Low-wage healthcare job benefits increase amid labor shortage

Hospitals and health systems are looking to do more to address financial stress among employees, particularly those earning lower wages.

Besides pay hikes, employers are implementing income-based benefits, including more voluntary healthcare coverage, to retain and recruit workers amid higher inflation and the ongoing effects of the COVID-19 pandemic.

At 37% of hospital systems, benefit contributions have been reduced for low-wage workers, compared with 30% a year ago. Another 21% are considering rsuch eductions in the next year, up from 15% last year, according to an annual survey released this week by financial-services firm Aon. The firm surveyed 145 health systems representing more than 1,200 hospitals and 2.6 million employees.

Nearly 20% of systems are also aligning the cost burden of deductibles and copays with an employee’s salary. Another 15% are considering a similar change, the report found.

“Somebody making $150,000 versus $50,000, should they be paying the same towards the healthcare costs is a philosophical, organizational question,” said Sheena Singh, senior vice president in Aon’s national healthcare division. “It’s not that they weren’t doing it in the past, but there’s an increased number of health systems that are doing it compared to prior years. They are really looking at how can we modify our benefits to better support the financial well-being of our employees and be more proactive about making those changes?”

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Singh said there has been a rise in programs for low-wage employees who face additional financial barriers, such as transportation and daycare costs. More voluntary options for life insurance and disability coverage are being made available.

Aon found the efforts can make a difference, especially for workers with support-staff skills in high demand across multiple industries.

For example, 39% of hospital systems offer programs for student loan forgiveness or refinancing, while 41% are considering them, according to the report. That’s compared with last year’s results at 31% and 30%, respectively.

Employees at not-for-profit hospitals can qualify for the Public Service Loan Forgiveness program, through which full-time workers can have their outstanding debt on federal education loans forgiven tax-free after 10 years of monthly payments.

Singh said it is a necessary balancing act for hospitals to absorb costs on the employee benefits side as well as higher labor costs in general and rising prices on supplies. Many systems are projecting negative operating margins for the year. She said hospital systems want to implement changes causing minimal disruption, such as virtual care, to move care to lower-cost settings while also keeping a robust benefits package. Systems can use any savings from the lower-cost strategies to reinvest into employees.

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“All of the top priorities are about the human capital and talent focus because without that asset, they’re not going to be able to provide the (core) services … around patient care and management, and that can have downstream effects to safety and other things,” Singh said.

Hospital systems also are looking at pharmacy benefits for their employees, seeking high-performance networks to reduce drug costs and ensure contracts come with better discounts, Singh said. More than 60% of systems offer lower copays for employees on prescriptions filled at in-house pharmacies. In some cases, employees are required to fill certain prescriptions internally. Fourteen percent of hospitals will only offer 90-day prescriptions through an in-house pharmacy, the report found.

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