Archive for the ‘healthcare’ category

Highlights and Trends in the HRO Market for H1 2013: Part 2

August 14, 2013
Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Amy L. Gurchensky, HRO Research Analyst, NelsonHall

Last week, I zeroed in on specific market activity within the payroll, learning and RPO service lines. This week, I’ll take a closer look at H1 2013 activity within benefits administration and MPHRO as well as provide some insights on what to expect in H2 2013 based on NelsonHall’s recent HRO Confidence Index.

Benefits Administration

Contract signings aside, there has been a plethora of activity within benefits administration in H1 2013, including:

  • New offerings:
    • Mercer launched a private benefits exchange, Mercer Marketplace
    • Buck Consultants launched an automatic enrollment offering in the U.K.
    • Secova launched a Coordination of Benefits (COB) audit offering to coordinate benefits with insurance carriers
  • Acquisitions: Wageworks acquired Crosby Benefit Systems and Benefit Concepts to strengthen its H&W administration offering, including reimbursement account and COBRA administration
  • Partnerships:
    • Fidelity partnered with Extend Health, a Towers Watson company, to provide retiree healthcare services
    • JLT Employee Benefits partnered with Vielife for health and wellbeing services in the U.K.
  • New technologies:
    • Xerox launched an account-based benefits portal, BenefitWallet, to assist with managing multiple health accounts on one platform, including HSAs, HRAs, FSAs, HIAs (health/wellness incentive accounts) and other specialized services
    • Aon Hewitt launched an absence management tool, 360 Absence Solutions, to help clients manage absence-related costs, compliance risks, the administrative burden and lost productivity
  • Educational resources:
    • Mercer and ADP both launched websites to provide information on healthcare reform
    • Ceridian launched an auto-enrollment knowledge center in the U.K.

MPHRO

In recent years, the MPHRO market has been relatively quiet in terms of contract announcements and H1 2013 was no exception. However, my last MPHRO research study, published in February 2013, revealed that the market is very much alive with new wins and contract renewals from all the major vendors, including IBM and Accenture. In fact, IBM recently won a new seven-year, multi-country MPHRO contract, which was bundled with F&A outsourcing services. Other wins include ADP and Marriott Vacations Worldwide for core HR, payroll, time & labor management and talent management covering ~9.2k employees.

Many vendors have been focused on their strategies for expansion, including Aon Hewitt with its acquisition of OmniPoint Workday Services. Although still early, NelsonHall expects ADP to make inroads in LATAM with its MPHRO services since it added RPO capabilities in this region from its acquisition of The RightThing and now expands its payroll footprint from the Payroll S.A. acquisition.

H2 2013

So what does the rest of the year have in store? NelsonHall’s recent HRO Confidence Index survey finds that overall expectations for HRO revenue growth remain at the same level as those reported for the last five quarters; with payroll leading followed by RPO. Top industry sectors for HRO services include healthcare, pharmaceuticals and high-tech. By geography, vendors have reported increased confidence for revenue growth in Central and Eastern Europe and Central and Latin America.

Needless to say, it will be interesting to see how the rest of the year unfolds for HRO.

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.

Advertisements

Benefits Outsourcing is Blooming

May 9, 2013
Linda Merritt, HRO Research Analyst, NelsonHall

Linda Merritt, HRO Research Analyst, NelsonHall

Benefits administration is producing a bountiful crop of new and expanding services. Recent contract award announcements included ADP, Aon Hewitt, Ceridian, Equiniti, Fidelity, Mass Mutual and Merrill Lynch. A wide range of industry segments were represented: banking; food; education; non-profits; hi-tech; pharmaceuticals; and travel. This week, I have taken a look at some of the newer benefit outsourcing “crops” that are starting to grow nicely.

