Aggressive Measures Can Cut Health Costs

March 8, 2002 (PLANSPONSOR.com) - Companies had better start moving aggressively to cut health care costs with help from their employees or they could face a doubling of those costs within five years, a new study found.

The problem is acute: The Watson Wyatt Worldwide study found the median health care costs rose by 14% this year – up from a 10% hike last year. Researchers found that human resource officials who move aggressively on health costs enjoy a slower increase at 12.9%.

Just trying one approach won’t work, the Watson Wyatt researchers warned. Companies have to implement a mix of approaches including:

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  • giving employees more control over how their benefit dollars are spent. Nineteen percent of respondents were already taking this step while 43% said they planned to implement it in coming years.
  • The report notes that those who oppose employee-directed health programs fear workers might forgo needed treatments to save money.
  • buying disease management programs separate from the health plan. Five percent already did it; 15% planned it.
  • analyzing benefit options with Return On Investment measures. Eight percent did it; 15% had it in the plans.
  • direct contracting with health providers such as doctors and hospitals. Eight percent said they did it; 11% planned it.

In support of their calls for aggressive health care cost cutting, the Watson Wyatt researchers said that aggressive managers tended to work for financially healthy companies – more than 33% of aggressive managers versus 17% who are more cautious.

Watson Wyatt conducted the survey during November and December of 2001 among almost 300 companies with at least 1,000 workers who collectively provide benefits to ten million workers and dependents.


 

State Street Clears Hedge Fund 'Hurdle'

July 3, 2002 (PLANSPONSOR.com) - State Street has finally found a way in to the hedge fund business, having reached an agreement to acquire International Fund Services, a New York and Dublin-based provider of alternative investment services.

IFS services over 100 large asset management firms and private equity fund managers, representing more than 350 funds globally, according to the firms. IFS is headquartered in New York City, with operations centers in New York City and Dublin, Ireland, with approximately 500 employees.

“This acquisition marks an important milestone in delivering on two of our key priorities — enriching our relationships with sophisticated global investors and extending our capabilities in alternative investments, including hedge funds,” David Spina, State Street’s chairman and chief executive, said in a statement.

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IFS provides fund accounting and administration as well as trade support and middle office services for alternative investment portfolios.

Spina also noted that State Street will take ownership stakes in service providers specializing in alternative investments, “as they increasingly allocate a larger share of their funds under management to non-traditional investments,” according to the statement.

The transaction is expected to close in the third quarter and have a neutral effect on earnings this year, State Street said.

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