national consumer driven healthcare summit october 20, 2008 michael vittoria integrating wellness...
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National Consumer Driven Healthcare SummitOctober 20, 2008Michael Vittoria
Integrating Wellness & Preventive Care into a CDHP
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World’s largest manufacturer of Personal Protective Equipment. Headquartered in Paris, France.
$1 billion global sales, $400m in the United States
1300 Employees insured in U.S.
56% PPOs, 30% HSAs, 14% HMOs
10 Major locations in 9 States + National Sales Force
2008 US health insurance expense: $9.0 million
Sperian Protection: A Brief Introduction
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The Healthcare Cost Problem
Plan Design Strategy
Employee Communications
HSA Enrollment Results
Wellness Results
Agenda
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Sperian’s Cost Containment Challenge
Merger in September 2001 – need to create a common culture
5 Health Plans in 2002
Health Insurance Trend
• 2002 $6,616,212 (12.3% increase)
• 2003 $7,132,928 (7.8 % increase)
• 2004 $9,764,864 (36.9% potential increase)
Tried Contingent Premium
EmployerContribution
EmployerContribution
EmployeeContribution
2005
EmployerContribution
EmployeeContribution
2006
EmployerContribution
EmployeeContribution
2007
EmployeeContribution
2007
Funding Gap:
When will it occur and how much will it be?
20042001 2002 2003
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Long-Term Cost Containment Required a Strategy
Key Elements of our strategy:
Support our overall business plan
Be consistent with our corporate culture. Understand our benefits relationship with our employees. What is it now and what do we want it to be in the future?
Be implemented in phases so that employees will be introduced to healthcare consumerism gradually, over time.
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A Solution Must Address 3 Core Issues
How much can our company afford to spend on health care as a percentage of revenue?
How much can our employees afford to spend on health care as a percent of their hourly wage?
Will our employees see their health plan’s features and benefits as desirable, thereby enabling us to attract and retain the best people to our organization?
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In 2004 Sperian adopted a CDHP funding arrangement by carving out certain parts of our insured plans to be self-insured through an HRA. Sperian introduced HSAs in 2007.
1 National PPO/HSA plan and 2 regional HMOs BCBS-RI now covers 1,017 Employees (359 in HSAs) A lower health cost trend
• 2004 $7,965,538 (11.7% increase)
• 2005 $8,320,981 (4.5% increase)
• 2006 $8,622,024 (3.6% increase)
• 2007 $8,846,197 (2.6% increase)
• 2008 $9,005,259 (1.8% increase)
4-year plan savings of $8.5 million Payroll deductions have remained stable for 4 years
Our Strategy: Start by Phasing in a CDHP
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Health Cost Per Employee Per Year
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Do
llars
Market Trend
Sperian Target Trend
Reduced Trend
2005 Introduced3-Tiered HRA Choice
2004 Introduced Hybrid CDHP Design
2010 ROI from Wellness
Initiatives
2006 - 07Launched
HSA Program
Our Roadmap to Containing Healthcare Costs
2007- 08 LaunchedWellness Plan Design
2008 - 09Wellness Programs
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Average Cost Per Employee
•Avg. Cost of PPO Plans Family Individual•Kaiser Survey (Sept. 2007)1 $12,443 $4,638•Towers Perrin (Jan. 2008) 2 $13,704 $4,704
•Rhode Island State Employees3 $14,388 $5,136•Sperian PPO Option $10,521 $3,983•Sperian HSA Option $ 8,925 $3,437
•Average Cost Per Employee – All Plan Types•Towers Perrin (2008) 2 $9,312•Sperian $7,332
•Sources: 1) Kaiser/HRET 2007 Survey of Employer-Sponsored Health Benefits, Exhibit 6.3 2)Towers Perrin 2008 Health Care Cost Survey, • 3) Providence Journal, August 26, 2007 Page A17
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Claims Reduced 24% Over Traditional PPO Design
Comparison of Sperian per member utilization with BCBS-RI plan-wide data for 2007 plan year
(22.2%)
(22.5%)
(13.9%)
(24.4%)
(33.4%)
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Plan Design
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Wellness: A Key Part of Our Strategy for 2008
All of our 2008 health plan options offer an expanded list of preventative services at no cost to employees or family members:
Physicals w/ related lab tests, Well baby visits, Immunizations (adult & child)
Pap smears, Screening mammograms, Annual GYN exams
Screening colonoscopies (beginning January 2009)
Enrollment in 2008 health benefits was tied to taking a Personal Health Assessment
Employees also received their own confidential personal wellness report
One-day Wellness Clinics at all major locations during open enrollment Free cholesterol, blood glucose, blood pressure screening & flu shots
Employee wellness committees were established at major locations. Sperian will invest $100,000 in local wellness programs and $50,000 in increased free preventive care in 2008
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Classic OptionUp-front deductible of $1,500 Single / $3,000 per Family - but ALL services are FREE once the deductible is met. You can use a Health Savings Account to pay for your out-of-pocket expenses, but Sperian will NOT make a contribution to your HSA account.
