A group of best-performing companies has achieved a $2,251 per employee per year (PEPY) healthcare cost advantage over the national average in 2017 ($9,950 compared with $12,201), according to global advisory, broking, and solutions company Willis Towers Watson’s 22nd annual Best Practices in Health Care Employer Survey.

Willis Towers Watson defines best performers based on their abilities to manage cost trends and efficiency, e.g., a company of 10,000 employees could realize savings of more than $22 million annually by implementing a broad set of effective strategies and practices.

Willis Towers Watson classifies high-cost companies as those employers with spend above, and efficiency below, the national average. The financial advantage of best performers over high-cost companies is $3,583 PEPY ($9,950 compared with $13,533).

“Best performers understand there is no single strategy for managing costs and improving the well-being of their workforce,” said Julie Stone, a national health care practice leader at Willis Towers Watson—said in a press release. “They evaluate all aspects of their health and well-being benefit strategies and activities, and implement innovative, integrated practices to improve them.”

One area where best performers excel is with subsidization and plan design:

“Best performers lead the way in developing health programs that keep costs down by continuously evolving the financial and plan aspects of health benefits,” said Erin Tatar, a national health management practice leader at Willis Towers Watson. “These companies attain their advantage through effective value-based designs, superior network and provider strategies, and activities that engage employees in healthier lifestyles.”

According to the survey, best performers do more to encourage and improve workforce well-being, using a variety of approaches:

Best performers are far ahead of organizations with higher healthcare costs when it comes to employee engagement in well-being, especially through company social networks. The survey showed that close to half of best performers (47%) engage employees through their company’s social networks (key influencers, testimonials, and viral messaging), compared with 21% of high-cost companies.

Forty-two percent of best performers use social recognition to boost engagement in health and well-being compared with 23% of high-cost companies, while 28% offer wearable devices for tracking physical activity versus 12% of high-cost companies.

Best performers are also ahead of peers in adopting new healthcare delivery solutions:

In addition, 57% of best performers formally monitor vendor performance through performance guarantees, compared with 34% of high-cost companies. The same percentage have a partnership with a third-party data warehouse, compared with 25% of high-cost companies.

The gap narrows between best performers’ pharmacy practices and those of organizations with higher healthcare costs, which may indicate that all employers are hyper-focused on rising pharmacy costs, especially for specialty medications.

Best performers still lead the pack in adopting strategies to manage pharmacy cost. More than half (57%) evaluate pharmacy benefit contract terms, compared with 49% of high-cost companies. And more than a quarter (28%) evaluate their plan design to promote the use of specialty biosimilars, when available, compared with only 18% of high-cost companies.

“Best-performing employers take aggressive action in areas that can have the greatest impact in their employees’ health care,” said Jeff Levin-Scherz, M.D., North American coleader, Health Management practice at Willis Towers Watson. “They put employees at the center of their health care strategy and benefit experience, and develop new ways to engage employees in improving their well-being. Our research shows this diligence can create a healthy, high-performance workforce and a competitive advantage for the company.”

About Best Performers

The research identified 47 companies that qualify as best performers based on their abilities to manage cost trends and efficiency. Best-performing companies (47 survey respondents) exhibited the following two characteristics:

• Cost trend: 2-year average trend after plan changes (2015/2016 and 2016/2017) that is below the national norm (4.5% in 2017) and 2-year average trend before plan changes (2015/2016 and 2016/2017) that is below the national norm (6.0% in 2017)
• Efficiency: Efficiency in 2017 that is 5% or greater — roughly 60th percentile and above

Willis Towers Watson selected best performers from the 395 companies that completed the 2017 Willis Towers Watson Financial Benchmark Survey and the 2017 Willis Towers Watson Best Practices in Health Care Employer Survey with sufficient healthcare cost trend and efficiency information. For more information about best performers, download the full survey report.

About the Survey

The 22nd annual Willis Towers Watson Best Practices in Health Care Employer Survey was completed by 698 U.S. employers between June and July 2017 and reflects respondents’ 2017 health program decisions and strategies. Respondents collectively employ 11.9 million employees and operate in all major industry sectors. Results provided are based on 555 employers with at least 1,000 employees.