g. thomas welsh –director hr benefits and serviceshmrc/news/conference slides/welsh.pdf · top 10...
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G. Thomas Welsh – Director HR Benefits and Services
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ENGAGING THE C-SUITE
Presentation Objectives:Describe the information management process
Detail specific engagement goal metrics and tactics
Primary focus will be on U.S. health care for active employees and dependents
Economic Aspects of Health Management
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Complex /Intangible
Simple /Tangible
High
Low
Information Management
Satis
fiers
Dis
satis
fiers
Advisor
Responsive
Insightful
Pertinent
Available
Accurate
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Importance of Cost
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Non-ergo Injuries Ergo Injuries
Non-ADIImpairment
Productivity
H. Care Risk/Utilization
Screening
Benefit Design
Disease Management
Care variance
Risk reduction score
HRA participation
Health Care LTDA&SLost time
Job Content
Fatigue
Exposure
Force Repetition Posture Hours of work
ADI
Occupational Non-Occupational
Direct Costs Indirect Costs Direct Costs
Workers’ Comp
PPG I&I
All Injuries
Impaired
2008 Burden on Health & Productivity
$500MM
Y=f(X)
SC
Current Measure
Additional Measure
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To inform and motivate employees, their dependants and retirees to prevent disease, stay healthy and become better health care consumers in order to reduce overall costs.
To use SMART goals and measures to achieve success
To reduce burden on health and productivity cost to half of the prevailing national average change over 5 years.
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1. Annual net cost per participating employee will be on average (five years) 50% of the rate experienced by companies of like size
2. Total net cost to the company for health care will be maintained at 2003 level
3. HRA participation rate will be maintained at 80% of the employee population on the three year average
4. The employee population at low or no risk will be at 70%
5. At least 80% of the population will know their key health metrics (BMI, cholesterol, blood pressure)
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* Projected.
Source: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1988 − 2008; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1988 − 2008.
Recession 2001 − 2003
Recession 1990 − 1991
Recession 11/2007 − ?
3.4%
-1.1%
3.7%
6.4%*6.1%6.1%6.1%
7.5%
10.1%
14.7%
8.1%
11.2%
7.3%
6.1%
0.2%2.5%2.1%
8.0%
10.1%
12.1%
17.1%
16.7%
18.6%
6.3%
2.6%
3.9%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Workers' earnings Annual change in total health benefit cost per employee Overall inflation
In 2008, health plan growth was held at 6 percent, but it
exceeded workers’ earnings and the general Consumer Price
Index.
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Gross: PPG payments to TPAs + employee out of pocket $XXX MM– Best measure of overall change
Less: Employee out of pocket (deductibles/co-pays) YY MM
Employee contributions (pay withholdings) XY MM
Net: PPG payments less employee contributions $ZZZ MM– Good bottom line number, but
Employees: 15,500 (US)Employees – participating: 13,700 (US)Participants: 31,500 (US)
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$3,820 $4,037 $4,320 $4,604$5,162
$5,758$6,348
$6,918$7,382
$7,832$8,231
$8,750
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Mercer
+ 5.7% + 7.0%+ 6.6%+ 12.1%
+ 6.7%
+ 11.5%+ 10.2%
+ 9.0%+ 6.1%
+5.1%+6.3%
Large employers
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Net Active Health Care Cost% Change Per Participating Employee
Source: Mercer
11.50%
10.20%
9.00%
6.70%6.10%
5.10%
6.30%
7.40%
5.80%
4.90%
‐2.50%
5.10%
4.70%
4.50%
‐2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2002 2003 2004 2005 2006 2007 2008
Benchmark PPG
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Net Active Health Care Cost% Change Per Participating Employee(without incremental 2007 high cost claims)
Source: Mercer
11.50%
10.20%
9.00%
6.70%6.10%
5.10%
6.30%7.40%
5.80%4.90%
‐2.50%
5.10% 4.70% 4.50%
‐2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2002 2003 2004 2005 2006 2007 2008
Benchmark PPG
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11.50%
10.20%
9.00%
6.70%6.10%
5.10%
6.30%
7.40%
5.80%
4.90%
‐2.50%
5.10%
8.20%
4.50%
‐2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2002 2003 2004 2005 2006 2007 2008
Benchmark PPG
Net Active Health Care Cost% Change Per Participating Employee
Benchmark Source: Mercer
Cumulative Savings
2002– est 2008 = $145 million
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Top 10 Locations - Active EmployeesFor the Twelve Month Period Ended December 31, 2008
COST
Location
YTD Q4 2008 Gross Expense (In 000's)
% Change from YTD Q4 2007
YTD Q4 2008 Participating
Employee Count*
% Change from YTD Q4 2007
YTD Q4 2008 Net Cost Per
Employee
YTD Q4 2007 Net Cost Per
Employee
% Change from YTD Q4 2007
Plant A $ xxxx 6% 306 -8% $ xxxx $ xxxx 17%Plant B xxxx 7% 555 -2% xxxx xxxx 10%Plant C xxxx 7% 657 2% xxxx xxxx 4%Plant D xxxx 6% 838 0% xxxx xxxx 4%Plant E xxxx 5% 193 2% xxxx xxxx 1%Plant F xxxx -8% 121 -3% xxxx xxxx -6%Plant G xxxx 0% 364 -1% xxxx xxxx -1%Plant H xxxx 10% 475 -5% xxxx xxxx 21%Plant I xxxx 17% 394 -4% xxxx xxxx 30%Plant J xxxx -5% 102 -3% xxxx xxxx -8%
Total high cost locations $ xxxx 6% 4,004 -2% $ xxxx $ xxxx 19%
Total PPG $ xxxx 1% 13,700 -4% $ xxxx $ xxxx 4.5%
Note: The top 10 locations identified above were based on the calendar year 2008 report.
