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(Fall 2001)
EAP Ethics and Quality
Does national vs. local service delivery make a difference?
By David A. Sharar and William White
Professionals say they’re concerned about quality erosion as
a result of the recent trend toward national vendors dominating
administration of local employee assistance programs, according to a
recent U.S. survey that measured differences in perceptions of ethical
problems between respondents working for national and local/regional EA
firms.
The survey found, among other things, that a majority of EA
professionals say that quality of service is compromised by subcontractors
who may lack knowledge and competence, that out-of-state administration
may constrain local response time, and that enrolled local companies may
lack elements of a comprehensive EAP, such as adequate training of
supervisors to identify troubled workers.
Over the past few years, a series of mergers has yielded a
tremendous concentration of U.S. employees covered by for-profit,
nationally based EA vendors. In fact, 10 vendors now manage 75 percent of
EAP enrollment in the country — with Magellan Behavioral Health, Managed
Health Networks and Value Options comprising the Top Three.
As EA service control becomes concentrated and structured
into massive delivery networks, examining ethical perceptions of
professionals who work for national, local and regional vendors may offer
some insights on this market trend.
National firms tend to be vendors based in private,
for-profit stockholder or investor-owned corporations that offer programs
throughout the United States as well as internationally. Local/regional
firms tend to be based in not-for-profit behavioral health agencies or
health systems as a division or specialized program, or based in local
proprietor-owned programs, either as a stand-alone EAP or an extension of
a private group practice.
Concerns over
service quality
Interestingly, 71 percent of respondents employed by national
vendors — who arguably have some duty of loyalty to their employers — say
they are concerned that EA service quality is compromised when national
vendors assume control of local aspects of service delivery.
Some 71 percent of respondents who work for large, national
for-profit EA firms indicated that the “shift from local/regional vendors
to national vendors sometimes or frequently compromises the quality of
care.” Similarly, 82 percent of respondents employed by local/regional EA
firms expressed the same concern.
Surveyed professionals alluded to two primary related
concerns: First, they questioned the degree of knowledge and
sophistication among subcontracted EA providers. Most national vendors
contract with “network providers,” affiliates or independent contractors
who can be used on an as-needed basis to provide services in locations
where national vendors do not have staff members or offices.
Respondents suggested that these subcontractors, while
licensed, sometimes lack competence and experience in the distinguishing
aspects of EA practice. Respondents cited examples of subcontractors who
lacked rudimentary understanding of EA core functions, such as conducting
a screening for chemical dependency, managing a supervisory referral, or
having some knowledge of the relationship between personal issues and
workplace productivity.
Secondly, surveyed professionals cited a missing connection
to the local workplace when communications, decisions and account
management migrates to an out-of-state headquarters. The local
subcontractor, they said, is “unaligned and nonintegrated with the local
employer” and has little motivation to build a close and consultative
relationship with the local employer, particularly when the subcontractor
has signed a non-compete clause with the national vendor.
One respondent commented that “I’m essentially a bottom
feeder in my own market, waiting for the occasional referral. I’ve never
even been to the local employer’s work site or had a conversation with
their human resources staff.”
Another respondent remarked “Basically, I’m the local problem
assessment/ counseling resource on behalf of [national vendor] and provide
no real work-based services to the local company. I don’t think I’ve ever
had a supervisory referral.”
Frequently, the subcontractor is not even known to the local
employer. If subcontractors wish to be utilized and paid, they must wait
for a request for service from the national EA vendor headquarters and
“adhere to an array of telephone authorizations and paperwork
requirements,” respondents said.
Critical incidents in the workplace were referenced as one
example of this “unalignment” in action. A rapid and intense local
response by a subcontractor is severely constrained when the incident is
being coordinated by an out-of-state account manager whose “primary
objective is to contain the cost of subcontractor’s intervention.” Another
example cited is the large number of supervisors among geographically
diverse multi-location employers who rarely or never receive EA training
on how to identify and refer troubled employees.
When the scope of the subcontractor’s involvement is limited
to the occasional EA assessment of an employee, essential elements of an
effective and comprehensive EAP are missing. The emergence of national
models of EA delivery, with the “convenience of a
single-point-of-contract,” distances the concerns of the local employer
from the local EA provider and dilutes the workplace emphasis that EAPs
historically bring to the table.
The delineation of roles between the local subcontractor and
the national vendor is not simply a technical one. Without all parties,
local and national, involved in the implementation and delivery of a
complete program, without all the key players receiving incentives to
integrate the EAP with the work site, the claim of a comprehensive and
integrated program may merely be, in some cases, a liberal form of puffing
and spinning, under the guise of marketing and contract retention.
Low-ball rates
Among professionals employed by national vendors, 42 percent
of respondents said that “low-ball rates and bids frequently lead to
quality erosion.” This compares to 26 percent of local/regional players
who responded similarly.
Most EAPs are priced using “capitation,” or a fixed sum per
month or year for each covered employee of a defined workforce. With that
sum, EA vendors are responsible for providing all services as agreed upon
— as well as for paying all legitimate claims from EA subcontractors — in
order to fulfill contractual obligation to the employer or customer.
The ethical breach here, as noted by respondents, was to
knowingly put forth a bid that was insufficient to fund the program as
proposed.
