There is a significant ‘perception gap’ between purchasers’ satisfaction with occupational health (OH) services and providers’ own perception of the service they deliver, according to a recent survey. It also shows that one of the greatest difficulties facing OH is the absence of robust management information. This makes it difficult to measure the quality and economic value of OH services.
The most surprising result was the limited emphasis, from both buyers and providers, on integrated service offerings. In terms of future spend on health management services, there is a clear trend towards ‘hard results’.
The survey, by OH consultancy psHealth, was conducted in summer 2009. Detailed feedback was collected from 30 senior managers directly involved in OH purchasing decisions on behalf of large private or public organisations. In parallel, 20 senior executives representing the largest OH providers in the country were asked about service delivery challenges and trends relevant to their organisations.
At the heart of building a successful OH organisation is the ability to deliver on the areas that are most important to the customer and have the biggest potential returns for both parties.
Figure 1 contrasts relative satisfaction scores among OH buyers with the providers’ perception of their service quality. A positive score means buyers have rated the providers’ service higher than providers rate themselves, and vice-versa.
The good news for OH professionals is that the study shows that in the categories ‘Responsiveness’ and ‘Case outcomes’, providers underestimate the quality of their service by 8% and 10% respectively. In other words, they are actually more than meeting customers’ expectations.
By way of contrast, the 12% gap between the level of service providers believe they are giving and what the buyers are actually experiencing vis-à-vis ‘case visibility’ – the provision of ongoing visibility and reporting on individual OH cases to the buyers – presents a serious challenge for OH. In fact, while a significant 13% of buyers are currently ‘extremely dissatisfied’ with this area, providers themselves recognise that it is an issue, with just over a quarter not being satisfied with their own delivery.
Significant competitive advantage should, therefore, accrue to those OH providers who recognise the shortfall, and drive more resources into giving their clients access to real-time case status.
Value for money
Almost inevitably, perhaps, the survey shows that you cannot get away from price: 75% of buyers feel it is ‘very important’ when choosing a provider. However, there appears to be a growing emphasis on the importance of delivering solid management information. Consistent with the findings on case visibility and, in this economic climate, a focus on value for money, 50% feel that robust management information is ‘very important’, with the remainder rating it ‘important’.
Providers of OH services have for years talked about demonstrating return on investment (ROI) for their customers and helping them to better risk-manage their human capital. However, potential purchasers seem to indicate that many providers are still far from delivering on this promise, and many senior buyers of OH services indicated frustration on this point. Buyers of OH services perceive that accessible management information is at the core of providing an outsourced service, and outsourcing companies with more sophisticated IT solutions have made greater progress in this area over the past three to five years.
Only 13% of buyers rate where an OH service is located as ‘very important’. This is likely to lead to continued consolidation as the regional advantage is disappearing, and a need to spread larger system investments over a larger customer base.
It is encouraging for OH that despite the current tough economic climate, 90% of buyers expect spending on OH and related services to stay constant.
Buyers expect the largest increases in spending to be on health surveillance and traditional OH, where added value is most evident (see figure 3).
The business case for pre-employment screening still stacks up, but providers can expect price pressure and, following the recent case of Cheltenham Borough Council v Laird, where pre-employment screening failed to disclose evidence of a history of mental health problems related to work, a concentration on the robustness of screening processes.
It seems that the best way for providers to deliver screening profitably will be to rely on online screening with the use of decision algorithms that have been signed off by OH professionals and lawyers. Using nurses or even administrators to check paper questionnaires is just too costly. In the future, these resources will only be applied when ‘the machine’ has escalated a case.
Historically, external OH providers have struggled with poor profitability. This has often been put down to the cost of staff, staff turnover and clients requiring non-standard practices.
It is, however, an incomplete picture. OH providers have, in the past, failed to develop services and processes that demonstrably add value. They are also all too often subject to the revolving doors of frequent tender processes.
Despite the survey clearly showing that providers consider understanding contract profitability as very important to them (see figure 4), many organisations are probably five to 10 years behind leading service industries in terms of integrating contract profitability analysis into their management information systems.
At the most basic level, providers need to understand how much time their OH professionals and administrators spend serving their contracts. By making relatively small investments in systems that capture the staff time spent and allow benchmarking, providers will able to make great progress in understanding contract profitability and direct resources where they best benefit the client and their own bottom line.
OH is going through an exciting transformation from a cottage industry to that of a modern service sector. Successful organisations will focus on ‘what is important to my clients’ while driving process optimisation and increased automation to improve efficiencies.
The more widespread use of remote service delivery has only just begun and, judging by the findings, process improvement methodologies such as ‘Lean’ and ‘Six Sigma’ will become part of the everyday vocabulary of senior OH executives.
The new industry dynamics where regional focus is becoming secondary to good systems and processes will change the OH landscape. The benefit of size and scale will marginalise many smaller organisations. Expect stiff resistance from many traditional OH professionals. However, it is clear that the successful organisations of the future will deliver services that customers value, and invest in systems and processes to ensure that they can become integrated into their customers’ HR supply chains, and deliver profitably.
Mindy Daeschner and Ingolv Urnes are principals at psHealth, a provider of workflow and case management applications for OH and medical rehabilitation.