Challenges of increasing health care costs & other benefits amongst employees in the hospitality industry - Essay Example

Discuss challenges of increasing health care costs & other benefits amongst employees in the hospitality industry. Introduction Increasing healthcare costs have become a major issue in the American context in recent years, so much so that President Obama has observed that American economy may not improve until the issues impinging healthcare are set right and healthcare costs rationalized forthwith. This assumes more serious proportions when one considers that healthcare system in US is fragmented and in total disarray. The poorer of American citizens have little, if no access to private profit-biased medical facilities, or even profit-neutral medical aid, and would need to spend their own funds, in the event of an emergency. On the one hand, employers may cut costs, but on the other, it is also necessary for them to increase wellness programmes and step up” initiatives designed to encourage healthy behaviors and promote employee accountability." (Hewitt Survey: Keeping Employees Healthy Remains a Priority for U.S. Companies, Despite Short- Term Need to Cut Costs). These would perhaps serve as the silver bullets that could cushion the effects of healthcare costs in the future and steer US out of the present imbroglio with aplomb. The main idea that needs to be kept in mind is in terms of cost benefit analysis that is imperative in present scenario, where healthcare costs are galloping unbridled. The Government needs to be able to be able to enforce costs cuts, which would not only serve the economy well, but would also, increase well-being, productivity and overall contribution of employees. Statistics on present healthcare scenario in the country Nearly 195 M (70%) of its population enjoy health care insurance through Medicare or profit-biased health insurance agency. Around 52M (19%) people seek recourse through Medicaid. Around 50M poor and socially backward inhabitants have no recourse to public insurance schemes and have to fend for their own during emergencies. The distortions in the system are palpable and need to be sorted out. (Bradley). It is believed that between 1990- 2003, the rate of growth of America’s per capita spending on health care services has been around 3.6%, which is higher than most developed countries in the world. (Tierney). Further, it is believed that, although America’s healthcare costs form nearly 15% of GDP, the quality, efficiency and performance of healthcare services needs to be improved. The US spent 14.1% ($1.4 trillion total and $4,914 per capita) of the GDP on health care in 2001. It is believed that health care expenses in United States will rise to $2.08 trillion (16% of GDP). Further it is also expected to cross over 18.7% of GDP by 2014 (Centers for Medicare and Medicaid Services 2006). (Bradley). What is main problem concerning this topic within foodservice or hospitality industry? It is seen that the increase in the health care costs leads to loss of performing employees, cuts in head counts, conversion of full time jobs to part time ones and restructuring of jobs to core areas. This is more pronounced in the present condition where it is conservatively estimated that annual spending growth rates is fixed around $ 25 trillion. It could also be seen that often the increased health care cost would be passed on by the employers to employees in the form of wage deductions and compulsory insurance schemes, not voluntarily opted by the employees. The problem of attracting and retaining qualified workers, once an issue limited within an isolated number of markets, is now increasingly becoming a global challenge. Demography, wage levels, failure to adequately deal with worker satisfaction and a reputation for long hours and low pay are all cited as contributing factors. Creative hospitality professionals have begun to develop innovative strategies for acquiring and retaining high quality workers. (Bruce). What challenges do operators face if this problem goes unchecked or unresolved? Give examples of operators faced with recent litigation in news, etc. One of the main aspects in the health care industry costs is that of insurance. In the US context, it is seen that high rise in the health care expenses and cost conscious employers are constraining employees to look for other alternatives for heath care options. It also needs to be seen that in US, nearly 46 Million people are not insured and nearly 250 million are underinsured, and this shifts the cost to the insured sector. (Industry Voice: Medical Tourism on Boom, Despite Downturn). Other major aspect if this problem would go uncontrolled or unchecked is the reality of medical mal-practices. It is often seen that health care professionals, especially in the private sector, resort to recommending costly MRI and CT scans in their own private clinics, which is a form of medical malpractice categorically banned under US laws. In the USA, Medical malpractices lawsuits are proliferating nowadays, thanks to large number of carelessness and errors, on the part of the consulting health