Managing Automation - August 2008 - (Page 33)

tection in case of a serious illness. In 2004, Textron went from offering 154 health plans to U.S. employees to one consumer-driven plan with three options. Textron’s goal, says Cathy Streker, the company’s vice president for HR and benefits, “is to provide access to quality care and to get employees to have a vested interest in their healthcare by seeing their doctors regularly for preventative treatment as well as understanding options that they may have for cost savings, like asking for generic drugs at the pharmacy.” The initiative has begun to pay off. Over the past two years, Streker says, Textron employee contributions toward healthcare costs have remained unchanged. VALUE-BASED APPROACH Other manufacturers, such as mail processing equipment manufacturer Pitney Bowes Inc., have focused on value-based healthcare, a growing movement that endeavors to cut costs by keeping employees healthier. In 2000, Pitney Bowes decided to look more deeply into what illnesses among its workers were leading higher healthcare usage and rising costs. Then the company attacked those illnesses by subsidizing the cost of specific medication combinations and providing employees with information about how they could fight those diseases. Using analytical software licensed from the National Institutes of Health, Pitney Bowes discovered that asthma, diabetes, and cardio-vascular diseases were driving up the company’s healthcare costs the most and were responsible for high levels of absenteeism as well. Pitney Bowes cut employee cost for medications for those diseases by 30% to 80%. “Suddenly people began taking their medicine,” says Jack Mahoney, strategic healthcare initiatives consultant at Pitney Bowes. “The end result was that we saw costs related to these conditions go down as we saw more people adhere to appropriate care. There was a reduction in hospitalization and the use of emergency rooms.” In recent years, Pitney Bowes has expanded the program to cover osteoporosis, seizure disorders, and blood clotting-related diseases, and it has begun to subsidize drugs that can help employees stop smoking. The company has also invested in on-site clinics. The result, Mahoney says, is that Pitney on returns investment THE BEST VERSUS THE REST There are big differences between companies that are the best at managing healthcare costs and those that aren’t quite as good. One of the differences is how these companies work with employees to help them make better healthcare decisions. The following chart shows the differences between best-in-class companies — selected for their total healthcare cost per active employee, rate of cost increases, and success in meeting various health benefit objectives — and lower-performing companies. Does your company’s approach to managing health programs include the following: Motivating employees to manage their healthcare purchases responsibly? High-performing companies: Low-performing companies: 36% 78% Supporting employees’ capability to make sound healthcare decisions? High-performing companies: Low-performing companies: 35% 74% Focusing on employee health management? High-performing companies: Low-performing companies: Source: Towers Perrin 72% 33% Bowes’ healthcare costs are now 20% below those of similar companies. In 2007, those efforts saved the company $40 million. In seven years, the disability rates related to diabetes have dropped by half. “The key is that Pitney Bowes was willing to take a long-term approach to reducing healthcare costs,” Mahoney says. “The results didn’t come all at once. They were incremental. But now they’ve really added up.” Other manufacturers should emulate Textron’s and Pitney Bowes’ patience when attempting to stem the rise of healthcare costs, experts say. The reality, says Tom Morrison, a principal in the human capital management consulting practice at Deloitte, is that there are no quick fixes. “There needs to be a degree of patience and faith that efforts will produce results,” Morrison says. “Manufacturers need to take a long-term approach to this in much the same way that they have focused on improving productivity over several years. The reality is that healthier employees are more productive.” ■ 33 August 2008

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Managing Automation - August 2008 Contents Take 1 After 18 Months, the Oracle/SAP Suit Has Little Effect on Maintenance Sales At 100, Foxboro Reinvents Around Its Customers New Private Equity Firm Eyes Software A Software Suite Just for Manufacturers i2 Chief Focuses on Services Plan Notes It's Time for Action Examining U.S. Competitveness Leveling the Field An Unhealthy Situation Exploring Alternatives Math and Science: Key to the Future Product Scan Advertiser Index Next

Managing Automation - August 2008

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