equivalent to almost 10% of the total covered by health plans in the country. The majority of respondents to the survey said that the price increases of these plans are equivalent to at least two or three times inflation and some said that they had already paid increases of six or seven times the IPCA. "It's as if the alligator's mouth wouldn't stop opening," says Luiz Edmundo Rosa, director of people development at ABRH Brasil. According to him, the forum brings together 20 large groups at the moment, including Itaú, Petrobras, Johnson & Johnson, Pirelli, Sherwin Williams and Natura. The union to cut costs and include health in the business strategy led to the need to train human resources teams. In partnership with a university whose name remains confidential, a training course in corporate health management will be launched in May. "Before, we talked about the problem to ourselves. But it's no use complaining about price increases and simply delegating the care of employees to the operators. We need to create health intelligence within the company," says the president of Asap, Ana Elisa Siqueira. For Rosa, from ABRH, entrepreneurs run a serious risk of not being able to contain this escalation in costs when they delegate responsibility for managing the company's second biggest expense to a single person. But many have already realized this.
Since October 2016, the pharmaceutical company Biolab has had an internal area created by the human resources and finance departments. In partnership with a consultancy, several measures have been taken. One of them consists of analyzing all requests for medical procedures and exams from its 2,500 employees. At 6am every day, the HR superintendent, Luciana Lourenço, receives a list of requests involving the main specialties, such as orthopedics and cardiology.
In the screening process, doctors who work for the company can be called in to give a second opinion. But, according to Luciana, the success of this type of action depends on the worker's trust in the company. Biolab has partnered with the Industry Social Service (Sesi) to offer tests in mobile clinics, which are parked in the courtyards of the group's factories. It monitors all hospitalizations. The results are gratifying. Luciana accompanied the entire recovery of the son of an employee in Espírito Santo. The boy was orphaned after an accident in which his parents died and he was seriously injured. "In the old model I wouldn't have been able to interfere; I wouldn't have known what had happened until I received the report of the time he spent in the ICU," she says.
Large companies have switched from pre-paid to post-paid plans, where you only pay when you use it. "The risk of making this switch without creating a management program at the same time is like leaving an uninsured car parked on a dark street," says Luciana. With these two actions, Biolab reduced its health insurance costs by 30% in one year. "Today, we pay the equivalent per beneficiary as we did three years ago," says financial director Alexandre Iglesias. "If companies don't take over this management, they will have to bear an unpayable expense."
Entrepreneurs' concern about health insurance costs doesn't just affect Brazil. As reported in yesterday's edition of Valor, three American giants - Amazon, Berkshire Hathway and JP Morgan - have teamed up to create a non-profit company to contain health insurance costs for their almost 1 million employees. With 8,500 employees and 24,000 lives, including dependents, Bosch decided to reduce its health insurance structure when it realized that the "growth of this cost was disproportionate", says Human Resources director Fernando Tourinho. "Nothing over 20% to 22% a year." At Bosch too, health costs represent the second largest personnel expense. Four years ago, the number of operators was reduced from eight to three and the number of plans fell from 27 to seven. But the action Tourinho is most proud of was the creation of an internal committee involving HR managers, internal doctors and employees from other areas. According to the executive, the idea is to do with health what a working group would do if it had to launch a new Bosch product. "If we know how to develop the artificial intelligence of a car, we have an obligation to know how to do the same with the lives of our people," he says. Partnerships with consultancies, Sesi and a review of the factory menu to offer healthier food and reduce the level of salt are also part of the change in the concept of health at Bosch.
This effort has helped to cut costs. But Tourinho won't reveal any figures. According to him, it's more about the quality achieved. The president of the Fleury Group, Carlos Marinelli, advocates integration between operators, health plans and hospitals. "We don't have a silver bullet to solve the problems. This is a complex sector with cross-incentives that are difficult to resolve, especially as it is a highly politicized area," he says. As part of this change in model, the profile of occupational examinations is also beginning to change. The doctors who provide this service opened up and told the Bosch team that in occupational examinations they don't have time to "be doctors". "If a worker tells me he has gastritis, there's no time to examine him," said one of them. To eliminate the questions, the company implemented software that takes the employee's medical records to the doctor before he enters the room. Prevention has been on General Electric's agenda for over eight years now. With the help of consultants, a strong program was implemented to combat smoking, sedentary lifestyles and obesity. With agreements with six operators, the company also switched from pre-paid to post-paid plans. This has changed the habits of 33,000 people across the country, according to GE, which says it is silently watching the transformation in people and their choices.