Critical List

Of the many important insurance issues that club and resort managers must address each year, none may be more pressing right now than tending to the health of their employees.

by Don E. Vance, CCM (editor@clubandresortbusiness.com)
January 2007
 

But that doesn’t mean a major insurance storm isn’t brewing. The rising cost of healthcare continues to be one of the nation’s fastest-growing concerns as health insurance premiums surge—increasing at nearly three times the rate of average earnings, according to a recent study. At clubs and resorts, like all businesses, health coverage has become almost as important to many of our employees as salaries and wages.

Traditionally, most private country clubs have paid up to 100 percent of the employee premium for health insurance, while hotels and resorts have usually paid 50 percent or more. But this is quickly changing. As health insurance premiums continue to rise, we are having to make painful decisions that challenge our ability to offer and maintain benefits packages consistent with what we’ve been able to provide in the past to attract and keep good employees.

In an attempt to control premiums for themselves and their workers, some companies have increased employee co-payments and scaled back insurance benefits. Others are raising deductibles or out-of-pocket maximums, or even levying surcharges on workers who sign up for family benefits but have a spouse eligible for healthcare coverage at another job. And some are offering higher pay to employees who choose not to enroll in employer-provided programs.

All of these represent possible actions we can take in the face of this significant threat to our normal way of doing business and dealing with our employees. But in my 37 years in the club and resort business, during which I’ve been a dishwasher, waiter and bartender before working my way through the ranks of most management positions in the industry, one thing I’ve learned is that some of the best solutions can often be found just by trying to take a fresh look at the things you see and often take for granted every day. I think that applies to how we can approach the current health insurance dilemma, too. Let me give you some examples, from my own experiences, of other approaches you may not have thought about:

• Assess the health of your “sick day” policy —At one club I managed, we did a study and found that only 34 percent of our employees were using their sick days, and the majority of those who were had been with us for less than two years. Our more tenured employees, though, were not using their sick days at all. So we converted these days to personal time off, and weighted the benefit towards longer service. This had a remarkable effect on how “sick” our other employees ended up being—we actually experienced a five percent reduction in insurance claims for doctor’s visits.

• Make it worth waiting for—Another way to modify employee medical insurance premiums is to extend eligibility waiting periods for new employees. Like many clubs, we’ve traditionally provided health insurance for our employees after 90 days of employment. But to try to contain insurance costs, we’ve now made it mandatory that all employees must have an introductory eligibility period of 180 days. That’s bought us 90 days of not having to pay our 50 percent of the premium costs. Just as importantly, we’ve eliminated some of the frustrations we were having with employee turnover. We no longer have employees coming to work for us just for the insurance—and bringing serious medical conditions with them.

• Put your gym to good use—Pretty much all of us now have some form of fitness center on our properties. If we don’t, we at least have miles of cart paths or grounds that can be walked. Why not find ways to put these “natural” resources, when they’re not being used by members or guests, into play as “personal wellness programs” for your employees? It will help them stay healthier, and help keep your healthcare costs in better shape, too. These kinds of programs and resources can be used as part of employee health assessments, or to provide pay incentives for achieving weight control goals. Another approach that’s within easy reach is a health and nutrition program led by your chef.

The End May Be Near
To end on a positive note, I can report that in some especially competitive markets, employers are starting to see a real break in the pace of healthcare premium increases, after several years of double-digit rises. Believe it or not, at some clubs premiums were even lowered for this year. In my area, thanks to moderating medical costs and a decision by Alabama and Tennessee’s largest insurer to forego premium increases on some products due to higher reserves, I was told by one colleague that his club actually experienced a six percent decrease in employee medical costs.

At my club, we received a five percent increase for this year, after double-digit increases for prior years. Needless to say, we signed the agreement and ran with it, thinking we got a real deal. But that certainly won’t stop us from still doing as much as possible on our own to try to continue to find new ways to firm up our healthcare coverage.

Don E. Vance is a member of the Club & Resort Business Advisory Board and a regular contributor of “Today’s Manager” articles. To comment on this story, ask questions, or suggest future topics, write to Don at editor@clubandresortbusiness.com