Healthcare: an unhealthy outlook

In the definitive Chartered Institute of Personnel and Development, Reward
Management Survey 2006, the vast majority (86%) of companies in the booming
private service sector offered private health care. Expanding this employee perk
was also seen as one of human resources’ priorities in the coming months.

Whatever the government says it is easy to see why this employee benefit is
regarded as almost compulsory. Patients think they are still waiting too long
for hospital treatment despite recent improvements. A survey of 3,000 people by
the National Centre for Social Research found the majority of people believe NHS
waiting times are still too long. A significant 81% want shorter waits for
elective operations.

Health insurance providers have noticed that whatever swing there may have
been away from health insurance, this has been checked by the appreciation that
extra cash in the NHS has largely gone into higher pay packets rather than
improved care.

For profitable finance companies employing highly paid staff, any down time
is not only expensive, but could, given the nature of personal client
relationships, be commercially damaging. It pays to have a healthy staff who
don’t have to worry about the healthcare of their families. And if they need an
operation to have them in and out as quickly as possible.

The waiting list for non-emergency operations stands at 792,000, around half
a million below its peak. The government claims that no one waits more than six
months for an operation, and by 2008 the aim is to reduce this to 18 weeks.

Waiting game

But public expectations are higher than the government’s targets, especially
in outpatient appointment waiting. For example, when it comes to mild back pain,
people think it’s reasonable to wait four weeks for an outpatients appointment,
but the average is nearly seven. There is a gulf between what the government
says is happening and the reality on the ground.

While the general public may have to wait for Blair’s long-heralded NHS
reforms, those working in the highly successful service sector have long had
another option – private health care. At present, around 7% of British
households have the benefit of company-purchased private health insurance.

A similar number buy their own health cover. A study by the Institute of
Fiscal Studies says: ‘Our main finding is that there is a positive association
between the purchase of private health insurance and the length of local NHS
waiting lists.’

But among accountants the demand for healthcare is not particularly high. In
the most comprehensive study of accountants’ salaries and benefits produced by
Accountancy Age/Robert Half Finance & Accounting, only 11% of accountants
put healthcare as their number one perk. This was headed by a company car (18%)
and bonus (13%). While 13% of male accountants voted for healthcare, only 9% of
women did.

This is consistent with the findings of John Pardoe managing director of
Universal Provident, a health insurance provider, who says: ‘Among the well-paid
finance sector there is little basic interest in the health insurance package.
Most are well paid enough to handle their own healthcare. No one is joining a
company because of its health insurance provision. In fact, many major companies
are introducing an excess of £150 as a way of reducing their premiums. If it was
a sensitive issue they wouldn’t dare.’

Stephen Clements of Mercer HR Consultants says that companies buying
healthcare cover are trying to engineer the offering so that it is not only an
employee perk, but an employer benefit.

‘The 10% inflation each year in these policies makes them expensive and so
more value is being sought through offering flexible benefits and integrating
these care packages into absence management programmes,’ says Clements.

Hamish Nesbitt, a consultant at the career advisers Penna, says: ‘For
qualified accountants health insurance is taken as given. Its absence would not
make anyone walk away from a job, but might raise a few eyebrows. When junior
staff are offered a choice of perks up to a certain value they rarely take
health insurance.’

Family matters

Carolyn Wilkinson senior employee benefits manager at PricewaterhouseCoopers,
says: ‘What we provide in terms of healthcare benefits has nothing to do with
the NHS, it’s all to do with what is best for our people. We are interested in
supporting them and their families.

‘We don’t feel we are competing with others in this area. What we are doing
is always looking at extending the offer with our health providers so it will be
more relevant to a workforce that stays at work longer, while at the same time
they may have long term conditions such as cancer or chronic back pain.’

The business of business is business, and so it is with health insurance. Ben
Willmott, employee relations adviser at CIPD, says: ‘Companies have to show a
return on their investment in health insurance. When it comes to perennial
concerns such as back pain and stress, if these common complaints are tackled
quickly they can disappear, if they are left then they can keep recurring and
blight years of a working life. In these cases, the lack of availability of NHS
services must be an issue.’

Irena Cowan, HR director at BDO Stoy Hayward, says: ‘In recruiting and
retaining the right staff, a strong benefits package is one of several factors
for candidates choosing to join the firm and for employees to continue working
with us. Other key factors include career opportunity and work/life balance.

‘In addition to core benefits, which include life assurance and permanent
health insurance, we offer a flexible benefits package. This enables our staff
to pick and choose the remuneration most appropriate for their individual needs
and personal circumstances. With specific regards to healthcare benefits,
private medical insurance is one of a range of benefits which we offer our
employees within the flexible benefits package.

‘As to its degree of importance, this varies enormously between individuals.
For example, for some employees it is a very important benefit and for others,
it is of little importance.’