Why net ROI should be the focus of your next EAP tender

Employee Assistance Programs (EAPs) have come a long way. Once used primarily to address acute psychological stress, they have evolved rapidly in recent years. Today, employees often turn to their EAPs first when seeking support with mental health and wellbeing.

The result is more robust EAP solutions that are fundamentally changing people’s lives.

Many employers have already experienced the benefits of these solutions and want to provide their employees with access to high-quality healthcare benefits, but they also need to manage their budgets. They want to know if this investment will pay off enough to allocate additional budget. Therefore, an important nuance to consider in the RFP process is questions about net return on investment (ROI).

My background is in data science and healthcare technology. For two and a half years, I led Spring Health’s customer-facing data science team as the Head of Customer Analytics, so demonstrating the ROI of an EAP is one of my passions. My goal is to help organizations understand how their business and employees benefit from their EAP, so let’s dive in.

The importance of net ROI

Traditionally, EAP vendors respond to questions about ROI in RFPs by touting financial savings, but what they often fail to mention is the cost associated with achieving those savings.

That’s like talking about how much money you saved at the supermarket without mentioning how much you spent on grocery shopping. How do you know you’re saving without considering the cost?

Similarly, in the EAP space, it’s about more than just gross ROI. Effective EAPs provide quick access to quality care and produce positive outcomes that result in savings in health insurance and EAP spending and improve employee lives.

So what should hiring managers and employers ask in their RFPs? Is there a way to overcome this discrepancy? Let’s consider how net ROI offers a solution.

Keeping an eye on the big picture

Net ROI goes beyond simple financial calculations and includes costs as well. While you want to see improvements in traditional metrics like clinical outcomes, productivity, and reduced absenteeism, you can also think bigger.

And what about the consequences for overall health insurance spending? We know that untreated mental illness can drive up health care costs.

When employees are mentally healthy, they are better able to manage their physical health, are less likely to end up in the emergency room, and are more likely to use the services offered in-network.

Holistic care is an overlooked part of ROI

Essentially, you’re investing in the whole person by providing world-class mental health support from the start. The benefits extend beyond the immediate mental health care an employee receives.

So, when you create the next EAP RFP, don’t just ask about ROI. Ask about net ROI, too. Ask vendors to show the savings and total value their program delivers compared to the cost of the solution. Consider how the EAP:

• Has a long-term impact on overall healthcare costs
• Contributes to employee wellbeing beyond mental health

A truly effective EAP isn’t just about saving money, it’s about creating a healthier, happier workforce. And that’s an investment that will pay off in ways you may not have even thought of.

Net ROI versus gross ROI

Not all ROI numbers are the same. For example, compare net ROI to gross ROI.

Net ROI is your take-home pay. It’s what you’re left with after all deductions. In EAP terms, it’s the return on investment after deducting program costs. Gross ROI, on the other hand, is your pay before taxes. It may look great on paper, but it’s not the whole story.

So if your company saves $500,000 in health insurance costs through an EAP, that sounds fantastic, right? But the math looks very different if you had to spend $1,000,000 to get that return. Net ROI gives you the full picture and helps you make smarter decisions about your mental health investments.

The benefits of using net ROI as a metric

So why should you focus on net ROI in your next RFP? It provides a useful framework for evaluating EAP providers and allows you to:

1. Bridge the gap: EAP and health insurance budgets have traditionally been treated as separate entities. Net ROI shows that they are two sides of the same coin: it represents your investment in your employees’ overall health and gives you a more complete picture.
2. Demonstrate sustainability: An EAP solution that guarantees a net ROI means you can be confident that you will save more than you spend year after year. In an era of ever-increasing healthcare costs, this is critical.
3. Promote transparency: Asking about net ROI in your RFPs raises critical questions about savings, costs and their impact on employee wellbeing.
4. Creating a level playing field: By making net ROI a more widely accepted industry standard, companies are requiring their vendors to speak the same language. No more comparing apples to oranges when evaluating different EAPs.
5. Make better decisions: Net ROI provides a comparable metric that reflects the financial impact and clinical benefit of an EAP program.

By incorporating net ROI into your RFPs, you are not only seeking transparent financial data, but you are also paving the way for more informed and impactful decisions to support your employees’ mental health.

The nuts and bolts of net ROI

So you’re convinced of the value of net ROI in EAP RFPs. Great! But how do you put this into practice?

First things first: standardization is key. When analyzing how vendors calculate net ROI, it should be clear that the methodology used is:

1. Reviewed by external experts
2. Transparent so that everyone understands how providers reach their conclusions
3. Comparing apples to apples using matched cohort studies

There’s another layer: the ability to prove ROI to your own workforce. This requires a good methodology and the right software and technology to track and measure results.

Ensure ROI claims are legitimate

Let’s also talk briefly about credibility. That’s what this conversation is primarily about: knowing if the vendors’ claims are true. When evaluating a vendor’s ROI claims, it’s important to consider:

The gold standard is a net ROI guarantee for all clients. It eliminates cherry-picking of results and uncertainty about whether you will see positive results with your individual group of employees.

A net ROI guarantee provides security

Before we wrap up, let’s briefly touch on a common challenge that arises during the RFP process. When a vendor seeks information on ROI and clinical outcomes, they might say, “We’ve seen these results elsewhere, so you can get them too.” But that’s not good enough.

One solution to this projection problem is a performance guarantee, which is essentially a promise that the vendor’s solution is suitable for your specific target audience.

A performance guarantee means:

• The provider is convinced that its solution achieves a positive ROI for various target groups
• You have proof of the net ROI next year
• You can hold the provider accountable for delivering the promised results

This gives you peace of mind as a company, especially when a provider offers a net ROI guarantee across the board, regardless of company size or industry. Hopefully, this will also lead to a shift where employers view EAP and health insurance budgets as one cohesive unit.

A broader perspective

When evaluating EAP upgrade options, it’s easy to get lost in the numbers. While financial sustainability is important, net ROI is more than just a cost factor.

It is a useful metric that describes:

• How effective the program is in clinical terms and whether it is changing people’s lives for the better
• The magnitude of this impact on overall health (measured in savings to health insurance plans)
• The efficiency of achieving this effect; how many sessions are required to see results?

Net ROI is a single metric that comprehensively describes the impact of an EAP on your workforce.

So next time you create an EAP RFP, ask for a net ROI backed by a guarantee and a solid methodology. Your staff and your budget will thank you.

‍Make sure you invest in the wellbeing of your employees delivers real value – discover how Spring Health’s Net ROI Performance Guarantee can deliver both significant results and financial savings to your organization.