Keenan HealthCare recently published its 2019 HealthCare Benefits Strategy Survey compiling industry-specific benefit information from sixty-eight organizations – representing 218 California-based health care facilities. To facilitate year-to-year comparisons, we employed consistent methodologies and metrics from the survey’s previous years. For 2019, we expanded our results when comparing benefit plan designs to include the most popular plan of each type. Additionally, we continue our efforts to establish “better practices” for health care organizations by identifying strategies and tools used by those organizations with the best results.
Highlights of the survey results are shown below:
Medical Benefits
California hospitals, on average, experienced a moderate increase in their medical benefits cost. For hospitals participating in both the 2018 and 2019 surveys, the average increase in medical cost per employee per year was 3%. The annual medical benefit cost per covered employee in 2019 is $14,487. Health care organizations are bearing most of the cost burden; half are offering at least one medical plan at no cost to the employee. California hospitals pay, on average, 85% of the annual cost of employee only coverage for their most popular plans. A majority of hospitals (75%) offer at least one self-funded plan, and 51% provide entirely self-funded medical plans.
Approximately 21% of hospitals expect their benefit program costs will continue to grow faster than overall employee compensation. This is generally driven by increasing cost associated with health and welfare benefits.
Participating organizations reported their top benefit program objectives as:
- Managing cost
- Improving workforce health
- Increasing use of their own facilities
- Competing for talent
Organizations said they were using a variety of tactics for managing benefit costs, including:
- Managing eligibility
- Increasing employee contributions to cover dependents
- Targeting prescription costs with multi-tier benefit structures, clinical intervention programs and purchasing initiatives
- Channeling care to their own facilities and affiliated physicians, or narrow networks selecting providers with lower costs
Dental Benefits
The average dental benefit cost for 2019 remained relatively flat. Preferred Provider Organization (PPO) programs are the most popular across California: 61% of members are enrolled in a PPO. Dental Health Maintenance Organization (DHMO) program enrollment is significant only in Southern California and San Diego, while traditional dental plan designs are more popular in Northern and Central California.
Time Off Benefits
Most health care organizations in the survey (70%) have an integrated Paid Time Off (PTO) program, which incorporates vacation, holiday and sick leave.
Life Benefits
Basic life insurance coverage is typically based on 1x annual salary for both management and non-management employees.
Retirement
All organizations offer their employees some form of retirement savings/income vehicle. Less than one-quarter (22%) offer a defined benefit or cash balance program. The remaining organizations utilize a defined contribution or deferred compensation approach.
Regional Differences
As a diverse state, with large city and suburban populations and more isolated rural communities, health care benefit programs and strategies vary significantly by region within California. There are major differences in medical cost, employee contributions, plan design, eligibility, financing, and delivery depending on regional labor market forces, the influence of organized labor, organizational mission and philosophies and other factors.
For more information about the Keenan HealthCare Benefit Strategy Survey, click here or contact your Keenan HealthCare representative.
About Bill Urick
Bill Urick, is the HealthCare Benefits Practice Leader and Senior Vice President of the HealthCare Employee Benefits Division. He works directly with Keenan’s clients to develop employee benefit program strategies, evaluate alternative financing and delivery system options, and to assist in implementation and performance management.