workforce health strategies: a multinational perspective

© 2011 Towers Watson. All rights reserved.

Multinational Workforce HealthBuilding a Sustainable Global Strategy

Presentation by Francis Coleman and Nicole SerfonteinMay 18, 2011

© 2011 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

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Nicole has worked in New York, London and South Africa, where she was a practicing attorney in the commercial and financial services industry.

She co-leads global health care within the International Consulting Group and has consulted on health insurance and related matters for many multinational companies, government and plan trustees.

In prior work, she was appointed in 2003 by the Minister of Finance in South Africa to the South African Financial Services Board to draft and comment on regulations to the Financial Services Advisory Act.

Nicole Serfontein is a senior international consultant for Towers Watson, based in Washington, D.C.

Today’s experts

Francis has more than 20 years of international benefit experience and has served in a number of different management roles and assignments worldwide, including in the U.K., France, Greece, Eastern Europe and the U.S.

He holds a national role, leading global health care within the International Consulting Group and has extensive experience in global medical plan design and funding.

Prior to joining Towers Watson, he was Worldwide Director of a Pooling and Captive network providing employee benefits solutions for over 100 countries. This also included provision of medical plan design in over 40 countries worldwide.

Francis Coleman is a director in Towers Watson’s International Consulting Group and is based in the company’s Los Angeles office.


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Today’s discussion

Multinational workforce health: Global health strategies Trends in wellness programs Cost trends and management Governance


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Global health continues to grow as an important business issue for multinationals.

Medical costs globally are projected to grow at double-digit levels for the next three to five years*

Public health systems are inadequate in many countries, and high-quality health care benefits and/or services can create a competitive advantage in the war for talent

Business leaders are increasingly recognizing the value of health and a consistent governance framework across geographies

Chronic conditions are increasing worldwide in prevalence and incidence levels Health care regulation is growing in volume and complexity around the globe,

forcing large multinationals to react Multinational employers have, on average, 25 employee health programs

across their operations**

*Towers Watson 2011 Global Medical Trends survey.**Towers Watson 2009/10 Workforce Health Strategies: A Multinational Perspective survey.


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About the 2011 Multinational Workforce Health survey

Tracks detailed information about global employee health strategies, health programs and costs at multinational organizations

149 respondents Collectively, respondents employ 5.2 million employees Survey conducted in January and February 2011 and completed by senior benefits

managers

Employee Size Groups Industry Groups

10,000+

5,000 to 10,000

2,000 to 5,000

Less than 2,000

IT and telecom

Public sectorand education

Wholesale and retail

Health care

General services

Financial services

Energy and utilities

Manufacturing

Multinational Workforce Health: Building a Sustainable Global Strategy


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Nearly half of multinational organizations plan to adopt a global strategy.

Which best describes the global health strategy at your organization?

More multinationals are adopting a global health care strategy. In our 2010 survey, 26% of companies had a global health strategy in place compared to 32% today.

No global strategy and no plans to

adopt one

No global strategy, but plan to adopt one

in next one to two years

A global strategy has been in place for five or more years

A global strategy has been in place for less than fiveyears


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Poor health habits of employees and reducing health care costs are organizations’ top priorities, but they vary by region.

Select the top three most important objectives of your organization’s current or planned global health strategy

Demonstrate interest in employee well-being, employee resiliency/stress management

Contain/reduce the organization’s health care costs

Provide competitive reward packages

Retain key talent

Reduce the cost of work loss (i.e., absence, disability)

Increase productivity

Improve on-the-job safety

Increase employee access to health care

Supplement public health system

Other 3%

14%

9%

42%

59%

0%

0%

8%

23%

46%

62%

38%

23%

31%

69%

0%

0%

15%

15%

35%

23%

54%

62%

42%

46%

8%

30%

42%

36%

54%

AmericasEMEAAsia Pacific


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Organizations without a global health care strategy struggle to make the business case.

What have been the three biggest barriers to your organization adopting a global health strategy?

