With medical costs rising faster than other remuneration components, such as salary and allowances, providing an attractive employee benefits package could become increasingly challenging for organisations in the Middle East, according to a recent survey.

In its Medical Trends 2017 report, global professional services firm Mercer Marsh Benefits notes that medical costs continue to outpace inflation, putting pressure on employers’ operating expenses and employees’ purchasing power.

Across the region, medical and healthcare costs represent between five and 10 per cent of companies’ total compensation and benefits spend, said Koen Van Kerckhoven, Mercer Marsh Benefits leader, MENA.

He explained that while the increase in salary and allowances is measured against general inflation, medical benefits spend follows medical inflation. Globally, medical inflation for 2017 stands at 9.7 per cent, while projected general inflation is 3.7 per cent.

“[For the MENA region], the differential between medical and general inflation is [more than] eight per cent,” he added.

The survey also indicates that lifestyle diseases, such as heart and respiratory ailments, account for the majority of medical spend in the region.

Asked whether current medical cover offered by insurance providers in the region is geared towards promoting prevention, rather than cure, Waqar Mohamed – managing director, First Select Employment, FM, Aviation at G4S UAE – said the situation was more complex.

“There are insurance companies that offer great patient-focused services, [but] I believe it’s HR’s responsibility to do proper research before signing any contract,” he said.

Van Kerckhoven added that improving efficiencies in the healthcare insurance market, particularly in terms of plan design and provider network management, would help organisations ensure the sustainability of their existing benefits packages.

“Benefit design could become more consistent and achieve cost containment, for instance, by having designated service providers for standardised tariffs,” he said. “On the provider network management side, we would like to see the emergence of preferred provider networks, standardised tariff and coding systems, and prescription management.”

However, the success of such initiatives will depend on the commitment of all stakeholders – employers, insurers, third party administrators, brokers and consultants, he said.

Van Kerckhoven also advised organisations to use technology to enhance the employee benefits experience and promote engagement.

“Companies can take more control of their medical programme using the power of data and analytics by applying tools and technology that unravel the insights that go along with it,” he said. “Once in control of the data and subsequent insights, decisions related to programme design and the communication around that are more easily embedded in the longer term into HR and compensation and benefits strategy.”

Wearables and mobile health apps could also offer a way for employers to motivate employees to take control of their health and increase productivity. In addition, companies could organise fitness activities and health education campaigns to raise awareness among employees, said Mohamed.

“At G4S UAE, for example, we also have contracts with insurance suppliers to provide seasonal health check-ups to our employees, and we train our managers to create a stress-free work environment,” he added.

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