Implications of Pricing for EAP Integration and ROI
By Mark Attridge, PhD
This article explores the implications of a financial budget devoted to EAP services and how it either promotes, or limits, the opportunities for creating effective partnerships and key integration. I will summarize key points from my EAP Talks keynote presentation at EAPA’s 2016 World EAP Conference in Chicago.
The Organizational Health Map
In my 3rd Quarter 2015 column, I introduced a general conceptual model and visual map that described the most common partners for EAP integration. They included individuals in HR, benefits, leaders of unions, and men and women in executive and leadership roles. These key individuals can invite the EAP to play a more strategic role within the business.
The point is, when integrated into these five areas of an organization, the EAP can do much more than just consult with managers and provide confidential counseling to troubled employees. It can also help to create a healthy place to work that connects employees to a wide range of support programs.
But this can only happen when the EAP has the opportunity for meaningful and regular access to key people and to other programs. As noted, the size of an organization’s budget allocated for EAP services is crucial.
EAP Utilization: “Free” EAP vs. Direct Pricing Models
To examine the implications of product pricing and the portion of a budget allocated for EAP integration, we must recognize the rise of minimal EAP products in North America that are touted as being “free.” This kind of EAP is indeed sold at no direct cost to the organization. Instead, the real cost lies in hidden or embedded services that are rolled into much larger bundled fees (often disability or other health care insurance products). With no line item budget accountability and minimal promotion, this kind of EAP product typically offers a very limited set of EAP services – mostly telephonic counseling for individuals, website-based educational resources, and access to crisis response services.
In a 2013 published survey of 82 external vendors of EAP – see the National Behavioral Consortium study in the Journal of Workplace Behavioral Health – different models of pricing for EAP were examined, as well as the rates of program utilization across all customers. Among the vendors with predominately a “free” EAP model, annual program utilization was very low. On average, they had 1.6 individual cases of EAP counseling per every 100 covered employees per year, and these cases averaged 3.1 counseling sessions per case.
On the other hand, the utilization profile in this same data for the 43 other vendors with predominately direct pricing (either capitated or fee-for-service models) revealed a comparatively much higher level of program utilization. EAP vendors with direct pricing contracts had, on average, 4.9 individual cases of EAP counseling per every 100 employees per year, and these cases averaged about 2.6 counseling sessions per case.
Thus, even though the individual clinical experience was similar (both types had about 3 sessions per case), the full-service, higher- priced EAP delivers three times the total number of individual users of counseling from the EAP than the “free” EAP.
Delivering Greater ROI
When considering the dollar value of workplace outcomes for typical counseling case, having a greater number of total EAP cases generates more net business value back to the purchaser when considering the dollar value of workplace outcomes for the typical EAP counselor case.
I completed a meta-analysis study at EAPA’s 2016 World EAP Conference, which reviewed findings from research projects at 20 different small and large EAPs with an aggregated sample size of over 200,000 EAP cases from all over the world. When comparing the work experience during the month before EAP use versus against the month after use of EAP counseling, the average result was seven: 7 fewer hours of work absence and 20 fewer hours of lost work productivity (less presenteeism) for the typical employee user of EAP counseling.
In addition, the average case had an outcome of 27 hours (or 3.3 workdays) of lost productive time that was restored after EAP counseling. Considering that the clinical case rate utilization rate was roughly three times greater than that of “free EAPs” (4.9 vs. 1.6), this means that about 132 hours of lost productive time (LPT) were avoided by the directly priced EAPs per every 100 employees in the covered population, compared to only 43 hours of LPT avoided for the “free” EAPs. The cost savings argument is even greater when also considering the savings from additional areas of outcomes beyond just productive work time.
The usage rates for other core services were also extremely low among the “free” EAP vendors: only 0.2 work/life users and 0.2 organizational EAP services used per year per every 100 covered employees.
In contrast, these same usage rates in the direct pricing group of vendors were comparably much higher: 1.3 work/life users and 1.8 organizational EAP services used.
