Health Benefits for Hospital Employees: A Cautionary Tale

If healthcare executives don't know where hospital employees stand on health benefits, how can they claim to have a strategy for truly promoting the health and well-being of employees?

A union action at a hospital in Olympia, WA, offers a case study in how employees might respond to the shifting market in health insurance coverage. As of January 1, healthcare benefits for 2,400 employees at Providence St. Peter Hospital (PSPH), a 390-bed hospital that is part of the five-state Providence Health System, shifted from a comprehensive preferred provider organization (PPO) health plan to a plan with three high-deductible options: a health reimbursement medical plan, a health savings medical plan, and a group health plan.

In protest to what they say were unfair labor practices and a reduction in healthcare benefit coverage, 530 of the hospital's workers (members of the Service Employees International Union) went on strike March 11. The group quickly grew to 700.

On the surface, the new insurance plans seem reasonable. The deductible is only $150 more than last year's plan, and out-of-pocket costs amount to $1,300 less than in the 2012 PPO plan, according to the hospital.

But the difference is not in the cost, it's in how these plans are used by the employees. Maximum out-of-pocket expenses now range from $5,100 to $6,600 for a family of four. These plans are not well suited for low wage earners.

"In a health system, you have people in very low wage and very stressful jobs, so for that group in particular you would want a health plan that's very supportive of them, and it does everything it can to keep them from having a lot of out-of-pocket costs, including for getting services you hope they would not need because they have to pay for coinsurance, probably," says Helen Darling, president of the National Business Group on Health, a national nonprofit organization that represents large employers' perspectives on health policy issues.

An operating room technician with a family is going to need different options for his health plan than a single, childless surgeon. Healthcare employers should recognize these differences.

"A traditional hospital system is comprised of a number of different populations. It's no different in its demographics than food services and hospitality. Employers need to recognize the differences in how people learn and react to healthcare, because it is so important to how they think about their jobs. Microsegmentation—effectively communicating to an audience in a more precise, surgical approach—is much more preferable than rolling out a wide message," says Joey Dizenhouse, a professional services consultant for hospitals with HR consulting firm Towers Watson.

Know your workforce's priorities
The new group health HMO contains financial incentives for participation—$700 for single employees and $1,400 for families loaded into health savings accounts. These are substantial amounts—yet only 81% of eligible employees who are SEIU members have earned the health incentive, according to the hospital.

What about the remaining 19%? According to SEIU, these workers couldn't make it to required biometric screening appointments because of conflicting schedules since many of their workers have families, work night shifts, take public transportation, etc.

When I asked the hospital why these employees weren't participating, the answer pointed to a disconnect in communications. "I don't know. You'll have to ask SEIU. It's a great deal and they should use the wellness program and I don't know why they didn't," says Deborah Shawver, APR, Director of PR/Marketing Communications at PSPH. "I just find it really hard to believe that they couldn't make it to a wellness screening. There were so many opportunities over a very long period of time [two months] with almost daily emails about it. … So there were a variety of options, and at some point, you have to participate in the plan."

If you want employees to participate in reducing costs, take steps to make sure your priorities and theirs are aligned. Otherwise, you may be learning about them later, yelled at you from across the picket lines.

"The message in healthcare over the years is that we're asking employees to absorb increases as well as asking them to use our own providers through plan design. So the message is, 'Use our providers, and costs for you are going up,'" says Dizenhouse. "But employers have to emphasize that 'We're going to take care of you along the way.' That means recognizing the changing landscape in healthcare and being proactive about integrating it into healthcare programs for your employees."