Best-in-class large and mid-sized employers are able to moreeffectively control their health care costs and better manage HR functions, as measured by lowerturnover and higher employee satisfaction, according to twoGallagher Best-in-Class Benchmarking Analysis reports, based on employerresponses to Gallagher’s 2017 Benefits Strategy & BenchmarkingSurvey.

Best-in-class large employers with 1,000 or more full-timeemployees achieved at least one of the following metrics forpremium cost increases in the past three years: 3.9 percent or lessfor the last three years; 0.9 percent or less for two of thoseyears; or 0.9 percent or less for one year plus 3.9 percent or lessfor another year.

One way they achieve this is by spending less -- 62 percentbest-in-class large employers spend under $10,000 on employer-paidbenefits per eligible employee, compared to 42 percent ofother large employers. To make sure eligible workers are enrolledin the appropriate plans, 68 percent of the best-in-class performaudits, compared to 47 percent of their peers. In addition, theyhave a greater tendency to self-administer maternity leave (83percent vs. 71 percent).

“While employers may contain costs by using these spendingapproaches, they risk possible consequences from shifting morefinancial responsibility to employees -- including impactingemployee health and talent recruiting and retention,” the authorswrite. “For this reason, best-in-class employers for human resourcemanagement and the best of the best tend to avoid thesetactics.”

The “best-of-the best” – those who excell in both categories –are more inclined than other large employees to consider compensation and benefits as investments inmaximizing workforce performance to achieve business outcomes (50percent vs. 26 percent) — instead of simply the costs of doingbusiness (4 percent vs. 17 percent).

More than half (54 percent) of the best-of-the-best executemulti-year benefit strategies, compared 30 percent of other largeemployers, and are more likely to integrate health and disabilitymanagement programs (54 percent vs. 32 percent). In addition, 42percent of the best-of-the-best

carve out their pharmacy benefit from their health plan in aneffort to better manage costs, compared to 20 percent of theirpeers.

“Together, these practices support a more proactive, aligned andcomprehensive approach to total compensation,” the authorswrite.

Gallagher also compared the metrics for mid-sized employers with100 to 999 full-time employees. Best-in-class mid-sized employersare less likely to increase employee contributions to health planpremiums (43 percent vs. 57 percent), or add to employee expensesthrough benefit plan design changes such as higher deductibles,copays or coinsurance (41 percent vs. 55 percent). And fewer areconsidering defined contribution as a cost-control method (7percent vs. 14 percent).

Options like self-insured medical plans are more common amongbest-in-class employers (62 percent vs. 41 percent).

“In return for claims that pose a higher financial risk underthis funding arrangement, they gain lower health plan fees, greatercontrol over healthcare costs and -- if costs are managed well --possible savings,” the authors write.

The best-in-class mid-sized employers more frequently use healthprograms and services to control costs than their peers do —including wellness (63 percent vs. 54 percent) and diseasemanagement (45 percent vs. 31 percent). They also extensivelyintegrate their health and disability management programs (26percent vs. 18 percent).

“This more sophisticated, proactive approach focuses onmaintaining employee health and wellbeing,” the authors write. “Thegoal is to give management the tools they need to keep employeesactively at work, in spite of injuries or illnesses.”

The best-in-class mid-sized employers for human resourcemanagement have a greater financial stake in their benefits, with56 percent reporting a higher average cost of employer-paidbenefits per eligible employee -- $10,000 or more -- compared to 46percent for their peers. Their annual health plan deductibles tendto be lower -- they’re less likely to offer in-network deductiblesabove $2,000 for individual coverage (16 percent vs. 27 percent) orabove $4,500 for family coverage (18 percent vs. 28 percent).

Still, they report a better balance of wages and bonusescompared to benefits spending (83 percent vs. 75 percent). Apossible contributor may be their higher rates of multi-year laborcost modeling used for compensation planning (24 percent vs. 19percent)

“This ability to proactively plan instead of reactively respondhelps them apply a more strategic and integrated approach tobenefits management and cost control,” the authors write.