Emphasis on prevention leads to impressive results

Financial incentives get large number of employees to participate in Generac's benefits programs

Published Sept. 17, 2007

By JERRY GEISEL

WAUKESHA, Wis.--At Generac Power Systems Inc., "an ounce of prevention is worth a pound of cure'' is more than just a saying. It's the foundation of the company's strategy to hold down health care cost increases.

Keeping employees healthy, said Linda M. Kuklinski, Generac's employee benefits and risk manager, is "positive to employee health and to the company's bottom line.''

To that end, Generac has used a multistep approach in recent years to revamp its health care benefit program.

In 2003 it added free preventive care services provided through clinics that are convenient to employees. Later, it expanded health care services available through the clinics. And in a groundbreaking approach, Generac gave employees a strong financial incentive--halving their health care plan deductibles--for those who get health risk assessments and actively try to improve their health.

In addition, to get more employees to contribute to and build up their health care flexible spending accounts, Generac makes a contribution of up to $200 to employees FSAs, so long as employees contribute to their accounts as well. That resulted in a whopping 70% FSA participation rate in 2003 and 75% since 2004.

The results have been impressive. Over the past three years, the number of so-called high risk employees has fallen by 10%, while Generac's health plan costs per employee have held steady since 2004.

It is for these and other accomplishments at Generac that Ms. Kuklinski has been named Business Insurance's 2007 Benefit Manager of the Year.

"You may not be able to stop high blood pressure, but at least you can help employees get treatment sooner and to manage it better,'' said Ms. Kuklinski.

"If you can identify risk, there will be long-term savings,'' she added.

In 2003, Generac contracted with Corporate Health Services, a unit of ProHealth Care of Waukesha, Wis., for employees and their dependents to have access to a medical clinic, staffed by nurse practitioners, at no cost for preventive and wellness benefits, such as annual checkups, pelvic exams and well-baby examinations.

The nurse practitioner model was appealing for several reasons, Ms. Kuklinski said. Services provided through the clinic cost between 20% and 50% less compared with other providers, she said.

Lower costs were not the only attraction, however. Not only do nurse practitioners provide high-quality care, Ms. Kuklinski said, but they also are able to spend more time with patients.

The clinic, just a mile from Generac's Waukesha manufacturing facility, was an immediate hit with employees. In fact, while the clinic was open to anyone, 99.9% of patients were Generac employees or dependents.

Soon, the clinic was too small to meet Generac's needs. Later, another bigger clinic was offered to employees, but still centrally located in Eagle, Wis.

The current primary clinic is located in nearby Mukwonago, Wis., and is not only conveniently located, but also has room to expand. Generac employees also have access to other Corporate Health Services' clinics, though free office visits are not available at those facilities.

Clinics are staffed by a family nurse practitioner, a pediatric nurse practitioner and a licensed practitioner nurse with a physician on call at all times.

Generac did more than just contract with the clinic provider on rates and services, Ms. Kuklinski said. Generac also interviews prospective clinic staffers enabling it to obtain staff members "who share in our culture,'' Ms. Kuklinski said.

Over time, the clinic was expanded to enable Generac employees access to more than just preventive services, so that employees could get treatment for such medical ailments as colds, the flu and sinus infections.

Employees have a significant financial incentive to go to a clinic for treatment of medical problems. If medical services are needed, such as laboratory work and X-rays, employees pay only $15 compared to 20% of the cost if they received services through Generac's preferred provider organizations.

Additionally, Generac contracted with certain specialty physicians, such as orthopedists, who are not in its PPOs, to provide services at discounted rates.

"We are not shy about negotiating discounts with out-of-network providers,'' Ms. Kuklinski said.

Yet more changes--very significant ones--were unrolled last year when Generac offered employees and their spouses free health risk assessments. Those assessments provided by ProHealth Works measured blood pressure, weight and cholesterol levels, with participants filling out a detailed questionnaire covering lifestyle and family health history.

Employees were given powerful financial incentives to get the assessments, having the results reviewed by a physician and then completing certain "healthy living activities,'' such as joining a health club and getting their blood pressure checked regularly.

For employees with family coverage who meet all the requirements in the health risk assessment program, Generac contributes $500 each year for the next three years into a special account, known as a Medical Deductible Reimbursement Account. Employees with single coverage who meet the requirements receive $250 a year and those with employee-plus-one dependent coverage receive $375.

Those contributions then are used to offset health care expenses that fall under Generac's deductible, which is $500 for family coverage.

Participation has been huge, with 80% of employees and 70% of covered spouses getting health risk assessments.

Ultimately, Ms. Kuklinski said, individual health risk assessments will be integrated with quantitative modeling to develop programs to both reduce employee health risks and future health care claims.