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Worker Productivity as the Next Frontier

in Benefits Cost Management
A Companion Report to Prudential’s Fifth Annual Study
of Employee Benefits: Today & Beyond

0189062-00001-00
Worker Productivity as the Next Frontier in Benefits Cost Management
A Companion Report to Prudential’s Fifth Annual Study of Employee Benefits: Today & Beyond

This companion report to the Fifth Annual Study of Employee Benefits:

Today & Beyond from The Prudential Insurance Company of America (Prudential)
provides quick access to the most salient findings as related to one of main
report’s key themes: “Worker Productivity as the Next Frontier in Benefits
Cost Management.” This theme focuses on the increased interest across the
industry to place greater emphasis on improving employee productivity as a
long-term business strategy in an effort to manage and reduce health care costs.

Improving worker productivity is becoming a higher priority for many employers.

• As U.S. health care costs have increased during the past decade, plan sponsors have
made it a top priority to address their exposure to rising costs associated with their
health-related benefits. Currently, 7 in 10 plan sponsors say controlling health care costs
is “highly important” to them. Moreover, three of plan sponsors’ top five benefits
objectives in 2010 are cost-related.

• Currently, about half of plan sponsors surveyed (49%) cite increasing worker productivity
as a “highly important” benefits objective. Productivity-focused strategies include
wellness initiatives, absence management, and benefits integration, among others.

• Brokers/consultants are on the same page. Roughly 40% agree that expanding the
use of wellness/preventative/work-life balance initiatives is “highly important” to their
clients. Half of those surveyed say they are recommending to some extent that their
clients provide accommodations to assist employees in returning to work (50%)
or undertake some form of benefits integration (54%).

TOP FIVE BENEFITS OBJECTIVES

PERCENTAGE OF PLAN SPONSORS AND BROKERS/CONSULTANTS RATING EACH ITEM “HIGHLY IMPORTANT”

Plan Sponsors Brokers/Consultants

Cost-Related Controlling health care related costs 70% 77%
Retaining employees 58% 53%
Cost-Related Reducing the cost of benefits administration 54% 64%
Cost-Related Increasing employee productivity 49% 53%
Attracting employees 46% 46%

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Benefits integration efforts show promise in improving productivity and reducing
health care costs.
• More than half of plan sponsors (57%) who are involved in benefits integration activity say
they currently have measurable cost-savings goals in place. Their top goals are to help
lower their health care related costs and to increase the productivity of their workforce.

TOP GOALS FOR BENEFITS INTEGRATION BY LEVEL OF INTEGRATION

PERCENTAGE OF PLAN SPONSORS MENTIONING EACH ITEM AMONG THEIR TOP 3 GOALS

All Plan Sponsors

Lower health care costs 59%
Improve productivity 43%
Improve workforce health 41%
Reduce benefit administrative costs 39%
Lower cost of disability benefits 38%
Reduce number of absences 33%
Reduce duration of absences 30%
Improve absence tracking/reporting 16%

Source: Preliminary results from Prudential’s The 2010 Market for Integrated Health Care and Disability Management Study.

• Just over half (52%) of plan sponsors currently involved in benefits integration indicate
that they have been successful in achieving their desired cost savings goals; 26% say
their program has been “highly successful.” More specifically, among those that identify
their top goals as “lowering health care costs” or “improving productivity,” most say
that their integration efforts have produced at least “modest improvement.”