Classic OptionUp-front deductible of $1,500 Single / $3,000 per Family - but ALL services are FREE once the deductible is met. You can use a Health Savings Account to pay for your out-of-pocket expenses, but Sperian will NOT make a contribution to your HSA account.
Completing a Personal Health Assessment (PHA) is required for the plans aboveCompleting a Personal Health Assessment (PHA) is required for the plans above
Wellness HSA OptionAn up-front deductible of $1,100 Single / $2,250 per Family applies; Deductible is cumulative for all family members - but ALL services are FREE once the deductible is met; You can use a Health Savings Account to pay for your out-of-pocket expenses with a $250/$500 Sperian contribution.
Wellness HSA OptionAn up-front deductible of $1,100 Single / $2,250 per Family applies; Deductible is cumulative for all family members - but ALL services are FREE once the deductible is met; You can use a Health Savings Account to pay for your out-of-pocket expenses with a $250/$500 Sperian contribution.
Wellness PPO OptionCo-payments for Office Visits are $15 or $25 per visit;Pharmacy co-pay is 25% ($50 maximum) per prescription;A Deductible of $500 Single / $1,000 Family applies to all other services;You can use a Flex Account to pay for your out-of-pocket expenses.
Wellness PPO OptionCo-payments for Office Visits are $15 or $25 per visit;Pharmacy co-pay is 25% ($50 maximum) per prescription;A Deductible of $500 Single / $1,000 Family applies to all other services;You can use a Flex Account to pay for your out-of-pocket expenses.
Sperian Health Plan Options for 2008
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2008 Health Plan Cost ComparisonWeekly Payroll Deductions
ClassicOption
Wellness HSA Option
Wellness PPO Option
Individual Plan $18.00 $13.00 $23.00
Two-Person Plan $36.00 $26.00 $46.00Family Plan $49.00 $39.00 $59.00
Individual PlansClassicOption
Wellness HSA Option
Wellness PPO Option
Premium Cost for the Year $936 $676 $1,196Calendar Year Deductible $1,500 $1,100 $500
Copayments (add to Total) $0 $0 See Detail
Sperian Contribution to HSA $0 $250 $0
Your Maximum Cost for 2008* $2,436 $1,526 $1,696
Potential Annual Savings versus Classic Option $910 $740
Two-Person PlansClassicOption
Wellness HSA Option
Wellness PPO Option
Premium Cost for the Year $1,872 $1,352 $2,392Calendar Year Deductible $3,000 $2,250 $1,000
Copayments (add to Total) $0 $0 See Detail
Sperian Contribution to HSA $0 $500 $0
Your Maximum Cost for 2008* $4,872 $3,102 $3,392
Potential Annual Savings versus Classic Option $1,770 $1,480
Family PlansClassicOption
Wellness HSA Option
Wellness PPO Option
Premium Cost for the Year $2,548 $2,028 $3,068Calendar Year Deductible $3,000 $2,250 $1,000
Copayments (add to Total) $0 $0 See Detail
Sperian Contribution to HSA $0 $500 $0
Your Maximum Cost for 2008* $5,548 $3,778 $4,068
Potential Annual Savings versus Classic Option $1,770 $1,480
* The Wellness PPO maximum cost above does NOT include copayments for office visits and prescription drugs. Actual costs for the Wellness PPO Option may exceed the values listed.
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Communications
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Listen Before You Launch . . .
To help us understand the decision-making behavior of our employees when it come to health care decisions – and to help us plan our communication campaign, we held a series of focus groups around the company in June 2006 (and repeated the process in 2007 and 2008):
71 Employees from 5 key locations
12 to 15 per session – mixture of salaried and hourly
Participants from all of our health plan options, plus non-participants
Each group followed a structured agenda with four main components that allowed us to capture consistent information for comparison and analysis:
Reasons for selecting their current plan option
A ranking exercise for key health insurance attributes
Understanding of how they make consumer decisions
Recommendations for improving plan communications and education
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•Coverage Comprehensive Network, Providers & Services
•Cost Payroll & Out-of-Pocket Co-pays and Deductibles
•Convenience Easy to follow forms and processes
•Cash Flow Ability to pay as you go - with no surprises
Focus Group Results - % of Responses
Ranking 1 2 3 4
Coverage 59 24 14 3
Cost 30 53 10 7
Convenience 8 11 44 37
Cash Flow 3 12 32 53
#
#
Most Common Response in the Category
Second Most Common Response
Employee Focus Groups: Ranking the 4 C’s
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Targeted Employee Communications
It’s YOUR money – to keep, spend or save!
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Enrollment
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Enrollment Results Based on 1,219 employees enrolled in ahealth plan option for 2007 and 1,179 enrolled in 2008
23% HSA enrollment in year 1
2007
30% HSA enrollment in year 2
2008
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122 Employees switched from PPO to HSA 27 switched from HSA to PPO
Enrollment rate for families is the same (33%) for PPO and HSA participants
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Enrollment Results by Age
69% of HSA participants age 40+
2007
73% of HSA participants age 40+
2008
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Average age of Sperian employees in U.S. is 46
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Enrollment Results by Income
52% of HSA participants earnless than $50,000
2007
55% of HSA participants earnless than $50,000
2008
$75,001-$100,000
16%
More than$100,000
11%
More than$100,000
12%$75,001-$100,000
15%
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Average income of Sperian employees in U.S. is $40,000 per year
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Wellness
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Case Mix
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
2007 2008 2010 2011
Trend Effect
Utilization
Cost
Healthcare Costs are Driven by 3 Factors (“Trend”)
Cost – the cost of healthcare services.
