Employee health benefits are among the most valued perks companies offer, but they are also the most expensive. Healthcare costs continue to rise, with premiums for family coverage increasing nearly 20 percent in just the last five years alone. As costs steadily increase, employee health benefits have become a more substantial part of a company’s bottom line, and as with any other major business expense, measuring results is critical.
The challenge is that the value of healthcare investments is notoriously difficult to measure. Beyond financial return, a health benefits program is expected to bring value beyond the bottom line. But what are the right metrics employers should use to assess the total value they are getting from their investment?
From our conversations with health benefits leaders across industries, we’ve learned that there are four essential parts of the value equation when considering a health benefits platform:
- Medical Cost Savings – Is there a financial return on our benefits investments
- Program Utilization – Are employees using the benefit programs at their disposal
- Administrative Enablement – Are benefits leaders enabled to successfully deliver their health benefits programs?
- Employee Experience – Do employees value their health benefits and, in turn, value their company?
Castlight’s ROI Guarantee
Measuring value is challenging. That’s why Castlight last month introduced a new return on investment (ROI) guarantee program available to employers that purchase our Care Guidance and Complete platform solutions.
The new guarantee is based on an analysis we conducted over the past year with Verscend, an industry-leading healthcare analytics company, to study savings using employee claims data.
We found that in 2017 in aggregate, Castlight saved our Care Guidance customers $286 million, which equates to a 2.5X aggregate ROI across the customers studied. While ROI varies across customers based on a number of factors, customers have seen on average a 1.25 percent to 1.75 percent reduction in medical cost trend.
Analysis in Human Resources Executive
Long time health benefits expert and Human Resources Executive columnist Carol Harnett evaluated our new program in her recent column: Calculating an ROI From Healthcare. Carol describes the “fuzzy math” that some vendors have used in the past to calculate ROI and the healthy amount of skepticism benefits leaders should employ when trying to make this calculation. She also takes an in-depth look at Castlight’s ROI with our customer Steel Dynamics.
Ultimately, she writes: “I’ll cut to the end of the story to avoid the suspense: I believe Castlight is using an appropriate process to calculate ROI.”
We’re proud of the ROI we offer customers, but ROI is just one part of the healthcare value equation. When health benefits leaders know ROI is guaranteed, they can turn to other value drivers — engagement, health outcomes, and satisfaction — to evaluate health benefits solutions.
We agree with Carol, who puts it best: “When ROI is difficult to measure, choose benefits based upon a balance of doing the right thing for employees and the company culture.”