Managed Retirement Accounts

Fidelity’s relatively new managed retirement account offering – Fidelity Portfolio Advisory Service at Work – was designed to address the low rate of adequate preparation for retirement by many employees by combining Fidelity Investments plan sponsor customized portfolio active management services with auto enrollment and available advisory services to help bridge the gap in achieving retirement goals from a defined contribution plan. The service grew in both participants and assets by 50% in 2012. Already in 2013, another 135 new clients have been added, bringing the total to more than 1,800 plan sponsors.

  • Fidelity awarded a contract for Portfolio Advisory Service at Work by ADM.

Health and Wellness

ADP’s Vitality wellness solution supports employers with between 50 and 1,000 employees manage rising healthcare costs and also reduce employee absenteeism. Vitality’s incentive-based program includes an interactive wellness portal, health risk assessments, biometric screenings and personalized wellness plans with recommended goals and activities. It integrates with social networking sites, mobile applications and fitness technologies; and when employees achieve planned goals, they earn points towards lowering their health plan contributions. The service is also integrated with ADP’s payroll services.

  • ADP awarded a contract by Jackson Companies for ADP Vitality services.

Benefits Bouquet Bundles

HRO buyers want multiple related services from one vendor under one contract; and health and wellness lends itself to packaging separate services into bundles. Ceridian’s LifeWorks.com combines EAP, work-life, and wellness services into one program with its own portal and mobile access. Also available is Health Coaching – a program for high-risk employees that provides access to comprehensive health assessments and personalized guidance programs – and Client Value Dashboard – included for employers to monitor reports usage data and ROI information.

  • Ball State University chooses Ceridian’s LifeWorks.com

Private Employer Exchanges

Mercer’s Marketplace allows employers to improve management of their benefits spending and administrative responsibilities for active employees. Employers determine how much to contribute toward the cost of their benefits program and can select from a range of insured and self-funded products and providers. The platform includes full benefits outsourcing and provides employees with call center and online decision support.

  • Mercer recently announced names of 10 of its 20 national, regional and state carriers that have joined Mercer Marketplace for providing core medical and voluntary benefits.

A good garden has a variety of plants. Some base crops are evergreen like benefits enrollment and management services, while others are changed out to meet growing market demand. Benefits HRO: how does your garden grow? Very well thank you.

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by clicking here.

Opportunities Expand for HRO: Health Care Exchanges

April 3, 2012

Private health care exchanges are a hot topic, and the number of HRO service providers with such an offering is expanding. In addition to current providers including Aon Hewitt, Extend Health, and Xerox/ACS, Mercer announced a suite of health care exchange offerings last week.

It’s no surprise that health care exchanges are increasingly popular since the benefits extend to both employers and employees. While employers reduce liability and administration while accessing better plans or prices, employees obtain access to competitive pricing, employer subsidies, and assistance with selecting the plan best-suited for their needs.

Here is a brief synopsis of the existing health care exchanges in the market.

Retiree exchanges: These exchanges typically help retirees select a Medicare plan and/or supplemental insurance products based on their medical needs and budget. Service provider offerings typically include:

  • Call center services to assist retirees in selecting a plan including assessing needs, evaluating options, and enrollment into a plan
  • An online portal for shopping plans
  • Written materials / communications such as booklets, letters (e.g., appointment, confirmation of coverage, and annual enrollment letters), appointment reminders, etc.

Retiree exchanges were the first type of exchange to appear in the market, and as a result, there are a few service providers with such offerings available. Extend Health has its ExtendRetiree exchange. Aon Hewitt added its retiree health care exchange in March 2010 when it acquired Senior Educators, Ltd. In 2011, the exchange was renamed “Aon Hewitt Navigators.” Xerox/ACS launched its retiree exchange, “My Medicare Advocate,” in October 2010.

Among the exchanges it announced last week, Mercer launched its Retiree Medical Exchange. Its exchange leverages any employer subsidies available for coverage by converting current and future retirees to a DC model where they purchase individual coverage most-suited for them.

Active employee exchanges: While the retiree exchanges are focused on individual coverage, the exchanges for active employees are focused on group plans.

