Pain Relief For Spending

IE-Engine Inc. last week released Human Resources Cost Management version 6.0, available by subscription through an ASP model. The software lets companies analyze the costs associated with and performance of vendors that provide HR benefits and services, such as relocation and outplacement services, as well as health-care coverage.

Tools that help companies get a better handle on the costs of health-care benefits for employees have become a hot topic. "This is the last cost bastion for many employers," says Jay Corscadden, partner at Adams, Harkness & Hill, a venture-capital firm that last month infused IE-Engine with $6.4 million, marking the privately held software developer's third round of financing. For many companies, "there hasn't been a lot of discipline over health-care spending," Corscadden says.

The cost of health care has been soaring. Early last month, the U.S. Centers for Medicare and Medicaid Services reported that in 2001, the country's health-care spending rose 8.7% to $1.4 trillion, the largest level in history.

As a result, employers have seen the costs of some plans undergo double-digit increases, so tools that can analyze health-care costs and squeeze optimal performance from benefits providers are welcome, HR administrators say. ABB Ltd., a provider of power and automation technologies to the utilities industry, began using an earlier version of IE-Engine's software last summer to create and manage a Web request-for-proposals process to determine what health plans and health-maintenance organizations should provide benefits to ABB employees in North Carolina.

Once HMOs responded to the RFP, the software scored and ranked all proposals based on ABB's needs, helping the company better analyze costs and benefits before making its choices, says Mike Scarpa, ABB's manager of employee benefits. ABB will use the software for future health-benefits RFPs, he says.

HR departments can also use the software to survey employees via the Web about their satisfaction with health plans and to gauge how employees would react to changes in benefits.