Utilization – the frequency of use of healthcare services.
Case Mix – the Age/Gender mix of the insured population.
2009
We can influence
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0%
10%
20%
30%
40%
50%
Determinants of Health Status
Determinants 10% 20% 20% 50%
Access to Care
Genetics Environment Behavior
We have more control than we think that we do!We have more control than we think that we do!
Our Health Status is Mostly the Result of Our Behavior
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The Wellness Continuum (Just Don’t Get Worse)
prevention…early detection…early intervention…medical intervention…medical management…end of life initiatives
prevention…early detection…early intervention…medical intervention…medical management…end of life initiatives
PRENATAL D
EAT
H
wellness
prevention treatment
H e a l t h R i s k F a c t o r sOPTIMAL HEALTH CHRONIC ILLNESS
“Because health naturally deteriorates as we age, keeping people from getting worse is actually the best way to make them healthier”
– Dee Edington, University of Michigan
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Reducing Health Risks Reduces Health Cost
“Invest your money keeping your low risk people healthy. That’s the business case for health” – Dee Edington
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Shape Up Sperian: Our 2008 Wellness Competition
Sperian 12-week ResultsParticipants Weight Loss Exercise Hours Pedometer Steps 806 3,522 lbs. 29,576 545,896,004
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Shape Up Weight Loss Results
17.3
23.7
36.1
39.9
25.8
21.4
12.6
9.1 8.25.9
0
10
20
30
40
HealthyWeight
Overweight Obesity I Obesity II Obesity III
Start of Program End of Program
The average Sperian employee who participated in the weight loss division had a starting Body Mass Index (BMI) of 30.7. By the end of the 12-week program, the average BMI was reduced by 1.4 points to 29.4 and the aggregate BMI for the group was reduced by 542 points.
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ROI of Shape Up Program Due to Reduced BMI
An individual’s BMI is highly correlated with medical and pharmaceutical claims costs. A decrease in BMI by one point is associated with a $202.30 decrease in medical and pharmaceutical claims costs over one year (Association of Healthcare Costs With Per Unit Body Mass Index Increase, Dee Edington, American College of Occupational and Environmental Medicine, 2006).
The decrease of 542 BMI points in the Sperian employee population over one year is expected to result in a decrease in medical claims and pharmaceutical costs of $109,647. This does not include significant cost-savings associated with decreased absenteeism and worker’s compensation claims and increased productivity, morale, and retention:
Medical and Pharmaceutical Claims Cost Savings Associated With BMI Decrease
Cumulative BMI Reduction (points): 542Cost Associated With One BMI Point: $202.30
Total 1-Year Medical and Pharmaceutical Claims Savings: $109,647
Cost of Program: $19,950Return on Investment: 5.5
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Our 2008 Wellness Program Strategy Paid Off
An essential component of our long-term strategy to control health cost inflation centers on the belief that it is less costly to invest in the health of our workforce than it is to pay for the cost of treating illness. As part of our $150,000 investment in wellness programs in 2008, we required employees to become more active partners in good health management:
All of our 2008 health plan options offer an expanded list of preventive services at no cost to employees or family members:
Physicals w/ related lab tests, Well baby visits, Immunizations, Pap smears, Screening mammograms, Annual GYN exams
Enrollment in 2008 health benefits was tied to taking a Personal Health Assessment
1480 out of 1535 employees (96.4%) completed PHAs and received their own confidential personal wellness report
One-day Wellness Clinics at all major locations during open enrollment
74% of Employees received free cholesterol, blood glucose, blood pressure screening & flu shots. Over 60 employees were referred for follow-up medical care, including one person who found out they were diabetic
Our Shape Up Sperian competition was a big success.
$109,647 in expected 1-year medical claims reductions and 5.5 ROI.
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What our employees are saying . . .
I lost 18 pounds and I am getting out and walking and feel so much better. I'm not so tired all the time. It was a perfect time of year to get everyone motivated.
This was a very challenging experience for me, but it was well worth it. I have more energy, healthier, sleep better, lost one size and don't know how many inches. I would certainly do this again.
Setting up teams was a great idea to make this process more competitive. I am kind of sad that it's over. I plan on keeping my success alive by continuing.
I have changed my way of living. I have learned that exercise is very important every day even if it is for a short time. I really enjoy it.
I’m very proud to say that I’m more active, more productive and I’m 20 lbs lighter. But the real benefit is how I feel, both mentally and physically. Thank you for letting me participate; I hope to do it again next year.
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More InformationMichael Vittoria
VP Human ResourcesSperian Protection900 Douglas Pike
Smithfield, RI 02917
401-757-2111