Aon Hewitt’s offering, for example, provides employees with a credit to purchase health coverage that can be accessed through its private exchange. Once employees log-on to the exchange, they will select health care coverage from group options that are standard levels of coverage with varying levels of reimbursement.

The Mercer Benefits Choice Exchange (MBCE) allows employers with 100 – 1,000 employees to contribute a set amount to a HRA. Employees then use decision-support tools to select coverage and enroll online.

Mercer’s other offering, Mercer Health Advantage (MHA), allows self-funded employers with >3,000 employees to enroll employees in new medical plans beginning January 1, 2013 that will save the employer 5% or more. Employers will also get access to dedicated MHA clinical care management with ongoing oversight and audit capabilities.

Benefits administration is a major and mature HRO service line. Health care exchanges present a welcome new growth opportunity for HRO and more options for employers and active and retired employees. Expect more benefits service providers to add to the available service offerings.

Amy L. Gurchensky, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

ADP’s Meeting of the Minds, not just an Ordinary Event

March 19, 2012

I attended ADP’s Meeting of the Minds (ADP MOTM) that happened last week March 11 to 14 in Dallas. This was my first time attending, and I didn’t quite know what to expect until I arrived—well, how about ~900 enthusiastic ADP clients. This is an annual event of which ~30% of attendees were first timers.

Sure, there were a few ADP presentations and demonstrations on ADP’s latest products and services, but many of the sessions were not conducted by ADP and were instead facilitated by HR practitioners and clients. Professional development would be a good way to summarize it. As they say, everything is bigger in Texas—how about ~170 sessions that you could attend to learn about everything from Healthcare Reform to Payroll taxes, to RPO, to best practices across a number of services, and functions including shared services, recruiting, change management, etc. There were also hands-on training sessions, of which I attended Learning, part of ADP’s Talent Management.

I could write my entire blog talking about the keynote speaker, Emmitt Smith, and the fun social events, but I’ll shift gears to talk about HRO to keep with our blog focus.

To begin, it’s important to share ADP’s three priorities, as stated by CEO Carlos Rodriguez, that are important to advance ADP as a:

  • Technical leader
  • Service leader
  • Global leader.

Regina Lee, president of ADP’s national and major accounts, GlobalView, and ADP Canada, spoke about four key areas of investments that were made by ADP:

  • Integrated Human Capital Management: including Vantage HCM and Workforce Now
  • Talent Management: including the integration of performance management, succession planning, and learning. ADP’s talent management platform has over 100 clients
  • Benefits Administration and Healthcare Management: having acquired Workscape in 2010 to strengthen ADP’s benefits administration capability, in addition to Workscape’s talent management and compensation capability. On March 8, ADP announced it has entered into an agreement to acquire SHPS Human Resource Solutions (rationale is below)
  • HR BPO, including the acquitisition of The RightThing in October 2011 (further details below).

I’ll finish my blog focusing on Benefits Administration and RPO.

The Workscape acquisition has proven to be a success, with ADP adding ~100 additional benefits clients annually. SHPS will further strengthen ADP’s benefits administration offering with capabilities including:

  • Eligibility and enrollment
  • Spending accounts administration
  • COBRA administration
  • Absence management
  • Benefits advocacy.

SHPS will strengthen ADP’s leave administration and reimbursement account administration capabilities, including HSAs and HRAs, which have become increasingly important as more employers offer high deductible benefits plans to their employees. You can read about this in my recent blog.

The RightThing – coming off its best year in 2011 – was ranked by NelsonHall in its 2011 RPO report as the top U.S. RPO provider in terms of North American revenue, bringing in ~80 clients. Prior to the acquisition, ADP provided recruitment administration and technology, but it is now a full end-to-end RPO services provider. Expect an RPO contract announcement soon and much more to come as RPO will continue to be provided as a standalone service and now also in combination with ADP’s multi-process HRO services.