Not a business priority at present

Lack of internal staffing

Lack of budget

Organization too decentralized

Health issues of employees vary too widely to manage globally

Lack of evidence to support a business case

Lack of senior leadership support

Unnecessary, as most public systems support employees in their health and well-being

Separate global health strategy not required as it is part of a broader global benefits structure

Desired health care vendors are not present (or don’t offer services/products needed)

Other 5%

6%

8%

11%

15%

16%

20%

35%

38%

41%

62%


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Although lack of data and inadequate resources are the biggest barriers to achieving global objectives, lack of senior leadership buy-in is also a significant barrier.To what extent are the following barriers to your organization achieving its global health care objectives?

Lack of senior leadership support

Poorly communicated global strategy

Desired health care vendors are not present (or don’t offer

services/products needed)

Lack of an adequate budget at regional/local level

Lack of an adequate budget at corporate level

Limited “local” support (e.g., resources)

Data is not available or reliable to identify employee health risks

Note: Percentages indicate responses of “to a very great/great extent.”

15%

22%

26%

25%

8%

15%

31%

25%

33%

8%

21%

15%

16%

33%

40%

13%

38%

30%

32%

41%

44%

AmericasEMEAAsia Pacific


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For all multinationals, mental health and stress are the leadinghealth risks.

In how many countries in which your company operates are the following health risk issues a priority of your organization’s current or planned global health strategy?

Not at all/few countries Some countries All/most countries

Mental/stress issues

Chronic conditions (e.g., diabetes, asthma, hypertension)

Tobacco use

Lack of physical activity

Disability

Obesity

Infectious diseases 52%

40%

41%

32%

31%

30%

24%

32%

36%

29%

36%

35%

31%

21%

16%

23%

31%

32%

35%

39%

55%

Surprisingly, 40% of respondents are seeing obesity as a risk in only a few of their global operations.

Global Health ProgramsCurrent Trends in Wellness and Other Programs

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Medical benefits are the cornerstone of a global health strategy, but to most, so is wellness.

Medical benefits (in addition to or instead of public health care services)

Wellness/health promotion programs(e.g., preventive care/screenings, health

risk assessments, smoking cessation)

Occupational health (e.g., job safety, risk management)

Reputational risks/branding (i.e., to build a global reputation as a good place to work,

demonstrate interest in employee well-being)

Pandemic preparedness (e.g., evacuation processes, communication systems)

Which of the following are core components to the global health strategy at your organization (or in planning such a strategy)?

46%

54%

63%

75%

89%


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While supplemental health care programs are widely offered, lessthan half of multinationals in Asia and EMEA offer all their employees wellness programs.

Employee Health Programs by Region

Not OfferedSome Employees

CoveredMost/All Employees

Covered

Medical/Health Benefits

Asia Pacific 8% 14% 78%

EMEA 6% 13% 81%

Americas 3% 13% 84%

Wellness/Health Promotion Programs


EMEA 27% 27% 45%

Americas 22% 21% 56%

Pandemic Preparedness


EMEA 13% 13% 74%

Americas 9% 13% 78%

To what extent does your organization offer the following programs?


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Preventive screenings and vaccinations are the most common global health and productivity programs.

In Most/All Countries

In Some Countries

Planning in Next Two Years

Don’t Offer/Not Planning

Health screenings 28% 57% 11% 4%

Vaccinations 23% 56% 9% 12%

Fitness (either onsite or subsidize membership)

17% 51% 17% 16%

Mental health/stress management 17% 46% 23% 14%

Healthy eating (cafeteria or vendor machine)

13% 50% 18% 19%

Health risk assessment 8% 54% 23% 14%

Disease management (for those with chronic conditions)

6% 47% 23% 23%

Weight management (including counseling)

3% 47% 26% 24%

Tobacco cessation 9% 39% 22% 30%

Lifestyle coaching 4% 34% 32% 30%

In the countries in which your company operates, to what extent does your organization offer (or plan to offer) the following health and productivity programs?


