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© Copyright 2000 Rogers Media. The following article first appeared in the May 2001 edition of
BENEFITS CANADA magazine.
Insights
Contrarian views, news and international intrigue
By Andrea Davis
Time lost
Short-term disability (STD) costs Canadian employers more than workers' compensation and long-term
disability (LTD) combined, according to a new survey on managed time loss. In fact, STD accounts for 50% of
total absence costs for the average employer surveyed.
The average cost of absence in the workplace for both occupational and non-occupational plans is about 3.5%
of total payroll or $33.3 million a year for a medium-sized organization, according to the study conducted
by Toronto-based William M. Mercer Ltd. Two-thirds of this total is for non-occupational absences among
medium-sized organizations.
To put the 3.5% into perspective, a medium-sized employer must generate an additional $22 million in
revenue to cover occupational and non-occupational plan expenses, says the survey. Sectors with the highest
STD costs include governments, municipalities and health and education. Manufacturing, retail/wholesale and
transportation have the lowest STD costs. A similar pattern exists for LTD.
"It's important to note that these are only the direct costs for short-term and long-term disability and
workers' compensation," says Anne Nicol, leader of Mercer's managed time loss practice in Toronto. "With
the recent increased attention on company sales growth and earnings reports, these types of impacts on
revenue and earnings cannot be left unmanaged. Reducing leakage by just 5% or 10% can have a meaningful
impact on the bottom line."
Absence is an issue of employee wellbeing and commitment, adds Nicol, and it requires comprehensive
solutions. For instance, she says stress and attendance management programs focus on coping skills and
behaviour and rarely address the underlying organizational factors that contribute to stress and
absenteeism. "Time loss must be managed in a systematic way, just like employers manage any other important
aspects of their business," says Nicol.
More than 80 Canadian organizations participated in the study, representing nine sectors, with the average
employer having a payroll of $94 million.-- Kathryn Dorrell
Prescribing behaviour
Dr. Fred Freedman, a general practitioner in Toronto, told one of his patients to take 400 mg of ibuprofen,
four times a day to curb his pain. The drug is available over the counter, but the patient asked Dr.
Freedman to write a prescription instead so it could be covered under his drug benefits plan. "I get that
all the time," Dr. Freedman says, admitting that whether or not a patient has a drug plan does affect his
prescribing behaviour to a certain extent. He says many patients are aware of what is--and what is
not--covered by their employee drug benefits plan.
Dr. David Imrie, an occupational health practitioner and president of Assure Health Management Inc. in
Toronto, says the group benefits industry affects prescribing habits to a large degree. A lot of choice is
taken out of the physician's hand, he says, as doctors are increasingly forced to adhere to the limits
imposed by certain restrictive drug formularies. But he adds that the benefits industry-induced limitations
have not been all bad for the medical profession.
"On that aspect, formularies are good in encouraging that the first-line drugs are, in fact, tried before
the fancy, new expensive drugs," he says. "Physicians have to become more knowledgeable of what is covered
and be responsive to the financial situation of their patients. The key thing about physicians is that
we're pretty conservative. And once we find a drug that we have confidence in and it works, we tend to keep
prescribing it until there's some reason to change."
Ashim Khemani, senior vice-president of group markets at Liberty Health in Toronto, says there are several
factors that influence the prescribing behaviour of physicians. There's been a marked increase in media
attention with the announcement and launch of new drug therapies. Public awareness has also increased, he
says, and patients are more educated and often request specific drugs and treatments by name.
--Young Um
Drug plan dependent
Almost six million Canadians have inadequate insurance for prescription drugs and 10% have no coverage at
all, says a study commissioned by the federal government that illustrates just how dependent citizens are
on employers to provide drug plans. Those most likely to slip through the cracks are people aged 55 to 64
who are starting to retire, according to the study.
Regional disparities emerge in the report. Ontario is home to 70% of all uninsured Canadians. People with
chronic health problems are considered poorly served by the various programs there. B.C., Alberta and
Quebec have no uninsured citizens as those provinces offer universal prescription drug insurance.
Individuals receiving less than 35ยข back on every prescription drug dollar spent were considered
underinsured. --Kathryn Dorrell
Numbers crunching
Just under a third of plan sponsors rate their members' numeracy skills as poor.
Q&A
John Gillies is retiring at the end of this month as executive director of the Ontario Dental Association
(ODA). He spoke to BENEFITS CANADA about the changes he's seen in the industry during his 27-year tenure
and the ODA's new fee guide to be phased in starting next year.
What's the biggest change you've seen in the dental industry during your tenure?
The quality and nature of dental care available to people. When I started, probably 35% of the population
accessed dentists on a regular basis. Now figures indicate anywhere from 75% to 90% of Canadians see a
dentist regularly.
What's the rationale behind the new fee guide?
The current fee guide was established in the late 1960s. As new technology came, as the emphasis on care
changed and the incidence of payment by third parties increased, the fee guide became more of a blunt
instrument and not particularly sensitive to patient needs. We started, using experts in healthcare
economics a number of years ago, and came up with a new methodology for assessing fees to the patient that
would be sensitive to their needs, market conditions and also meet dentists' needs.
Plan sponsors have expressed concerns that the new fee guide may make dental plans unaffordable. How do you
address that?
One of the big issues for plan sponsors is the cost of healthcare. When insurance plans first came in, the
theory was that there would be an initial high cost for restorative work as people started seeing dentists
when they hadn't done so for years and then people would get to a maintenance level and that cost should
taper off. That's never materialized because more people are accessing care at a higher level and that
costs more money. The fee guide will help, to a certain extent, deal with that. But this has to be married
to effective plan design. And most plans on the market now are the basis of a negotiation process on
compensation and have little to do with management of expenses or access to healthcare. For the most part,
[the plans] cover whatever's in the ODA fee guide in a given year. There's little thought given to ways of
enhancing the value to the employee and the employer.
What role do benefits plans play in your vision for the future of the dental profession?
They're absolutely vital. Dentistry is still an elective service. Dentistry is something that can be
postponed if people are feeling an economic crunch. If there's a well-functioning benefits plan, there's no
reason for a person to postpone care.
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