In other words, the “free” EAPs had a 2.0% total use rate (all services combined), while the direct-pricing EAPs offering a more comprehensive mix of services had a 8.0% total use rate, which is four times higher. Note that in the NBC study, there was substantial variation between these full-service vendors with some having double or triple the industry average. Note also that in general, internal or hybrid types of EAPs (which have one or more full-time employees of the organization dedicated to the EA program) typically have higher usage rates, larger budgets, and greater reach into the organization than external vendor EAPs.
Promise or Peril for Integration of EAP?
Comparing these utilization rates paints a vivid picture of two very different kinds of EAPs for purchasers to choose from. The “free” EAP offers a minimal level of utilization primarily for individual counseling services, but almost no workplace-based services to the organization. Conversely, and almost 10 times the level of organizational EAP services. Organizational services included:
* Management consultations;
* Topic-specific trainings;
* CISD/crisis incident response;
* Employee orientations; and
* Supervisor training sessions.
It is these organizational services that represent the best mechanisms for the EAP to become more integrated into the organization.
The contrast in service levels for EAPs with different budgets is depicted in the graphic on page 21. The left side of the figure depicts the “empty house” resulting from a minimal investment by the organization in a “Free EAP” type of program that isn’t used much and is largely disconnected from most programs and people in the organization.
On the other hand, the right side of Figure 1 illustrates the “full house” version that results from direct contacts and a significant investment by the organization in a “comprehensive EAP.” This version is integrated into other programs and with key people in the organization.
A more organizationally-focused EAP has several tactical advantages over “free” or more basic EAPs that function mostly as stand-alone counseling services. Integrated EAPs typically enjoy higher rates of referrals into the EAP from managers at the oranization and also use SBIRT risk-screening best practices to identify and refer employees into needed clinical treatment who have more serious mental health or addictions problems. Both of these operational practices generate a higher number of the kinds of EAP users who have the greateast potential for high dollar cost-savings back to the employer in areas of lost productive time, health care and disability costs, occupational accidents, and employee turnover.
Indeed, Dr. Tom Amaral’s presentation at the EAPA’s 2013 World EAP Conference examined the effect of three different levels of financial investment in EAP had on the mix of EAP services used, the associated outcomes, and ROI. The highest total net return on investment was found for the type of EAP with the highest level of investment. In his example, even with the difference in price between the Level 1 EAP was $20 vs. $40+ PEPY; their ROIs were roughly $2:1 vs. $10:1. This was because the much higher investment in Level 3 EAP produced:
* Higher overall usage;
* Greater EAP collaboration with mangers and with other partner programs; and
* Enhanced focus on follow-up and long-term management of referrals made by the EAP for high-risk clinical cases (i.e., depression, anxiety, and alcohol/drug).
This analysis revaled how the high investment EAP has a different expection from the purchaser for where and how it can provide value back to the organization.
I believe that it is through forging strong partnerships, resulting in greater integration, that EAPs can provide the most value to their client organizations. But as with other areas of investment, EAP is most effective when it is fully funded. The willingness of the purchaser to truly invest in the EAP (or not) has clear implications for how much the EAP can become integrated into the organization, and thus ultimately for the level of business value expected from the EAP.
In summary, you get (or don’t get) what you pay for with EAP services. It is important that businesses, HR professionals, and brokers of employee benefits and related insurance products understand this key difference between types of EAPs based on pricing.
CALL FOR CASE STUDIES: In future articles, I would like to profile EAPs or vendors that are partnering with client organizations and other programs in innovative ways. Please contact me with your suggestions for a case study.
Dr. Mark Attridge is an independent research scholar as President of Attridge Consulting, Inc., based in Minneapolis. He has created over 200 papers and conference presentations on various topics in workplace mental health, EAP, psychology, and communication. He has delivered keynote presentations at EAPA World EAP Conferences in 2013 and 2016 and is past Chair of the EAPA Research Committee. He can be reached at: email@example.com.