* Employee count is based on the number of those participating in PPG's medical plans.
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Top 10 Locations - Active EmployeesFor the Rolling Three Year Period Ended December 31, 2008 (Jan 2006 - Dec 2008)
HEALTH
LocationEmployee
Count*
HRA Participation
Rate (1)
HRA Participation
Rate Percent Low
Risk (2)Percent Low
RiskScreening
Rate (3)Screening
Rate(3 Year Avg) (1/06 - 12/08) Change** (1/06 - 12/08) Change** (1/06 - 12/08) Change**
Plant A 328 40% -33% 64% 8% 72% 19%Plant B 572 18% -1% 51% 0% 81% 1%Plant C 700 85% 2% 65% 1% 95% 0%Plant D 861 40% 0% 52% 0% 54% -1%Plant E 193 9% -49% 47% 6% 65% 5%Plant F 121 95% 0% 50% 0% 48% 0%Plant G 363 9% 1% 53% 1% 64% 4%Plant H 541 68% -56% 45% 6% 90% 2%Plant I 413 7% -2% 50% 10% 73% 9%Plant J 105 65% 0% 60% 0% 61% 0%
Total high cost locations 4,197 44% -14% 54% 3% 70% 4%
Total PPG 14,469 47% -6% 58% 1% 71% 3%
* HRA employee count is based on three year average of the actual number of employees at location as of December.** Represents the change from the prior rolling three year period (October 2005 - September 2008).
(1) Goal is to maintain HRA participation at or above 80% in any three rolling years(2) Goal is to maintain "low risk" for 70% of the population at any point in time(3) Goal is to achieve screening rates of 80% of recommended
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1 2 3 4 5Years
Lifestyle
Plan DesignImpact
PPG Cost Reduction Impact
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1 2 3 4 5Years
Lifestyle
Plan DesignCompany Driven
Individual Driven
Impact
PPG Cost Reduction Impact
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1. Establish a database that is accurate, available and responsive to inquiry
2. Make head to head comparisons and measure results
3. Compare spending to peers4. Tie behavior to cost and compare spending to
analogous in house spending5. Professional and consistently describe initiative
(including ROI real and perceived)
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Complex /Intangible
Simple /Tangible
High
Low
1. Information Management
Satis
fiers
Dis
satis
fiers
Advisor
Responsive
Insightful
Pertinent
Available
Accurate
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There is nothing like competition to get people into the game and focused.
Some overall indication of success is an excellent measured result. Overall $145 MM savings.
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Corporate investment in healthy behaviors as a percent of total net cost:
Company A 3%Company B 2%Company C 1.5%Company D 1.6%Company E 1.6%Company F 1.0%Company G 1.0%PPG .25%
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Price of WORK ACCIDENT
Prevention, $1.02 PWA‐D, $x.xx
PWA‐I, $x.xx
PPE‐D‐Active, $x.xx
PPE‐D‐Dependent, $x.xx
PPE‐D‐Retiree, $x.xx
Price of PERSONAL EPISODE Prevention,
$0.01
PPE‐I‐Actives, $x.xx
PPE‐I‐Dependents, $xx.xx
Occupational : cost/labor hr.
Non-Occupational : cost/labor hr.
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Summary message to PPG Management in most recent engagement:
Significant success has been achieved in mobilization of resources, metrics/reporting and cost mitigation
Further success in cost reduction through communications, metrics and spirit seems limited
PPG’s investment in prevention and behavioral change in the area of health and wellness is minimal by a number of measures
Further cost reduction through investment in health and wellness initiatives is considered viable
We will professionally manage and demonstrate return on these investments
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The PPG Industries Story
“Have a Healthy Day”