Most companies don’t have a strategy to contain costs or use tactics to cut medication expenses
A new survey from global insurance and risk management consulting firm Gallagher reveals that 57% of Canadian employers are looking to increase employee headcount next year, but could face a serious financial burden as a result.
According to the firm’s 2018 Benefits Strategy & Benchmarking Survey – Canada Edition, 64% of Canadian employers don’t have an effective strategy for managing healthcare expenses, and almost none employed advanced tactics to cut prescription-drug costs.
“Because we are in a tight labour market, organizations understand the importance of offering competitive benefit packages," said Leslie Lemenager, head of Gallagher's Canadian employee benefit consulting operations. "But today's workforce encompasses five generations, and each wants a benefits package that addresses their own individual set of needs.”
Among 468 employers surveyed, 55% identified high prescription costs as a top cost-management challenge; 64% cut costs by mandating generic or least-cost alternative products. But the study also found that just 5% use expense-management tactics such as step therapy, streamlining the supply chain, or mail-order options, all of which could significantly decrease drug expenses.
The research found a similar shortfall when it comes to employee well-being strategies, a fixture among only 46% of Canadian employers. Behind this gap could be a lack of recognition of the fact that employees’ entire selves, including their personal challenges, can impact their performance at work. “As a result, employee wellbeing should ideally take a holistic approach, addressing physical and emotional health, career growth and financial security, among other areas,” Gallagher said.
And while most Canadian employers believed they offer competitive benefits, but they don’t have adequate systems to confirm that. For example, while 60% of employers believe they have a highly engaged workforce, only 42% have conducted an engagement survey since 2016. Furthermore, 32% said they had no communication strategy whatsoever — a significant hurdle for benefits education or feedback.
"Employers cannot afford to offer the same healthcare and retirement packages year after year," Lemenager said. "Employee demographics are diverse and their needs are changing constantly. Organizations that recognize this, and continue to adjust accordingly, will do a better job of recruiting and retaining top talent."
