A spike in total health expenditure will increase the number of people with health insurance and add to the number of employees who use EAPs; in addition, the number of businesses will grow, allowing EAP suppliers to raise prices from higher demand.
Los Angeles, CA (PRWEB) April 07, 2014
Employee assistance programs (EAPs) have a buyer power score of 3.5 out of 5. Buyer negotiating power is limited by the low availability of substitute services. “As EAPs become more popular and widespread, suppliers will be able to charge higher prices,” says IBISWorld procurement analyst Aileen Weiss. “Nonetheless, low market share concentration provides buyers with some leeway to shop around and compare prices between suppliers.”
Over the past three years, employee assistance programs have increased in popularity. Particularly during the recession, many employees sought mental health services as they and their families fell on hard times. “To address the mental and emotional well-being of their employees, businesses purchased EAPs because they proved to be a positive investment for both the employees and the workplace,” adds Weiss. “Therefore, prices for services increased as demand for the programs grew.”
In the next three years, support for EAPs will continue as the need for mental health services is brought further to the forefront and those that seek such services are accepted. Though the Fair Labor Standards Act (FLSA) does not require employers to provide wellness programs like EAPs to employees, EAPs make up a very small percentage of the total health benefits a company pays per employee. As a result, buyers may be more likely to purchase such services, knowing that they will not present a huge financial burden. Finally, as the number of businesses and people with health insurance grows, suppliers will be more likely to increase prices.
Even as demand for EAPs rises, buyers will maintain some negotiating power as the number of EAPs grows and market share concentration remains low, providing buyers options. Some of the larger firms include ComPsych Corporation, Ceridian Corporation and ESI. Additionally, the importance of EAPs continues to be brought to light, as evident during the October 2013 government shutdown, when federal-led EAPs remained available to ensure that users could access such services.
Before making a purchase, buyers should ensure that they reduce the stigma of seeking help in the workplace to make sure that employees use these programs and to make certain that money is well spent in the programs. To lock in lower prices, buyers should seek to enter long-term contracts to avoid future price spikes. For more information, visit IBISWorld’s Employee Assistance Programs procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of employee assistance programs (EAPs). EAPs help employees and their family members handle personal problems that may adversely impact their work performance, health and well-being. Such programs center on substance abuse, workplace issues, mental health, personal problems and traumatic events. EAPs generally include short-term counseling and referral services for employees and their household members. These programs are also called member assistance programs (MAPs) or employee and family assistance programs (EFAPs).
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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