care specialists and careers. Yearly deaths of Patients Causes 106,000 Negative effects of medication 80,000 Complications arising from infections contracted during hospital stay 20,000 Other hospital errors 12,000 Unnecessary and costly surgeries/procedures 7,000 Medication errors in hospitals. It has been cited that medical malpractices in terms of medication error are the single most common cause for death or harm to nearly 1.5 lac patients in the United States alone. (Statistics on Medical Malpractice Lawsuits). This aspect is important when considered in the context of rising medical costs and often, patients having to spend for their own treatment. In the present background of economic slowdown, the money flow in the economy has been tightened and, therefore, the issue of escalating costs of health care is indeed one of utmost concern, not only for patients and careers, but also for administrators and policy makers.(Fuhrmans, 4). What are some of the best human resource practices on this topic? Some of the best human resources practices on this topic need to consider pre-emptive and preventive measures for protection of health and well being, through the use of diagnostic tools and other necessary measures. Changes in patient behavior and increased use of technology is expected to bring about much needed changes in health care costs, but it is also to be ensured that expenses are not only curtailed, it also needs to be cut down dramatically, in order to achieve health care cost targets. Again, it is seen that the Federal Government need to increase funding for public medical insurance. Also, the efforts of well meaning employers to commence wellness programs and initiatives to personalize the experiences of health plan members are on the rise. It is believed that employers will lay emphasis on prevention and disease management programs to control costs, rather than transferring higher levels of cost-sharing onto workers. (Behind the Numbers: Medical Cost Trends for 2009). Besides this, the best human resource practices would be in terms of keeping patients’ interests first, by way of interventional options and seeking permission and informed consent before commencing treatment. Equally importantly the best human resource practice shall also be in line with best moral, ethical and confidentiality standards that need to be complied with, in as much as patients’ course of treatment and its determination are concerned. Showcase some companies that employ the best practices of this topic The first that comes to my mind is Starbucks, the coffee conglomerate, which offers health care benefits and 401K benefits even to members its part time workforce, which is unprecedented in the annals of US corporate history. (Employees first: Strategies for service). Again, Marriot International also has a sophisticated medical system for its employees, “The hotel chain is using a Web-based personal health record system from ActiveHealth Management, which is owned by insurance company Aetna.” (Kolbasuk McGee). Another company who could be a past of this list is Wal-Mart which addresses healthcare benefits and costs for employees quite competently and satisfactorily. Give examples of how to handle the situation with excellence. Starbucks, for one, has set the highest standards of health excellence for employee healthcare routines and benefits. “Full health-care benefits (medical, dental, vision and alternative services) are offered to all employees, including part-timers who work at least 240 hours per calendar quarter.” (Hammers). However, rising health care costs does affect its ultimate profitability and corrodes revenues, especially in the present economic climate. Thus most companies are faced with two options, considering the fact that short terms drivers of cost cannot be tackled through just cost-cutting. The first would be in terms of having a long term obligation to bettering the health of employees and their families. The second would be in terms of revoking health care in toto. “Most companies believe that investing in the long-term health of their population is the most effective way to mitigate costs and create a more productive and engaged workforce." (Hewitt Survey: Keeping Employees Healthy Remains a Priority for U.S. Companies, Despite Short- Term Need to Cut Costs). Conclusions: It is observed that health care costs have increased substantially in recent times. But the silver bullet is that while total healthcare costs has gone up, the rate of growth has slowed down in recent years. (Employer’s Step up Enlistment of Employees in Battle against Health Care Costs). While some corporate do try to keep healthcare costs under control and are also concerned about employees’ health and productivity, there needs to be concerted efforts to seek a holistic view of the subject and address solutions that could deter negative aspects of health care costs, arrest further impairment to the economy, and alleviate increased hardship to the working population.. Economic Downturn Impact on 2010 Health Care Programs Increase No Impact Reduce Eliminate Benefit plan design offerings 13% 37% 49% Read More