CEO Voices: Making Healthcare Affordable For Employees

This article is the seventh of a series sponsored by PNC Bank engaging with CEOs from around the U.S. on some of the most important topics facing business leaders today. Part one focused on tax reform and global competitiveness, part two looked at technology transformation, part three examined strategies for growth, part four discussed cost-cutting, part five covered cybersecurity, and part six covered talent-related challenges.

Healthcare costs may have dropped from the business headlines amid talk of the economic boom, trade wars and labor shortages. Still, throttling medical expenses remains a top concern of American CEOs, who also wish to help guard the physical wellbeing of their employees.

The problem of rising healthcare-cost pressures has been epidemic for decades, and recent developments such as the passing of the Affordable Care Act (Obamacare) and the broad digitization of medical records, haven’t managed to halt the underlying surge. The pricing comes from the aging U.S. population, expensive new medical technologies, and complex medical treatment plans. In fact, U.S. employers expected their healthcare costs to increase by 5.5 percent this year, up from a 4.6-percent increase in 2017, according to a Willis Towers Watson survey.

All of this has prompted CEOs to continue to find ways to trim immediate healthcare costs and introduce innovations that can reduce them in the long term — as well as help produce a fitter and happier workforce. More companies are exerting greater and more direct control over their employees’ health benefits.

Big employers are taking radical steps to attempt to leapfrog this challenge once and for all: Amazon, Berkshire Hathaway and JPMorgan Chase, for example, recently announced a partnership on healthcare that is meant to innovate out-of-the-box healthcare cost solutions that could help take U.S. companies out of the ever-frustrating status quo.

Here are three mid-market companies and CEOs that are charting their own paths toward a better culture of healthcare:

Brian Schultz, CEO, Studio Movie Grill: This Dallas-based company opens and operates movie-theater facilities that feature full-service dining, with 30 locations in nine states and national and international expansion planned. Schultz says he’s leading the company’s strategic new effort to rein in health-insurance costs, and to boost overall employee wellbeing, based in part on his own experience over the last two years with a debilitating inner-ear condition.

“I started exploring not just holistic medicine but also the integration of mental and physical health, diet and exercise, and even relaxation and movement throughout the day,” he says.

Simultaneously, Studio Movie Grill experienced a 45-percent increase in health-insurance premiums two years ago, which Schultz blamed in part on the acute inflationary pressures brought about by the Affordable Care Act and also on amounts of prescription-drug spending by his company that “made me nervous.”

To combat these rising costs, Studio Movie Grill has gone on a preventive-care campaign. It’s working with its insurance plan to integrate each employee’s care instead of seeing it bounce around among specialists. And the company has enlisted a service that nudges employees to take their annual, covered physicals and to help them take steps to improve their health based on the results.

Early results are encouraging, including a 28-percent decrease in health-insurance costs over the last two years: “But we’re only in the starting phase of some of these concepts,” Schultz says.

Wallace Smith, CEO, E&E Manufacturing: As a Tier One automotive supplier of stamped and welded metal products, the Plymouth, Michigan-based manufacturer faces classic challenges to the health and safety of its 670 employees at two plants. Smith has established these concerns as strategic, with a culture defined by the tag line, “We all care.”

In support of this strategic objective, last year Smith began providing a part-time, on-site nurse at each plant to help employees handle minor medical issues and make necessary referrals. E&E has begun providing standing desks for office dwellers (you can get the same Standing Desk Frames for your home office). The company hosts lunch-and-learn sessions for all employees on health-and-wellness topics such as the benefits of physical exercise. It sponsors annual wellness screenings. And E&E has boosted its contributions to employee Health Savings Accounts.

At the same time, Smith expects all of this to help “drive good behavior and decision-making by participants in our insurance plan,” says Brian Swanson, E&E’s chief financial officer. And the company makes sure that employees “pay a fair amount” for their own coverage.

As a result of all these factors, E&E has been able to keep its overall healthcare costs flat over the last few years. “Our projection for 2019 sees some increase,” Swanson says, “but we’re looking for more ways to keep our costs neutral on a per-employee, per-month basis. We’d consider that a success.”

Kathy Hollenhorst, CEO, Creatis: The Minneapolis-based marketing agency has an employee makeup that is increasingly typical: a workforce that is mostly millennials, and that is mostly contingent. Eighty of the 120 people employed by Creatis work off-site at clients across the Twin Cities.

Yet those employees want Creatis at least to make health insurance available, especially confronting the Obamacare requirements for Americans to purchase health insurance. As a result, in an increasingly competitive labor environment, the agency has been taking a new look at that challenge.

It used to have a group insurance plan “but what we could offer was expensive and provided very poor coverage,” says Hollenhorst. So Creatis turned to Gravie, a health-benefit company that specializes in enabling small- and medium-sized businesses to set a defined contribution amount for each employee, which they use to shop for benefits through one of Gravie’s “marketplaces.” The company also makes it easy for a distributed workforce to sign up for plans and get advice.

Creatis contributes $150 a month toward each employee’s self-purchased health-insurance plan for minimal coverage through Gravie. Hollenhorst concedes that someone with great medical-insurance needs “would have to pick up another plan as well.” But the agency’s plan complies with the Affordable Care Act requirement for companies to have a group plan and includes preventive coverage.

Importantly, the new approach, Hollenhorst says, “gives employees more choices, and more flexibility, particularly young ones who don’t want or need a lot of coverages.”

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About PNC

For more than 160 years, PNC has navigated a steady course while growing in size, sophistication and service. Today, we’re one of the largest, most highly-regarded and well-capitalized financial services companies in the country. We’ve added thousands of corporate clients in the last few years and are expanding our geographic franchise with offices in 36 states, and in select regions around the globe. 

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The opinions expressed in this article are not necessarily the opinions of PNC or any of its affiliates, directors, officers or employees. This article was prepared for general information purposes only and is not intended as legal, tax or accounting advice.