SUCCESS OF BENEFITS INTEGRATION IN ACHIEVING GOALS

PERCENTAGE OF PLAN SPONSORS INDICATING “MODEST” TO “SIGNIFICANT” SUCCESS ON EACH GOAL

33% 48%
27% 32%
21% 27%
22% 19%

58% 57%
52% 52% 54% 54% 52%

41%

Lower Improve Improve Reduce Lower Cost Reduce Reduce Improve

Health Care Productivity Workforce Benefit Admin. of Disability Number of Duration of Absence
Costs Health Costs Benefits Absences Absences Tracking/
Reporting

Modest Improvement Significant Improvement

Source: Preliminary results from Prudential’s The 2010 Market for Integrated Health Care and Disability Management Study.
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 Return-to-work initiatives have been successful in generating cost savings as
well as productivity gains.
• In 2007, return-to-work initiatives were the most common cost-management strategies
among plan sponsors surveyed with 39% indicating involvement to some extent. Today,
45% report utilizing return-to-work initiatives with 63% having implemented their program
at least three years ago (42% launched more than five years ago).

RETURN-TO-WORK STRATEGIES—CURRENT USAGE AND WHEN STARTED

PERCENTAGE OF PLAN SPONSORS WHO ARE DOING TO SOME EXTENT

Currently Started 3–5 Started More Than

Doing Years Ago 5 Years Ago
Providing accommodations to assist employees in returning
to work following an absence, serious injury, or disability 45% 21% 42%

• Most firms (66%) providing accommodations to assist employees in returning to work

say this strategy has been successful at achieving their desired cost savings; 38% say
it has been “highly successful.”

• Many plan sponsors that are providing return-to-work accommodations (62%) report that
their company is also tracking employee absences as a way of managing the productivity
of their workforce. Among these plan sponsors, nearly three-quarters (73%) say their
absence tracking system has been effective in terms of helping their company to
improve the productivity of its workforce; nearly half say it has been “highly effective.”1

EFFECTIVENESS AND SUCCESS OF RETURN-TO-WORK PROGRAMS

PERCENTAGE OF PLAN SPONSORS WHO ARE DOING TO SOME EXTENT
73%
66%

RTW Program Absence Tracking

Has Been Successful Has Been
At Least Effective

1 Study of Employee Benefits: 2009 & Beyond.

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Data analytics plays a key role in achieving success with benefits integration efforts.
• Most employers involved in benefits integration activities utilize data analytics to
measure the impact of their benefits programs. Currently, two-thirds say they are able to
view data across a combination of their various health plans, including medical, wellness,
disability, workers’ compensation, and employee assistance programs. Fifty percent of
those not using data analytics have a strong interest in doing so.

• Many plan sponsors are also using predictive modeling tools to assist in analyzing
benefits plan data, especially for medical plans. Nearly 6 in 10 plan sponsors (57%)
involved in benefits integration indicate that their company uses predictive modeling
tools to assist in analyzing medical plan data. Just over half (53%) of those using
predictive modeling tools say that their company pays a fee for access to those services.

• There is evidence that using data analytics helps a company with integration and its
success. Plan sponsors who use data analytics are more likely to report higher levels of
integration as well as higher levels of success with their integration efforts. Among firms
that report a “high degree” of success with their integration strategy, 91% are using data
analytics across their health plans (compared to 45% of those reporting “low success”).

ROLE OF DATA ANALYTICS IN SUCCESS OF BENEFITS INTEGRATION

PERCENTAGE OF PLAN SPONSORS USING DATA ANALYTICS

91%

68%

45%

High Moderate Low

Level of Overall Success with Benefits Integration Efforts to Date

Source: Preliminary results from Prudential’s The 2010 Market for Integrated Health Care and Disability Management Study.

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 Prudential’s Fifth Annual Study of Employee Benefits: Today & Beyond was conducted
via the Internet during April and May of 2010 and consists of three distinct surveys:

• A Plan Sponsor Survey among 1,358 benefits decision-makers

• A Plan Participant Survey among 1,200 full-time employees age 22 or older,

who work for a company with at least 50 benefits-eligible employees

• A Broker/Consultant Survey among 703 group employee brokers/consultants

who work full time for a company with at least 50 employees

The research was conducted for Prudential by the Center for Strategy Research, Inc.,
an independent Boston-based market research firm.

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© 2010 The Prudential Insurance Company of America.
Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities.
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