Why managing healthcare costs must be Singapore firms' top agenda

Employee benefits appear to be high on the agenda for international employers in Asian and Singapore in particular, looking to recruit the very best. Of course, in today’s competitive environment, it isn’t just about attracting high-calibre employees; it’s about keeping hold of them to help grow businesses.

As economic powerhouse shifts from West to East, the Asia Pacific region is poised to become a new major hub for leading multi-national corporations (MNCs), and international employers are starting to realise that a superior benefits package, especially company healthcare plans, are a key asset in differentiating themselves from their competitors.

Healthcare costs top concerns
Skyrocketing healthcare costs are among the top concerns for both employees and employers here in Asia. Reasons for the jump in costs include more expensive medical technology, rising costs of service delivery, as well as patients receiving treatment that they don’t need. For example, a survey conducted by Towers Watson last year found that Singapore employers were faced with increasing healthcare costs, with the bill for employees' care rising by 8.5 per cent a year.

The rising costs reflect the World Health Organisation’s (WHO) projection of total healthcare costs in Asia-Pacific to increase to US$2.7 trillion by 2020 from US$1.4 trillion in 2012. In a similar manner, Singapore’s healthcare expenditure will grow to US$22.3 billion by 2018 from US$11.7 billion in 2012. This represents an annual compound annual growth rate (CAGR) of 11.4 per cent from 2012 to 2018.

In spite of the growing cost, Towers Watson advises firms not to scale back on their employees' medical benefits, saying it is 'not a viable option'. This is because doing so might simply exacerbate health issues and lead to higher costs in the long term.

Offering choices
Asia also has its own specific challenges. Employers in the region are committed to providing attractive employee benefits, but are still taking a conservative approach in how they use their benefit spending to its full potential. This is where the insurers come in. Insurers have an important role to play in designing products and services to support this approach. With help from the brokers and HR teams, insurers can help companies to tailor their healthcare plans to ensure they are relevant, meet the specific needs of the company’s individuals and most importantly, that they are competitively affordable.

Insurers have recognised that in order to keep up with the changing demands of clients; they need to offer new and innovative solutions that have direct relevance to their ultimate target audience: the employee.

It is no longer okay to offer a one-size-fits-all solution. Being in touch with the requirements of the specific needs of an employee in Asia is integral to being able to achieve successful take-up and engagement.

We are starting to see examples of this: for instance, Raffles Health Insurance in conjunction with Bupa recently launched two new corporate plans, which give employees access to healthcare treatment in the region where they are most likely to need it.

These plans offer a competitive price structure and offer flexibility in choice of treatment. For example, members on the Company Health Select Asia Pacific plan are covered for treatment in more than 40 countries in the Asia Pacific region, with the exception of Hong Kong; while the Company Health Choice International plan covers members in three countries, for which Singapore has to be their residency country with members choosing two additional locations of choice (excluding the USA).

Holistic approach
Health and wellness are hot topics for both employers and governments trying to promote a healthier lifestyle amongst employees and the wider population; to help reduce the reliance on medical intervention. This can range from the softer side of advice and support around fitness and diet, to more direct intervention such as vaccination programmes, occupation health assessments and active claims management.

We are now starting to see insurers take a more active role on holistic approach, whether through their own offerings or wellness initiatives sponsored by the employer. For instance, in 2011, Bupa mapped the global evidence based on behavioural science, to build a simple framework of approaches that works across cultures and challenges. These behavioural insights inform a range of Bupa’s programmes and services.

Holistic approach for health and wellness, with bespoke plans, will not only help employers manage rising healthcare costs, but also help employees to enjoy healthier, happier and more productive lives.