Client Success Story: HVH

RMP Helps Client Gain Control of Employee Healthcare Costs Without Cutting Benefits
Horsham Veterinary Hospital (HVH) is a full-service animal healthcare facility located in suburban Philadelphia. In 2006, after 20 years of providing outstanding care to a growing group of loyal pet owners, HVH moved into a brand new 12,800 square-foot facility. HVH has more than 50 employees, including doctors, technicians, groomers, and other animal-care specialists.

Health Benefits Challenge
In the 5 years leading up to its 2008 health insurance renewal, HVH was burdened by annual cost increases of between 15% and 20%. HVH was no longer financially able to support these cost increases. However, they wanted a strategy that would still provide their employees with health benefits at no cost (for single coverage).

Solution
Risk Management Partners LLC was brought in to develop a multi-year strategy to help HVH gain control over health benefit costs, while still meeting their objectives for maintaining good employee relations. This strategy involved the following:

• Introducing a new carrier with a Health Savings Account (HSA) option for its employees.
• Establishing the HSA as the ‘no cost’ option for employees, with HVH contributing $780 to a single employee’s $1,250 deductible.
• Allowing employees to choose a traditional Preferred Provider Organization (PPO) plan at their own cost.

All eligible employees elected the HSA option, and HVH experienced a 6.1% increase in health benefit costs, a significant improvement over the previous years’ increases of 15% to 20%.

Results and Ongoing Success
Statistics provided by the insurance carrier showed that 70% of the employees spent $500 or less during the year. As a result, most employees carried money over into 2009. Additionally, HVH employees are now:

• More engaged in their healthcare decisions
• Inquiring about the prices of services
• Enjoying the tax advantages of the HSA model.

For its 2009 policy renewal, HVH considered options centered on three decision points:

1. Changing carriers – HVH decided not to.
2. Changing the insurance policy deductible – HVH increased it from $1,250 to $2000.
3. Changing HSA contribution levels – HVH increased their contribution to $100 per month, or $1,200 per employee per year.

The cost increase to HVH for the year was 7.8%. Although they could have achieved a cost increase as low as 3.5% without cutting benefits, HVH wanted to be generous to their employees. The result? Their employees are happy. While they receive cash into their HSA for the first $1,200 of healthcare needs, the employees know that most of them will spend less than half of that amount. It’s a “win-win” situation for both HVH and its employees.

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