The Simmons Bedding CompanyWellness Journey

John Clifton – Director, Total Rewards

Who is Simmons Bedding Company?

•We’re a “great American brand” makers of the Beautyrest•We re a great American brand , makers of the Beautyrestmattress and innovators of the pocketed coil•Founded in 1870, over 140 years oldy•Privately Held / Private Equity (Aries Capital / Ontario

Teachers Union Pension)•1.1 billion in revenues•19 traditional manufacturing plants across US, Puerto Rico and

CanadaCanada•Mix of Union and Non-Union •2,900 Employees p y

- 2,400 US / 500 Canada- US 2,100 Benefit Eligible; both Union and Non-Union

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•Primarily self insured

Do These Challenges Sound Familiar?

DEMOGRAPHICS•Communication Challenges

- Union and Non Union populations- 16 plant locations plus Corporate, R&D and distributed sales force

L i l i i i f 25 300 i- Location populations range in size from 25 to 300 associates- 70% of benefit eligible associates are factory floor with no computer

access, limited technology skills- HR resources have shrunk drastically

- 30 total field FTEs in 2008 (each location had at least one dedicated HR resource)resource)

- 12 total field FTEs today (same number of locations, resource shared across up to 3 facilities)

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Do These Challenges Sound Familiar?

DEMOGRAPHICS (continued)•124 different nationalities represented in the workforce•Significant non-English speaking populations

- Hispanic (Puerto Rican, Mexican, Venezuelan, Dominican, Columbian)Columbian)

- Asian (Hmong, Vietnamese, Thai, Cambodian, Laotian, Korean)- Eastern European (Russian, Czech, Azerbaijani)p ( j )- African/Liberian- Must often rely on a ‘member of the group’ to be their/our

p k p rspokesperson•Often no fixed home address

- Difficulty in reaching spouses

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Difficulty in reaching spouses

Do These Challenges Sound Familiar?

OPERATIONAL CONSIDERATIONS•Business Reorganization in 2008

- Reduced 25% of the workforce- Reduced almost 50% of HR resources

Fi i l R i i d B k Q4 2009•Financial Reorganization and Bankruptcy Q4 2009- Emerged from bankruptcy and purchased by current private equity

owners in 1st Quarter 2010•New CEO and New President Mid-Year 2010•Ongoing Senior Leadership Challenges

- Of 9 current C-Suite executives, only 2 were in their position pre bankruptcy/sale of the company

- Not in one fell swoop but a bleed…

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Not in one fell swoop, but a bleed…- New execs want to ‘make their mark’ (competing priorities)

In 2009, We Forged Ahead Despite These Roadblocks

W H d S l B i Pl f Th W O l G i H•We Had Several Burning Platforms That Were Only Getting Hotter

Fi i l/E l i Cl i C- Financial/Escalating Claims Costs

- Health status and risks identified within our associate populationHealth status and risks identified within our associate population

- Unhealthy behaviors demonstrated by our associates, regardless of the bresources available to them (even in the face of healthcare reform)

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PEPM medical costs trending at an unsustainable rate

The Financial Case for Action

Simmons Bedding CompanyPEPM Self Insured Net Claims by Plan Year

$700.00

$800.00

Simmons Bedding CompanySelf Insured Total Medical Cost by Plan Year

$14,000,000

$16,000,000

g

$426.01

$557.63$551.36$444.03

$355.27

$100 00

$200.00

$300.00

$400.00

$500.00

$600.00$12,771,705$12,955,689

$11,593,219$11,244,059

$8,884,571

$2 000 000$4,000,000

$6,000,000

$8,000,000

$10,000,000$12,000,000

$ , ,

$0.00

$100.00

2006 2007 2008 2009 2010 20102009200820072006

$0

$2,000,000

1 2 3 4 5 6 7Ye

Over a five year period, Simmons self-insured net medical claims costs grew 57%

Left unchecked trend projected to result in a PEPM cost of overLeft unchecked, trend projected to result in a PEPM cost of over $980 by 2015

Total medical costs projected to be more than $29.0MM

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Total medical costs projected to be more than $29.0MM

Biometric Screenings Indicated a Very Unhealthy Population

O fi i 2008 l d h f ll i•Our first events in 2008 revealed the following:- At risk cholesterol (>200) present in 35% of participants• 2X National Average2X National Average

- At risk fasting glucose (>100) present in 24% of participants• 3X National Average

- At risk blood pressure (> 120/80) present in 61% of participants• 2X National Average

- At risk BMI (>25) present in 72% of participantsAt risk BMI (>25) present in 72% of participants

•These results correlated with the health conditions driving 80% of our claims

- Diabetes - Hypertension- Digestive - Heart Disease

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•Preventative and reversible through Behavioral Change!