The concern with this finding is that the current pricing
scene is filled with sometimes amazing examples of bids so low that
under-service and under-promotion is practically guaranteed. The data also
indicates that national vendors are, reportedly, experiencing this ethical
problem at a higher frequency than local vendors.
Perhaps intense competition for increased market share (for
example, making up loss by gaining volume) and slim profits or operating
losses among many EA firms has contributed to a climate where the field is
vulnerable to ethical breaches in pricing practices. Several respondents
mentioned experiences of bidding strategies that could probably be termed
“predatory.” Unlike the general health-care industry, EA vendors have not
been successful in negotiating substantive increases in their rates over
the past several years.
Price competition among the big firms and fighting for
dominance in the national market, is fierce. Local and regional players
attempt to justify why their bid is higher or else scrap for market share
by competing with the nationals on price.
Instead of finding ways to adequately fund what EAPs do — or
propose to do — the field has ceded leadership to the invisible hand of
market forces, in effect, becoming its own worst enemy. Despite the
acrimonious nature that frequently exists in the competitive bidding
process, the field needs to find ways to converge mutual interests so that
funding structures do not — at their best — support what some respondents
called “cheapened” mediocre EAPs, and — at their worst — “programs
camouflaged as EAPs,” such as strictly telephone services that call
themselves EAPs but have very limited value or workplace emphasis. There
is an ethical obligation to carefully assess the adequacy of a capitation
rate to make sure that basic EA services to both the employer and employee
are not threatened by rates too low to do the job.
Deception in marketing
Some 21 percent of national vendor respondents report that
“service features and capabilities are frequently misrepresented in
marketing materials, presentations, and proposals,” compared to 8.5
percent of local and regional respondents. Respondents referred to a
variety of misrepresentations in EA vendor promotional materials and
proposals, ranging from outright false claims of capacity to putting
positive spins on certain practices.
Analyzing what this finding means is difficult because the
general practice of marketing/sales, like politics, is a social context in
which the normal rules about truth telling are commonly relaxed. For
example, the EA sales representative is at a heavy disadvantage in her
sales presentation if she admits to a potential purchaser that,
“Unfortunately we do not have credentialed and contractual EA affiliates
in your Midwest locations, but I’m sure our provider relations department
could build that network in the next 120 days.”
The example of grossly exaggerating the scope, coverage,
availability and quality of an EA vendor’s affiliate network in marketing
materials was referenced in the survey as a common form of
misrepresentation. Another was the degree to which some national vendors
claim to be workplace-focused and involved, as though a telephone
counselor at the end of an anonymous 1-800 number has an understanding of
a local employer’s personnel policies and procedures, work environment,
absenteeism and other issues.
The finding suggests that an unknown number of EA vendors,
like other competitive business organizations, employ deceptive mechanisms
to win contracts. Deception, in this context, refers to the different ways
sales representatives refrain from telling the truth about their products
and services.
The degree to which employers and their employee families are
being victimized by deceptive market tactics is unknown, although national
EA vendors view it as a more frequent phenomenon than do local/regional
vendors.
The quality gap is
alive and well
Given the perception by local and national vendors that
ethical problems related to EAP pricing and models of service delivery are
increasing, combined with an extended period of restraint on premium
growth, it is counterintuitive to believe that the quality of EA services
is improving. The more likely scenario is that EAPs could progressively
deteriorate in the midst of these pricing wars and centralization of
service models. Despite the fact that EA administrators, account managers
and sales staff are quick to pledge their heart and soul to quality goals
and services, the quality gap may be alive and well.
While the recent short-term growth of the EA field has been
fueled, in part, by low-ball bids, marketing prowess and even ethically
questionable marketing practices, the long-term health of the field can
only be founded upon a commitment to sustained service quality and a high
level of ethical conduct in both our clinical and business practices.
David Sharar, MS, PhD candidate, is the director of business
development/compliance officer at Chestnut Health Systems Inc. in
Bloomington, Ind. He has been in the EAP field for 13 years and is the
author of several articles related to EAPs, managed behavioral healthcare,
and joint ventures among behavioral health providers. He can be reached at
dsharar@chestnut.org or (309)
829-1058, ext. 3522.
William White, MA, is the senior research consultant with Chestnut Health
Systems and has worked in the addiction treatment field for more than 25
years. He is nationally recognized as a trainer, consultant, and ethicist
and has authored more than 60 articles, research reports and books,
including Slaying the Dragon: The History of Addiction Treatment and
Recovery in America, and the latest edition of Critical Incidents: Ethical
Issues in Substance
Abuse Treatment and Prevention.
He can be reached at
bwhite@chestnut.org or (309) 827-6026, ext. 3403.
Sidebar:
How the Survey Was Conducted
The survey questionnaire used rating scales and open-ended
questions and was sent to a random sample of EA professionals from various
regions of the United States. Respondents indicated perceived frequency of
various ethical problems based upon direct observation and experience over
the past five years.
A total of 272 questionnaires out of 632 were returned, a 43 percent
return rate.
The survey focused on identifying ethical issues perceived as
occurring “frequently” — more than 10 observations — and “sometimes,”
between four and 10 observations. Findings here focus on the differences
between local/regional and national EA players, with some interpretation
and commentary regarding related environmental and financial issues.
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