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Integrating benefits programs can cut costs, raise productivity

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NEW YORK—Employers should integrate all of their benefit programs if they truly want to curb rising health care costs and lost productivity, benefit experts say.

Benefit programs often operate independently of one another, meaning employees are not managed by an integrated approach that aims to keep healthy people at work and get those who are ill or injured back to work as soon as possible, said David Kasper, vp, employee benefits for Waste Management Inc. in Houston.

Such an approach "doesn't really work all that well," Mr. Kasper told attendees of the New York Business Group on Health's April 12 conference on Trends in Health & Productivity Management: Integrating Data and Delivery of Health Programs.

At Waste Management, for example, administrators who managed workers compensation benefits had no interaction with managers of other benefit programs.

"We were managing things in that benefit-centric model," Mr. Kasper said. "We realized we have to manage in an employee-centric model."

The waste and environmental service provider overhauled its benefits program with the idea of improving profitability and employee relations while reducing turnover, absenteeism and presenteeism--those who report to work while ill but accomplish little--as well as the inappropriate allocation of benefits resources, Mr. Kasper said.

Managing return-to-work issues was particularly important because Waste Management had 25% of its workforce absent at any given time, leading to contingent labor costs that were almost as high at its group health costs, Mr. Kasper said.

The company now has onsite occupational health advisers who talk to health care providers and company managers to facilitate an injured employee returning to work, including putting them in jobs that match their physical capabilities. "There's enough work at all of our locations to keep people busy," Mr. Kasper said.

The full integration of Waste Management's benefits programs occurred in 2005. Teams were trained to think across benefit lines, to interact and coordinate their outreach functions, and manage their programs in a patient-centric approach, he said.

Previously, nurse case managers of different benefit programs may all have contacted the same patient to check on the progress of their rehabilitation. Now, one nurse gets necessary information from the employee and ensures the worker receives the appropriate treatment.

Costs trimmed significantly

The benefits integration program has had a positive impact, Mr. Kasper said. While average health care spending per employee was rising at a 21.4% rate in 2003 and 2004, that increase was limited to 2.4% in subsequent years.

"You're never going to stop that trend," he said. "You'll never get that down to zero, but you can control how that money is spent."

In a similar transformation, Public Service Enterprise Group, a Newark, N.J.-based energy company, linked the design and management of its benefit programs to minimize costs and productivity losses.

Data is a critical component in its health care strategy, said Kathleen Kostecki, manager, integrated health and productivity strategy, for PSEG. By evaluating medical cost drivers, the company identified the conditions on which to base its program: musculoskeletal, cardiovascular and mental health conditions.

A good data-driven strategy evaluates all factors that could impact the adoption of healthy behavior among employees, including whether senior leaders support a healthy and engaged workforce, whether the workplace supports the message of good health, and whether employees operate in an entitlement culture or understand they are responsible for good health practices, she said.

Sending a consistent message to employees about good health practices is something with which the company still struggles, Ms. Kostecki said.

While PSEG bars smoking in any company-owned or leased facilities and vehicles, its campus is not completely smoke-free. "That's not sending the right message," Ms. Kostecki said, "so that needs to change for us."

In addition, she told attendees at the New York meeting that she would like to institute a mandatory policy that employees spending company money on food must buy healthy meals. This is particularly important, given that nearly 70% of PSEG's workforce is overweight to obese, she said.

While efforts to control costs are aimed at injured employees or those at high risk of developing costly illnesses or conditions, employers should not neglect the large segment of their employee base that is healthy.

At Waste Management, a company survey found that 91% of employees were in the low-risk category, so it has implemented targeted wellness programs and incentives to keep employees on the healthy path. "We pay for preventive care and we want them to go get that," Mr. Kasper said.