Creating an effective healthcare employee benefits package
Philip Dickey, MPH, PHR, SHRM-CP
Partner and Director of Human Resources at DoctorsManagement
When medical practice administrators talk about staff “compensation packages,” they shouldn’t just mean salary. Typically, this package includes an employee’s pay plus several other perks like health insurance, retirement plans, and paid time off.
Benefits play a big part in employee recruitment and retention, helping to make employees feel valued. They want to know that the doctors care about their well-being and respect their choice to be a part of the practice. While mandatory benefits exist such as Social Security contributions, Workers’ Compensation, and Affordable Care Act (ACA) medical coverage for large employers, most benefits are voluntary in nature and determined by the practice, as the employer.
Benefits are a significant factor in compensation costs. Due to the practice’s cost investment and the importance of employee benefits in recruiting and retention, practices should have a well-thought-out benefits plan that meets both employee needs and practice objectives.
Step 1: Identify the Practice’s Objectives and Budget
The first step in designing an employee benefits plan is to identify its objectives which is offering benefits that reflect both the practice and employee needs. As important, is determining the budget for spending on benefits, as most practices have cost constraints in offering benefits to employees. The rising cost of offering benefits such as health insurance will greatly affect benefit choice. A benefits broker may be helpful in this process.
Step 2: Conduct an Employee’s Needs Assessment
Employee needs will differ, as some employees may prioritize getting more paid vacation days, while others place a higher value on retirement plans. A needs assessment should be conducted to determine the best benefits based on the needs and wants of the employees. Consider employee inquiries in the form of personal interviews and simple questionnaires.
Step 3: Develop a Benefits Plan
Once the needs assessment and gap analysis are complete, the practice will need to develop the benefits plan and evaluate it against the benefits budget. Can changes be made to the plan design to reduce cost? Can benefits that are underused or not valued by employees be eliminated? What are the administrative costs, if any, of the benefits? Will employees have to contribute, and how much? Will a third-party administrator and broker be necessary for certain plans?
State and local laws may require employers to offer certain benefits like paid sick leave and disability to employees, and practices should be aware of such requirements.
Smaller practices that are growing can phase in employee benefits so that as growth occurs, the practice can continue to attract and retain the talent needed and expand their employee benefits package as resources allow.
According to a 2016 benefit survey by The Health Care Group, common examples of benefits provided by medical practices to full-time employees include: “Vacation Days (92%), Sick Days (79%), Personal Days (66%), Flex Time (10%), 401K Plan (77%), Fully paid Health Insurance (26%), Partially paid Health Insurance (68%), Dental (54%), Vision (49%), Life Insurance (56%), STD (34%), LTD (38%), Continuing Education (66%), Uniform Allowance (61%), and Child Care (5%).”
These are among the considerations a practice will make in determining whether to add, change or eliminate benefits offerings.
Step 4: Communicate the Plan to Employees
The communications strategy is a critical component of benefits planning and management, to ensure employee buy-in. Without buy-in, the practice’s efforts may be futile. If employee input was obtained and used in the benefits design process, practices should share this with employees to let them know how their feedback influenced the benefit plan’s design. The positive impact on recruiting, retention and employee morale may be lost without effective communication.
Step 5: Perform a Periodic Plan Review
Periodically review the benefits plan to determine if it is meeting the practice’s objectives and employees’ needs.