Healthcare Research 2010: Employee healthcare costs and calculating return on investment

Employers are keen to get value for money from healthcare benefits, but more than one-third do not know how much they spend on these perks, says Nicola Sullivan

Cost is still a top priority for employers when it comes to healthcare benefits and most organisations opt to use an intermediary or broker to ensure they get the best deal.

This year, the use of intermediaries and brokers appears to be on the increase, with 64% of respondents choosing to use one. Although 82% of employers which use brokers use one for advice and to buy healthcare products, only 22% use them simply to procure health insurance products.

Private sector employers are the most likely to use intermediaries and brokers, with 75% of these respondents saying they do so, compared with 30% of public sector organisations. The use of intermediaries and brokers is particularly popular in the manufacturing, financial services and professional services (such as law firms) sectors, with more than 70% of employers in these industries using them.

Given the huge amount of pressure the recession has put on many employers’ benefits budgets, it is surprising that the percentage of respondents that say they do not know how much they spend on healthcare perks has continued to rise. Just over one-third (36%) of respondents to this year’s survey say they have no idea how much is spent on health-related benefits in their organisation, compared with 28% in 2009 and 22% in 2007.

But employers continue to have a poor record when it comes to calculating the return on investment for healthcare benefits, with only 7% looking at the business benefits they get for their money. However, a quarter of organisations are showing willing by saying they plan to calculate return on investment in the future, so it will be interesting to see if this happens. These figures have remained fairly static for the last couple of years.


Measuring return on investment is not an exact science because there could be a number of other factors, besides workplace healthcare benefits, that impact on matters such as staff engagement, absence and productivity levels.

These include relationships with colleagues and managers, the working environment and the nature of an employee’s work.

Employers that do calculate the return on investment focus on monitoring sickness absence levels above all else.

Employee engagement and usage of employee assistance programmes and other benefits come in joint second place, looked at by 67% of employers. Levels of claims on health insurance come in fourth, followed by the impact on retention.

As employers become increasingly targeted in their approach to benefits provision, they are looking more at productivity, which is measured by 52% of employers compared with 22% in 2009. A third of respondents now also look at the cost of benefits versus the risk of not having insurance cover.

The overall proportion of employers that feel staff understand the value of healthcare benefits remains consistently low. Small employers (with fewer than 100 staff) set a good example, with 61% saying they feel staff do understand the value of health benefits.


Back to Employee Benefits/HSF Health Plan Healthcare Research 2010