Apathy and Lack of Utilization of Services and Resources

N d il bl i l l i d•No-cost resources made available to associates were largely ignored:- Single digit utilization of Smoking Cessation- Similar utilization for Maternity ProgramSimilar utilization for Maternity Program- Limited completions of Health Risk Assessments- No usage of Disease or Health Management Programs

•Disturbing lack of utilization of preventative services- Less than 4 of 10 covered children receiving well-child visits- Less than 2 of 10 covered adults had preventative visits

- Simmons viewed this situation as a “ticking time bomb”…seemingly healthy individuals not generating current costs but whose actions

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healthy individuals not generating current costs, but whose actions (or lack thereof) represented a huge future risk

So, How Did Simmons Start Chipping Away at the Problem?

2009 f l i d i i•2009 was a year of planning and communication- Focused on driving home a message of “shared responsibility”- Associates’ premiums were increasing at an alarming rate (theirAssociates premiums were increasing at an alarming rate (their

perspective)• With a consistent cost-share ratio of 70%/30%, Simmons’ costs were

rising proportionatel b t there as little or no nderstanding of the selfrising proportionately, but there was little or no understanding of the self-insured equation•Associate claims escalate = employee AND employer costs escalate =

l d ll f l i / i i / h b filess dollars for salaries/training/other benefits•The message – YOU impact this directly through your actions and

behaviors; we’re in this together

•2010 was when our Wellness “rubber hit the road”…

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The Introduction of the Simmons Wellness Initiative

B ildi h f 2009 h i d•Building on the message of 2009, we christened our program“YOUR HEALTH IS WEALTH”

- Healthy behaviors can contribute to personal savings (lower premiums, Hea t y be av o s ca co t bute to pe so a sav gs ( owe p e u s,fewer sicknesses and claim incidents) and longer-term vitality and better quality of lifeCertain desired behaviors also earned incentives (with decidedly mixed- Certain desired behaviors also earned incentives (with decidedly mixed results)

- Transparent that these changes also contribute to the company’s bottom line

Ki k d ff i F b i h i d l ll i f•Kicked off in February with introductory letter to all associates from our President

- Clear demonstration of executive support for the program

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pp p g

Initial Year Program Elements

I d i M b li S d Pil P•Invested in a Metabolic Syndrome Pilot Program- Offered at no cost on a first-come basis to first 100 Simmons benefit

plan participants (including spouses)p p p ( g p )- 10 week online course (with personalized telephonic coaching), with pre-

and post-program biometric screeningsB h i ll b d ( th th “di t” h) ith d t bl- Behaviorally based (rather than a “diet” approach) with demonstrable impact on metabolic risk factors

Waist Circumference If an individual has 3 or more

TriglyceridesHDL CholesterolBlood Pressure

of these risks, he or she is

considered to have

“Metabolic Fasting Blood Glucose

G l b di i i i i i

Metabolic Syndrome”

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•Great results but disappointing participation

Initial Year Program Elements

Off d I i f P i i i i h F ll i•Offered Incentives for Participation in the Following- Online Health Risk Assessments

•Those who completed an HRA were entered in a quarterly drawing for FreeThose who completed an HRA were entered in a quarterly drawing for Free Healthcare for a Year in 2011

•Associates at locations who achieved 95% participation received health club subsidy of $20 monthlysubsidy of $20 monthly

•Cash Incentives for Participation/Completion of:- Smoking Cessation ($100)g ($ )- Maternity Program ($50)

•Carrot approach proved ineffectivepp p- Cash incentives didn’t move needle; HRAs participation was improved,

but largely self-selected by already health-conscious individuals

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Initial Year Program Elements

