ACCORDING to a new report, more than 4 in 10 companies say they will cut eligibility for healthcare benefits if costs continue to rise.

Increased government investment in the NHS has provided little relief to companies. Only 16 per cent of surveyed respondents say the extra money invested will reduce pressure on employers to provide healthcare benefits.

"Confidence in the NHS has waned and more employees now turn straight to private healthcare which can treat increasingly complex conditions. As a result, the number and size of medical claims have escalated, and company schemes are feeling the strain," said Steve Clements, European Partner at Mercer Human Resource Consulting who undertook the survey.

However, 8 in 10 companies believe they would have difficulty attracting and retaining good employees if they did not offer private healthcare. Furthermore, 9 in 10 consider that providing healthcare is an important part of being a caring employer.

The survey found that 8 in 10 employers believe that improved employee productivity currently justifies the cost of providing healthcare benefits and services.

Nevertheless, the results indicate that not all employers have the data to measure the return on their investment. While nearly three-quarters of companies say they can easily access data on employee absence levels, this figure drops to under two-thirds for those who can identify the causes of absence.

"The full cost of employee absence can be nearly a quarter of company payroll," said Mr Clements.