Services provided by Mercer Health & Benefits LLC Total Health Management: Best Practices to Drive Optimal Health and Business Outcomes May 13, 2010.

Services provided by Mercer Health & Benefits LLC

Total Health Management:Best Practices to Drive Optimal Health and Business Outcomes

May 13, 2010

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Total Health ManagementEffectively Addressing Key Business Issues

Total Health Management is all of the actions an employer can take to

engage and support management and employees in making good choices to avoid the cost and consequences of poor health

ReducedCost

Competitive Advantage,Positive Company Image

IncreasedProductivity

Healthierand SaferWorkforce+ + =

The Solution:A Total Health

Management ApproachThe Problem:

Health risks and conditions are leading to

increased costs of doing business and affecting companies’ ability

to effectively deploy talent on a day-in and day-out basis in the US and across the globe

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Critical Business MetricsHealth Status

Health Care Costs

Safety

Total Cost

Total Lost Time

Workers’ Compensation Costs

THM tackles the business challenge by addressing all the root causes of problems to achieve improvements in health, workforce productivity and cost management

• Policies

• Work Practices

• People Management

• Financial (e.g., plan design, variable compensation, reimbursements, incentives, contracting)

Non-Medical Drivers

• Multi-Diagnoses/Risks

• Psychosocial Issues

• Major Diagnoses

• Treatment Variability

• Care Coordination

• Case Management

Medical Drivers

The Problem:Health risks and conditions are leading to increased costs of doing business

and affecting the ability to effectively deploy talent

on a day-in and day-out basis

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Total Health ManagementAddressing the Entire Health Care Continuum

Optimized health, safety and productivity

Managed costs

Wise allocation and use of resources based on local needs and infrastructure

Alignment with broader total rewards and/or talent management strategies

Maximized ROI

THM componentsStrategyDesign

EngagementIntegration

Measurement

A Health and Human Capital Approach:

Global Vision

Locally Deployed

Flawlessly Executed

To achieve the following objectives

WellProductive, low health

care users

At RiskCurrently productive,

potential high cost claimants

Illness / InjuredLimited to no productivity,

high medical costs

CatastrophicHigh cost users, poor

prognosis

Health and Safety Risk Management

Chronic Condition and

Case Management

High Cost Case Management

Occ and Non-Occ Absence and

Disability Management

Health& Safety

Promotion

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Address the “hidden” costs associated with poor health with a comprehensive and integrated approach

Manage Total Health to Achieve Total Value

Reducedcost

Competitive advantage,Positive company image

Increasedproductivity

Healthierworkforce

+ + =

The Hidden Costs of IllnessEstimated indirect cost of absences = 2% of payroll

+

* Assumptions:• For an employer with 5,000 employees and average salary of $47,060

* Survey results:• Average salary: $47,060 • % electing employer coverage: 84% • % with dependent coverage: 56% • Average employee age: 41 years • % females/males: 53%/47%

Source: Mercer’s 2008 National Survey of Employer-Sponsored Health Plans and Mercer’s 2007 Survey of Health, Productivity and Absence Management Programs

$49M Health & Absence Costs*

$235M Payroll* Payroll

Direct non-occupational absence costs = 2.7% of payrollHealth care benefits costs = 16% of payroll

Equals more than 20% of payroll

The Total Health Management Opportunity

Total Savings of 1 – 2% of payroll (~ $1Million/1,000 employee)

Marketplace Trends

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Marketplace TrendsMercer Health Care Survey

Established in 1986, national probability sample used since 1993

2,914 employers participated in 2009

All employers with 10 or more employees are surveyed using a stratified random sample; large employers are oversampled to permit robust break-outs by size

In this presentation, we refer to:- Small employers – 10-499 employees - Large employers – 500+ employees- Jumbo employers – 20,000+ employees

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Jumbo employers

All large employers

Health management 71% 85%

Consumerism 64% 77%

High-performance networks 41% 51%

Collective purchasing 37% 29%

Scaling back benefits/shiftingcost to employees 37% 21%

Back in 2006: Health management and consumerism emerge as large employers’ most important cost-management strategies for the next five years*

* Employers indicating strategy will be significant in efforts to manage health benefit cost.

