Louisville, Ky. (July 24, 2007) – SHPS, a leading provider of health advocacy and health benefits solutions, today released a health practices study which shows that the use or absence of a handful of core best practices in employee health management could explain cost differences of as much as 50 percent between two otherwise comparable employers, even after factoring out differences in location, workforce composition and industry. The 2007 SHPS Health Practices Study substantiates that traditional financially based cost management methods are simply not enough to battle rising healthcare costs. Companies with the lowest healthcare costs focus on optimizing employee health and managing clinical risk, rather than manipulating the health benefit.

The SHPS study reveals that best practice companies take a laser-like focus on improving employee health, driving positive changes in health behavior with rigorous, clinically based care management programs and cash-based incentives. They also reported having strong centralized benefits administration, health analytics and employee communication practices.

The SHPS study identified six common health benefits practices that correlate with substantially higher healthcare costs, including:

• Managing employee health solely through the use of wellness promotion and education;
• Being unable to assess quality of provider care;
• Offering multiple plan designs;
• Using deductibles and co-pays to drive health behavior;
• Using health benefits to position a firm as an “employer of choice;” and
• Incurring unacceptably high levels of turnover.

“After observing that a handful of SHPS clients consistently outperform other employers in controlling healthcare costs without making cuts in covered benefits, we undertook this study to determine the basis for this phenomenon, and share the findings so that employers throughout the country could understand and implement best practices,” explains Rishabh Mehrotra, SHPS’ president and CEO. “Results of the study provide evidence that traditional methods of cost management, which rely primarily on the management of financial risk rather than clinical risk, are not enough to effectively manage the ever-increasing healthcare cost trend. In the long run, health costs can be lowered only by managing the health of the covered population.”

“Significant improvements in the healthcare cost trend are achieved when employees improve their clinical status and reduce their need for healthcare services,” added Mehrotra. “Based on the study results, SHPS believes a key issue for many employers is the fundamental misalignment between common healthcare procurement practices and the actual drivers of higher healthcare costs. As this realization sinks in, SHPS expects procurement practices to change dramatically, creating both opportunities and risks for vendors. The vendors who succeed will be those that are best able to empower the employer to measure and improve employee health.”

Methodology
The study included a comprehensive questionnaire targeting mid- and large-sized companies with at least 1,000 benefit-eligible employees. Participation from 115 companies, representing more than 3.7 million employees and an average revenue range of $750 million to $1.5 billion, reflects responses from vice presidents, managers and directors within the areas of benefits, human resources and finance. Survey questions covered healthcare costs, health outcomes, benefits strategy and goals, cost shifting practices, plan design, network providers, benefits administration, incentives, care management programs, decision support, communications, reporting, and workforce demographics.

The study was designed to determine if there are specific best practices that lead to lower overall healthcare costs, assuming otherwise equal benefits and workforce profiles.

“Other recent studies conducted by leading health consultants support the notion that employers with similar coverage and benefits can have substantial differences in overall health costs – on the order of $1,200 to $2,500, or more, per eligible employee annually,” points out Mehrotra. “For a company with 20,000 employees, this cost differential could be an enormous competitive advantage – $20 million to $50 million in discretionary dollars. The SHPS study takes these findings a step further, drilling down to the exact drivers of cost and empowering self-funded employers to take meaningful steps in adopting proven best benefits practices.”

The 2007 SHPS Health Practices Study is available for download in PDF format at www.shps.com/2007healthstudy.

About SHPS
SHPS provides a broad range of innovative health management tools, resources and services that empower consumers to make wise healthcare decisions. With comprehensive services that transform consumer health behaviors, SHPS’ integrated delivery system maximizes the value of consumers’ and employers’ healthcare dollars. Among its many clients, SHPS serves large and mid-sized employers, health insurance carriers, third party administrators, Medicare Part D providers and government agencies. The company employs registered nurses and health professionals, employee benefit specialists and IT experts in facilities across the United States. Visit www.shps.com.

For More Information
Sarah Bovine
Director, Corporate Communications
sarah.bovine@shps.com

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