Gary Bragar, HRO Research Director, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

Health Savings Accounts on the Rise

November 29, 2011

The utilization of health savings accounts (HSAs) is rising, creating a win-win for employees, employers, and HRO benefits providers. Let’s take a look at the results of two recent studies to find out why.

Buck Consultants conducted a survey (http://bit.ly/uu10es), commissioned by its parent, ACS, A Xerox Company, which revealed that HSAs are not only saving employers and consumers money, but also helping employees (and retirees) make better decisions about their healthcare. Consumers of HSAs are putting aside more money for potential medical costs than they did before (69% of those enrolled in High Deductible Health Plans [HDHPs] contributed an average of $1,000 to their HSA accounts  for individual coverage, and $1,500 for family coverage). They are also engaging in healthier lifestyle choices and doing more research for preventative care. Employers report that the cost of providing an HSA-qualified plan is less than that of a standard Preferred Provider Organization (PPO) plan. You might be thinking, this is good for the employer, but what does the employee think? Well, 72% of account holders chose the HSA-qualified plan even though they had other plan options, and 82% said their selection was based on the ability to save tax-free money.

According to the results of a survey released by Mercer (http://bit.ly/vZiiFL), due to the rising cost of healthcare plans and cost per employee, employers are taking action to try and keep costs down, e.g. nearly a third with 500 or more employees offer consumer-driven health plans, i.e. HDHPs linked to HSAs or health reimbursement accounts, up from <25% in 2010. Because of the high deductible to the employee, they cost less than other plans, around 20% less per employee than a PPO.

Here are two examples of leading benefits administration vendors helping their clients:

  • ACS, one of the first providers to implement an HSA in 2004, has 25,000 employer implementations and $1 billion in HSA assets
  • In 2010, Fidelity increased its number of HSA clients by >50% while adding 22,000 new indiviudal HSA accounts.

Providers can help with further education. Focusing on employees, I myself did not understand HSAs at first. I’m in my fourth year of having an HSA combined with my HDHP. First, let me say that I’m not the HSA spokesperson and there are pros and cons to any plan that need to be evaluated on an individual basis. The upside for those not familiar – speaking for my HDHP consumer-driven health plan I opened an HSA with – is that there are no co-pays and no forms to fill out. Preventative care is free, e.g. annual physicals. So if you are healthy, there are no costs except your monthly premium. But if you do get sick and need to go to the doctor, you pay out of pocket until the annual deductible is met, then in-network pays a high percentage until you reach your annual yearly max—that just happens to be approximately the same as the annual max I can contribute to my HSA; and like an IRA, the amount you contribute is deductible on your income tax.

HRO providers that can help clients navigate through the intricacies of healthcare will be greatly valued!

Gary Bragar, HRO Research Director, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

The Rise of Smartphone Apps in Benefits Administration

November 16, 2011

Over the past year, HRO service providers have launched various smartphone apps. One of the first apps I became aware of was ADP’s RUN app for small business owners. It’s been interesting monitoring the progress of this app since its launch in October 2010. Within six months, it reached 100,000 users while only available for Apple devices. It has since been made available to the Android and RIM platforms, adding even more users.

Payroll seemed like an ideal place for HRO service providers to develop apps. ADP then took it one step further and launched the ADP Mobile Solutions app, which provides users with HR, payroll, and benefits information including retirement savings information such as current 401(k) allocations, distribution percentages, account balances, and rates of return.

Towers Watson also has an app, TWGlobal50. It provides HR and benefits professionals with various information including planned pay increases, changes in employee engagement levels, talent mobility interest rates, and changes in healthcare benefit costs.

Unlike payroll, apps within benefits administration can cover a broad range of topics such as Morneau Shepell’s My EAP app, which provides the following:

  • Health and wellness articles (from its workhealthlife.com website)
  • Access to confidential e-counseling
  • LifeSpeak On Demand video clips on a range of personal and work-related topics.