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Although wellness is gaining momentum, financial incentives are not as popular outside North America.

Use of Wellness Incentives

Offer Significant Incentives

Offer Some Incentives

Don’t Offer Incentives

Don’t Offer Programs

Global

All countries 5% 17% 43% 36%

Regions

Asia Pacific 2% 11% 49% 37%

EMEA 2% 12% 48% 38%

Americas 12% 28% 29% 31%

Economies

Advanced 9% 21% 39% 31%

Emerging 1% 12% 46% 40%

Do you offer financial incentives in your global wellness programs in the following countries?

Global Health StrategiesCost Trends and Management Techniques


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2011 Global Medical Trends survey — Key findings

In 95% of the countries included in the survey, the medical trend exceeded the rate of general inflation

Growth of medical trend has slowed in emerging markets, whereas some of the more developed markets are seeing a greater increase compared to five years ago

Almost three-quarters (72%) of survey respondents say they expect higher medical costs over the next five years

The average medical trend for 2009 was 10.2% and is projected to be 10.5% in 2011 (Latin America, North America and Middle East/Africa have highest rates)

The average rate of medical trend globally is two to three times the rate of general inflation

Wellness service offerings are growing in prevalence and some form of wellness feature is now typical in all regions

The Towers Watson 2011 Global Medical Trends survey was conducted in September and October 2010. The results are based on responses from 170 leading health insurers who provide medical insurance solutions to employers in 37 countries.


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The average global medical trend is two to three times the rate of inflation

2006 2009 2011

Asia Pacific

China 15.2% 10.1% 9.4%

India 22.0% 12.0% 12.3%

Singapore 5.5% 7.4% 8.4%

Europe

France 5.6% 6.5% 8.4%

Netherlands 6.0% 5.0% 5.5%

U.K. 6.0% 9.3% 9.5%

Latin America

Brazil 9.2% 10.4% 11.0%

Chile 5.8% 13.9% 18.3%

Middle East and Africa

South Africa 7.4% 12.5% 9.3%

UAE 15.0% 10.3% 10.1%

North America

Canada 12.3% 12.5% 13.3%

Global Average Medical Trends: 2006 – 2011

Source: Towers Watson 2011 Global Medical Trend survey report.


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Cardiovascular disease and cancer are the leading causes of medical claims today, and expected to remain so over the next five years.

75%

63%

33%

32%

32%

25%

19%

13%

2%

75%

67%

33%

29%

33%

25%

17%

14%

2%

Cardiovascular

Cancer

Gastrointestinal

Musculoskeletal/Back

Respiratory

Accident

Other

Mental health

Substance abuse Now In 5 Years

Note: Estimates are equally weighted by respondent.

What are the top three conditions that cause the highest prevalence of claims today, and what are your expectations over the next five years?

Source: Towers Watson 2011 Global Medical Trend survey report


towerswatson.com 20Note: Respondents asked to select their top three priorities.

Control costs of employee health programs

Address emerging health risks (e.g., obesity, heart disease)

Use health programs as a tool to help attract and retain top talent

Provide incentive programs to improve employee health/wellness

Increase quality of health care

Reduce lost time (scheduled and unscheduled)

Expand health coverage to more/all employees

Improve pandemic preparedness

Consolidate vendors

Other

None of the above 13%

3%

6%

43%

25%

60%

1%

2%

11%

11%

22%

27%

33%

33%

43%

48%

49%

5%

13%

20%

22%

54%

What are your organization’s top priorities inside and outside the United States for improving employee health and well-being over the next three years?

Both inside and outside of U.S. operations, controlling costs is a top priority over the next three years.

Inside the U.S.Outside the U.S.


towerswatson.com 21Note: Respondents were asked to select their top three countries.

China

United Kingdom

Singapore

India

Canada

Brazil

Hong Kong

Mexico

Germany

Australia

Malaysia

Japan 7%

8%

8%

18%

21%

30%

36%

9%

10%

12%

12%

29%

Other than the United States, in which countries are you most concerned about cost increases in your company-sponsored health care benefits?