Source: Mercer’s National Survey of Employer-Sponsored Health Plans 2006

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Sharp growth in use of health management programsPercent of large employers offering programs and offering incentives

65%

73%

71%

51%

53%

78%67%

30%

53%

35%

20062009

Health risk assessment

Disease management program

Behavior modification

Health advocate services

Nurse advice line

52%

37%

19%

13%

Participation in or completion of a behavior modification program

Seeking preventive care / screenings

37%15%Participation in a disease management program

51%23%Completing a Health Risk Assessment

Jumbo employers

Large employers

Use incentives with specific health management programs offered (Among large employers offering program)

52%

37%

19%

13%

Participation in or completion of a behavior modification program

Seeking preventive care / screenings

37%15%Participation in a disease management program

51%23%Completing a Health Risk Assessment

Jumbo employers

Large employers

Use incentives with specific health management programs offered (Among large employers offering program)

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All large Jumboemployers employers

Provide health management programs through specialty vendor/request optional services from health plan vendor 37% 73%

Of those, % of employers that have attempted to measure return on investment (ROI)* 45% 69%

Of those, % of employers that are satisfied with ROI 74% 75%

*Among employers that offer disease or health management programs

Return on investment in health managementLarge employers

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Innovative Approaches

Surgical centers of excellence 57% 16% 17%

Retail clinics for chronic care mgmt 45% 8% 12%

Treating tele-mediatedphysician care as eligible expense 43% 6% 3%

Medical homes (A-ICU model) 53% 10% 1%

Tiering of non-drug treatments 49% 6% 2%

Very interested

Interested/very interested

What the largest employers are considering

for the next five years

Already use strategy

Employers with 5,000 or more employees

Have incorporated evidence-based (or value-based) design in one or more medical plans

Jumbo employers that waive/reduce cost-sharing for:

Maintenance drugs: 17%

Specific drug therapies proven to be cost-effective: 11%

Non-drug treatments proven to be effective: 2%

Other form of EBD used: 6%

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Currently provideConsidering for

2010 or 2011Currently provide

Considering for 2010 or 2011

Clinic for occupational health services 27% 8% 34% 8%

Clinic for primary care services 11% 11% 24% 16%

All large employers Jumbo employers

Provide worksite or near-site medical clinic

43%

51%

55%

70%

78%

87%

Review of health risk assessment findings

Preventive health and wellness services

Referrals to outside physicians and specialists

Health coaching and care management

Mental health counseling / integration with EAP

Pharmacy

Large employers that provide a

primary care clinic

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A strong THM approach can transform the member experience through an integrated approach

Traditional Health Management Program Model

Integrated HealthManagement Program Model

Healthpromotion

Lifestylemgmt

Diseasemgmt

Casemgmt

Disabilitymgmt

Healthpromotion

Lifestylemgmt

Diseasemgmt

Casemgmt

Disabilitymgmt

Healthy

At-risk

Chronically ill

Catastrophically ill

Historical emphasis Integrated approach

Source: Mercer Oliver Wyman

Limited participation, effectiveness Greater engagement, better ROI

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Vendors have been evolving towards more integrated modelsGeneration 1:

Traditional Health Management Program Model

Generation 2:Integrated Health Management

Program Model

Generation 3:Integrated Health Management

Value Chain Model

WellPoint

COMPANIES PLACED FOR ILLUSTRATIVE PURPOSES ONLY

Payers

HealthManagement Companies

Clinical Informatics and Decision Support

Provider Engagement

Consumer Engagement

Aetna

Source: Mercer Oliver Wyman

Generation 1:Traditional Health

Management Program Model

Generation 2:Integrated Health Management

Program Model

Generation 3:Integrated Health Management

Value Chain Model

WellPoint

COMPANIES PLACED FOR ILLUSTRATIVE PURPOSES ONLY

Payers

HealthManagement Companies

Clinical Informatics and Decision Support

Provider Engagement

Consumer Engagement

AetnaAetna

Source: Mercer Oliver Wyman

The marketplace is evolving rapidly: Expanded and re-tooled product suites New entrants More sophisticated offerings Shift to more consumer centric, integrated models

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Future Vision – A blended model of care, competing on cost, quality and outcomes

Evolutionary Path

On- and Near Site Care Model

On- and Near Site Care Model

Web and Telephonic based Care

Model

Web and Telephonic based Care

Model

Health Plan based Care

Model

Health Plan based Care

Model

Physician based Care Model

Physician based Care Model

BLENDED MODEL

Integrated Wellness/Illness/ Injury

Management System

BLENDED MODEL

Integrated Wellness/Illness/ Injury

Management System

Future State: Blended Model

EMR / PHRAccessPortabilityNavigational EaseQuality EfficiencyTransparencyOutcomes