I d d H l h d W ll Ed i l Pl f•Introduced Health and Wellness Educational Platform- Courses offered were a combination of health/wellness awareness and

education around understanding the healthcare systemg y•Facilitating the movement towards healthcare consumerism•Content designed to emphasize the connection between health and long term

financial well-beingfinancial well-being

•Courses were made part of mandatory training curriculum

C t h d it h ll•Concept had its challenges- Online platform difficult to translate for hourly workers

- Designed for individualized learning, not group settingg g, g p g- Couldn’t offer outside of workplace due to FLSA concerns

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The One That Really Moved the Needle

I d f 2011 O E ll d i•In advance of 2011 Open Enrollment, announced requirements to qualify for 20% Wellness Premium Discount

- Completion of biometric screeningp g- Completion of online Health Risk Assessment- Attestation of non-tobacco use by associate and all covered dependents- Agreement to participate in any health coaching or disease management

program offered directly by partner carrier

•Associates really responded to the opportunity to save up to $1,600 in premiumsp

- Participation in biometric screenings more than doubled from 2008 (although results were equally dismal)HRA mpl ti n j mp d t 45% f pl n p rti ip nt

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- HRA completions jumped to 45% of plan participants

Great, So 2010 Was a Huge Success…Right?

Not really.

Although we got some traction, these were ultimately disjointed pieces rather than outgrowths of a comprehensive and pervasive Wellness Plan.

In order for wellness to be the true strategic initiative we claimed it was we HAD to socialize it and integrate it into the business It trulywas, we HAD to socialize it and integrate it into the business. It truly had to be part of our culture.

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Assigning Ownership and Accountability

F 2011 l k d Si ’ i ll i d S f•For 2011, we looked to Simmons’ nationally recognized Safety program for inspiration and guidance

- Field HR Managers were charged with recruiting a local Wellness g g gChampion and establishing a local Wellness team

- Expectations were set for plant leadership to promote and encourage healthy behaviorshealthy behaviors

- Using 2010 as a benchmark, dashboard goals were set- All of these were baked into personal goals for 2011 performance p g p

appraisals

•With Executive Management support, it was made clear to all Si l d h h d b f h iSimmons leaders that they were expected to be agents of change in regards to health and wellness

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2011 Program Elements

O i d h l h d ll i i•Ongoing mandatory health and wellness training- Men’s Health / Women’s Health / Your Child’s Health

•Additional Metabolic Syndrome programs offered- Two locations received online coaching programs and one participatedTwo locations received online coaching programs, and one participated

in an onsite coach-led curriculum

•Locally designed physical activity programs at each site- Walking challenges, pre-shift stretching, breaktime Zumba- When developed by local team, better able to be meaningful to that

particular group

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2011 Program Elements

P i f i i•Promotion of preventative services- Repetitive messaging around 100% coverage (PPACA)- Dental plan design includes progressive annual maximumDental plan design includes progressive annual maximum

•Outreach to spousesOutreach to spouses- Invited to participate in on-site biometric screenings- Spousal HRA mandatory for 2012 premium discount

•Removal of workplace wellness obstacles- Vending machine changeover, removed soft drinks, candy, chips, etc.- Implemented catering policy mandating healthy alternatives

Eli i d ll ki Si d l d

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- Eliminated all smoking areas on Simmons-owned or leased property

2011 Program Elements

C i i f ll i di i f 2012•Continuation of wellness premium discount opportunity for 2012 Open Enrollment

- Changed discount to flat dollar amount (participation-based, not subject g (p p , jto HIPAA 20% limitation)

- Introduced spousal HRA requirement

•Began implementation of wellness elements in CanadaO i bi i i d l h l h- On-site biometric screenings and personal health assessments

- Offered monetary incentive for participation- Limited financial opportunity, but culturally the right thing to dopp y, y g g

•One company, consistent message

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Learnings

B f l i h i i ROI i•Be careful with incentives…ROI is no guarantee

•Accountability is crucial

•Wellness has to be ingrained in the business or it becomes white noise

•You have to recruit foot soldiers

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The Lombardi Moment

Our workplaces present a tremendous opportunity for us as business leaders to have a meaningful impact on the choices our associates make in regards to healthy behaviors. Because they g y yspend a majority of their waking hours in the workplace, we have a business AND moral obligation to create an environment conducive to making wise choices about those behaviorsconducive to making wise choices about those behaviors.

We are in a unique position to truly impact and even save lives. Embrace this opportunity and relish the good we can do for our friends, our co-workers and our companies!

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