Outside of their U.S. operations, multinationals are most worried about cost increases in China, the United Kingdom and Singapore.


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The cost of employee health programs for over half of multinationals in the Americas was 10% of total payroll.

Total Health Care Costs as a Percentage Of Payroll

Less than 2% 2% to 4% 5% to 9% 10% to 14% 15% to 19% 20% or more

Global

All countries 24% 13% 21% 21% 10% 12%

Regions

Asia Pacific 30% 13% 18% 20% 7% 11%

EMEA 25% 18% 23% 15% 13% 8%

Americas 11% 9% 27% 26% 12% 15%

Economies

Advanced 16% 18% 18% 26% 9% 13%

Emerging 34% 6% 25% 15% 10% 10%

Note: Excludes responses of “don’t know.”

What was the approximate total cost to provide employee health programs, as a percentage of payroll, in the following countries?


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Cost management (i.e., plan design changes in deductibles/copays/coinsurance)

Employees sharing in premium/health service costs

Limiting types of dependents covered or paid for by the company

Using provider networks

Leveraging regional vendors (i.e., consolidating coverage with regional/global vendors)

Prevention/wellness strategies

Providing onsite health services

Emotional well-being support (e.g., employee assistance programs)

Absence and disability management

Switch to self-insurance funding

None of the above

Identify the three most successful tactics your organization has used inside and outside the United States to keep cost increases down for company-sponsored health care plans

Within their U.S. operations, more than half of multinationals are responding to cost increases through cost sharing.

10%

15%

6%

44%

10%

66%

9%

5%

9%

9%

10%

26%

26%

28%

35%

39%

46%

3%

6%

30%

11%

59%

Inside the U.S.Outside the U.S.

Global Health StrategiesGlobal Governance


24


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Many employers miss an opportunity to develop a healthy workplace culture by not having senior leaders “walk the talk.”

To what extent are senior leaders and other managers involved in the global health care strategy and/or health care decisions at your organization?

Senior leadership visibly supports the importance of a healthy work environment

Senior leadership allocates adequate budget for health and productivity

programs

Senior leadership includes employee health and productivity in our

organizational goals or value statement

Managers and/or senior leaders receive regular reports with health and productivity

program utilization metrics75%

68%

41%

48%

15%

20%

38%

29%

9%

12%

21%

23%

Not at all/slight extent Moderate extent Very great/great extent


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13%

20%

18%

19%

12%

20%

29%

36%

35%

46%

47%

47%

47%

45%

39%

49%

48%

28%

26%

26%

25%

22%

Multinationals will increasingly rely on centralized decision making for their health care benefits over the next three years.

+28pt

+27pt

+27pt

+26pt

+22pt

+21pt

+21pt

+18pt

+17pt

+16pt

+16pt

At what level have decisions been made for the following issues related to health care benefits over the last three years? How do you expect decisions to be made in the next three years?

Data management and program evaluation

Selection of insurers or third-party administrators

Health risk appraisals

Prevention/wellness program offerings

Selection of brokers/consultants

Plan offerings

Plan design changes

Funding decisions

Employee cost sharing

Eligibility decisions

Plan communication

Next three years Last three years


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The survey’s key findings suggest that:

Employee health is a growing worldwide concern for many multinational organizations coupled with rising health care costs and trend

Reasons for a greater emphasis on workforce health vary significantly by region: Asia — the focus is the need to compete for top talent U.S. — cost containment continues to be the primary concern EMEA — multinationals are interested in reducing absenteeism and improving

productivity Companies that have a health strategy are not communicating it broadly

enough with local leaders and employees Sponsorship by senior leadership is critical for the success of a global health

strategy Wellness programs are offered by nearly three-quarters of companies and have

been growing in popularity


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Contact details

Michael [email protected]

Francis [email protected]

Nicole [email protected]