Finding Balance: Is it Time to Rebalance your Healthcare Benefits?

When’s the last time you rebalanced your 401k? Financial planners recommend rebalancing at least once a year to minimize risk, maximize return and make sure you stick to your investment strategy goals.

5 min read
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When’s the last time you rebalanced your 401k? Financial planners recommend rebalancing at least once a year to minimize risk, maximize return and make sure you stick to your investment strategy goals. As the health and benefits space becomes digitized, a healthcare benefits rebalance may be exactly what your team needs this quarter.

Healthcare costs for employers and employees continue to increase at about a 6% annual rate. This increase is directly attributed to prices for healthcare services, while utilization has remained relatively consistent. To counter this trend, employers and engagement platforms continue to increase investment in solutions to rein in healthcare costs, boost morale and productivity and attract the best talent in a highly competitive job market.

Where does digital health fit in?

According to the annual Optum Health Wellness in the Workplace study, employers are embracing digital technology to engage workers in health and wellbeing programs:

  • Since 2016, the proportion of employers using health-related mobile apps rose by 46%
  • Nearly 75% of respondents said digital health apps help increase employee participation 
  • The number of employers reporting that their employee wellness programs include the use of fitness or activity devices increased by nearly 40% since 2016

Digital health fits perfectly into employer strategies where improved digital employee engagement can help lower the cost of care and improve health outcomes. Scalable programs across many different disease classes such as mental health and musculoskeletal conditions are delivering results for employers and employees that are comparable to, exceed, or complement their pharmacological counterparts.

But the technology-enabled healthcare landscape is changing rapidly, and along with it, the vendor landscape, challenging benefits professionals and platforms to keep up.

Embrace a benefits refocus and rebalance this quarter

Just as your 401k or index fund investments are spread across several asset classes, use this quarter to take a step back, refocus and rebalance your portfolio of health benefits and consider digital solutions to boot.

Ask your team and consultants which solutions are performing best, delivering not just the financially restrictive return on investment (ROI) but also value on investment (VOI)? Within specific disease areas, are you employing the right digital health solutions? And which vendors and digital health apps specifically are driving the results relative to your organizational goals.

To help answer these questions and point your team in the right direction, here are some top considerations for rebalancing your organization’s digital health solutions:

Top six digital health rebalancing considerations

  • Engagement & Personalization – Are Your Apps Engaging?
    What is the overall employee digital health engagement rate and how has it changed in the past year? Dive deeper to see which digital solutions are delivering the highest return on engagement. New evidence-based, digital therapeutic solutions are gaining acceptance for their ability to address chronic pain and chronic illness – typically the biggest drivers of cost in any organization. If these are underutilized, it may be time to rebalance.
  • Cost Structure – Per Member or Per Active Member?
    The optimal payment model for digital health and therapeutics products can vary by product, vendor or platform. Numerous payment models are in use and may include enrollment fees, performance-based fees, and annual licensing. However, the most common models are per-member-per-month and per-active-member-per-month. Looking closely at usage patterns by digital solution can give your team critical insight into which payment models are most cost effective and maximize engagement among employees. Rebalancing your digital health payment models to reflect actual usage patterns could be one of the best moves your team could make.
  • Outcomes – Claims Review and Outcomes
    A detailed claims review in coordination with your provider or platform – along with tracking health outcomes – can help your team determine which apps are actually reducing claims and improving outcomes. Are high-cost claims conditions specifically targeted by digital health solutions increasing, decreasing, or remaining stable? Even if claims are not decreasing, stabilizing claims while improving outcomes could be a reason for maintaining current investment levels in a digital health solution.
  • Return on Value – Return on Investment (ROI) vs. Value on Investment (VOI)
    Return on investment is just one measure of a successful digital health solution. VOI goes well beyond ROI, and for good reason. Unlike your 401k, VOI for digital health solutions recognizes what your benefits, HR, or total rewards team likely already knows: that there is great value in “a healthier workforce across multiple lines, including short-term disability, long-term disability, leave of absence, workers’ compensation, absenteeism, presenteeism and overall productivity.”
  • Digital Health Solution Type – Point Solution or Platform?
    Employers today typically choose from two types of offerings: point solutions or platforms. Digital health venture fund Rock Health describes these offerings as: 1. individual services to manage a specific component of an employee’s health need; or 2. platforms that aggregate digital health solutions. Depending on your organization’s size and needs, one or two point solutions addressing high-cost, high-utilization conditions such as musculoskeletal pain or diabetes may be most appropriate. For others, as more point solutions are adopted, rebalancing in favor of a platform delivery may offer significant efficiencies.
  • Understanding Digital Health vs. Digital Therapeutics
    According to the Digital Therapeutics Alliance, digital health means any technology that engages patients for health-related reasons. This broad category covers a wide range of free and low-cost-health general wellness, fitness, and nutrition apps. These are easily accessible and widely available to the public via download from smartphone app stores. You might think of them as penny stocks. Digital therapeutics is a separate category of evidence-based products within the broader digital health landscape, with demonstrated clinical and cost effectiveness. You might think of them as Blue Chip stocks, with higher quality and higher cost.

Digital health offerings and complexity will only increase as vendors and platforms innovate while employers strive to reduce costs and enhance the employee health benefits experience.  So, the next time you hear someone talking about their investment strategy or rebalancing their 401k, think about how this might apply to your benefits team. Now might be the perfect time to focus your attention on achieving the most cost-effective outcomes for employees by rebalancing your digital health benefits.

Does your benefits, HR or total rewards program need to rebalance and take a more proactive approach to maximizing your investment in your human capital? Find out more by booking a demo or call with our team.

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