Other apps available from benefits administration providers allow users to access more personalized data. For example, Buck Consultants’ Benefits Genie Lite and Benefits Genie apps enable users to track a wide variety of health and insurance information for themselves or other family members including:

  • Allergy information
  • Prescription medications
  • Vaccinations
  • Operations
  • Family history
  • Physician contact information
  • Benefits co-payments and deductibles, etc.

Although not an app per se, Aon Hewitt is also enabling its client employees to access their personal health and retirement information from smartphones via secure websites, allowing users to make changes to their retirement plans and even enroll for benefits.

These more interactive personalized apps make it easy for employees to stay connected and engaged as more responsibility is being shifted on individuals to manage their own retirement savings and health. Also, with healthcare reform, we are likely to see apps expanding to new areas such as healthcare exchanges.

Mobile access from any device will quickly move from a differentiator to a requirement, including for HRO. The difficulty is the development time, costs, and security challenges for services that will not likely generate new revenues as much as protect revenues and support continued growth. Technology investment decisions will be critical in staying current and still managing needed margins.

Stay tuned.

Amy L. Gurchensky, Research Analyst, HRO, NelsonHall

 

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.

The Only Certainty is Uncertainty: Managing the Impact of Health Care Reform on HRO

September 21, 2011

A now perennial concern for U.S. employers is the cost of providing health care to employees. It is number one on the list of the “2011 Top Five Total Rewards Priorities,” a study sponsored jointly by Deloitte and the International Society of Certified Employee Benefit Specialists (ISCEBS).  Here are the top five for this year:

  1. The cost of providing healthcare benefits to active employees
  2. The willingness of employees to pay for an increasing portion of benefit plan coverage and to manage their own reward budget
  3. The ability of reward programs to attract, motivate and retain talented employees
  4. The ability to adjust to and comply with current and future provisions of Health Reform legislation
  5. Clear alignment of Total Rewards strategy with business strategy and brand.

Employer uncertainty on the requirements and cost of compliance with U.S. health care reform continues to the point where “the only certainty is uncertainty,” according to the study. In the meantime, 65% of 242 respondents said they had no plans to change employee-sponsored coverage. Only 9% of employers indicated that they plan to drop employer-sponsored coverage and pay the penalties with the expectation of further legislation and required changes. Lastly, about 20% of employers said they would consider converting to a defined contribution plan for health care and encourage employees to join an exchange.

Eight-five percent of employers are highly certain that an impact of health care reform will be higher costs for both the employer and employees. Seventeen percent are also concerned they will fall in competitiveness with peers in other countries.

If most employers are planning to change health care benefits at this time, what are they doing? They are closely monitoring the situation with 73% reporting they will re-evaluate benefits due to health care reform in the next 12 months.

Uncertainty is also an opportunity. Besides the obvious opportunity for continued benefits consulting, there are other opportunities for HRO. For example, total rewards statements are more than nice fluff. With effective communications, employers can help employees appreciate the full value of their wages and benefits, support the case for understanding cost shifts to employees, and even help with the attraction and retention of talent. Also, dependent audits have been a good foot-in-the door technique the last couple of years, ensuring value benefits go to only covered employees. Finally, absence management is another growing HRO service line with great potential to assist employees in difficult times and impact the bottom line when well-managed.

In core benefits administration, highlighting expertise in monitoring, understanding, and implementing regulatory benefits changes shows clients they will have a capable partner in their corner, no matter the changes ahead. Being the knowledgeable resource of choice in the midst of health care reform uncertainty and rising costs can be a leverageable factor in attracting new clients and deepening the relationship with current clients.

Is your HRO provider the rock you can rely on in times of uncertainty?

Linda Merritt, Research Analyst, HRO, NelsonHall

Interested in reading the latest HRO news from NelsonHall? Subscribe to our newsletter by emailing amy.gurchensky@nelson-hall.com with “HRO Insight” as the subject.