Demand for EAPs is forecast to grow strongly as the economy continued to improve
Los Angeles, CA (PRWEB) October 31, 2013
The Employee Assistance Program Services industry has experienced an increase in demand over the past five years as firms have aimed to reduce the cost of healthcare and turned to alternatives. Employee assistance programs (often called EAPs) have gained popularity as a preventative measure, allowing employees to address personal issues before they escalate into larger health problems. The more employees access their healthcare plan, the more insurance providers increase the rates. As such, companies have looked to EAPs to reduce insurance premium costs while keeping employees healthy and at work. Despite a recessionary hiccup, industry revenue has grown at an average annual rate of 2.0% over the five years to 2013 to $2.6 billion.
According to IBISWorld Industry Analyst Nikoleta Panteva, “An increase in the size of the US workforce, coupled with growing acceptance of EAPs into benefits packages, is expected to boost industry performance in 2013.” The industry has become a hospitable environment for players to expand their operations. While the number of EAP companies is not anticipated to grow strongly over the past five-year period, the number of locations has increased at 2.4% per year on average. Existing players have widened their reach to cater to previously underserved geographies. Additionally, the Employee Assistance Program Services industry has a low level of market share concentration. Companies have been seeking opportunities to expand service offerings to achieve greater economies of scale and minimize risks caused by overall changes in the economy.
As the economy continues to improve and companies generate higher profit margins and hire more employees, demand for EAPs is forecast to grow strongly. Additionally, “provisions under the Patient Protection and Affordable Care Act support employers' enrollment in preventative programs, thereby boosting industry revenue growth,” says Panteva. However, with the divorce rate projected to fall over the next five years, EAPs are at risk of losing revenue streams. Industry operators that focus on expanding service offerings are most likely to mitigate this risk and continue thriving over the outlook period.
For more information, visit IBISWorld’s Employee Assistance Program Services in the US industry report page.
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IBISWorld industry Report Key Topics
The Employee Assistance Program Services in the US industry provides support for family, financial, career and legal issues through an employee's benefits package. Industry operators provide a variety of services, including health coaching, nutrition and naturopathic advice. Employee assistance programs are often referred to as EAPs.
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