24/7/365 Web & Telephonic Support

On- and Near-Site Health/Clinical Services

Re-Engineered Primary Care Model

Specialty Care HPNs and COEs

Integrated Care and Absence Management

Value Potential

Total Health Management Best Practices – Management Practices

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HERO Best Practice Scorecard -- Version 3Sample Questions and Scorecard Output

Sample Scorecard

CategoryYour Score / Max Score

Benchmark

Strategic Planning 8 / 11 8

Leadership Engagement 22 / 33 22

Program Level Management 15 / 22 15

Programs 37 / 55 37

Engagement Methods 45 / 68 45

Measurement and Evaluation 8 / 11 8

Total 135 / 200 135

Illustrative purpose only

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Total Health ManagementCritical Success Factors

The above are considered THM Best Practices

and can be assessed through the Mercer/HERO Scorecard

Strategic Planning

Leadership Engagement

Program Level Management

ProgramsEngagement

MethodsMeasurement

and Evaluation

Cross-functional alignment of THM objectives and planning

Health and wellness objectives linked to annual operating plan

Formal 3-year strategic plan

Dashboard with THM metrics is routinely reviewed by leadership

Adequate funding allocated

Local wellness champions

The link between health and business success is supported at the enterprise-wide, business unit and local levels

Accountability for health and wellness endorsed by senior leadership and cross functional managers

Process and metrics for proactive program and vendor management

Vendor performance guarantees for outcomes

Programs span the health population continuum

Multiple modes of identification (claims, HRAs, screenings, vendor cross-referral)

Multiple modes of delivery (web, paper, telephonic, on-site)

Accessible to Employees, Spouses/DPs, Retirees

Strong branding

Multi-media communication strategy

Simple, on-going messaging

Incentives to drive key behaviors

Overarching/integrated health benefits portal

Integration with other company initiatives

Competitions and other means of group / organizational engagement

Integrated data warehouse with individual level data across programs and vendors

Data and process for on-going performance and program evaluation

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Total Health Management addresses the full health care continuum…

WellProductive, low health

care users

At RiskCurrently productive,

potential high cost claimants

Ill / InjuredLimited to no productivity,

high medical costs

CatastrophicHigh cost users, poor

prognosis

Awareness

Prevention and Early Detection

Healthy Lifestyle Promotion

Linkage to Safety

Bio-psychosocial Approach to Risk Reduction

Targeted Behavior Modification and Condition Management

Evidence-Based Decisions

Intensive Upstream Cost Risk Reduction

Access to “Top” Docs and Facilities (COEs)

Focused Treatment Compliance

Intensive Upstream Cost Risk Reduction

Access to “Top” Docs and Facilities (COEs)

Focused Treatment Compliance

Integrated Medical/ Disability Case Management and Return to Work/Health

…with tailored approaches…

Reinforcement through Incentives, Plan Design and Communications

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Comprehensive Branding and Communication Strategy Key stakeholder involvement is crucial to success

Goals and Outcomes

GLOBAL – Integrated approach to communicating core messages

Wellness brandCommunication strategy

Wellness programs

Centralized support

Wellness is experienced by

employees as part of the total value of

working at the company

New conversations between “healthy” and

“less healthy” employees

New healthier behaviors at work

and home

Sustainable behavior change

Control rising health care

costs

Wellness champion

s

Grassroots communication

Local programs

Local communicati

on

LOCAL – Tailored approach to reinforcing core messages and supporting local programs

Improved performance and

productivity

Bottom Up

Top Down

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Program Delivery See Intermediate-Term

Participation See Intermediate-Term

Awareness Program Perception

Program Satisfaction Impacts

See Intermediate-Term Impact on Organizational

Culture Outcomes

See Intermediate-Term Medical Costs

– Trend– ROI

Program Delivery Process Flow Vendor Cross-referrals

Participation Repeat Program Utilization Characteristics of

Repeat Participation Completion Rates

Awareness Program Perception

Program Satisfaction Impacts

Change in Health– Health Status– Health Risks– Clinical Values

Outcomes Health Care Utilization Lost Work Time Productivity Employee Turnover Employee Satisfaction/Culture

Program Delivery Process Flow Vendor Cross-referrals

Participation Baseline Utilization Characteristics of Participants

Awareness Program Awareness Name/Brand Recognition Program Perception

Program Satisfaction Impacts

Knowledge, Attitudes, Beliefs Self-Efficacy Behaviors

Baseline Analyses Health

– Health Status– Health Risks– Prevalence of Chronic

Conditions Health x Costs Relationships

Key Metrics and Measures Demonstrating effectiveness of THM

Leading Indicators Lagging Indicators

Long-Term Measures (2-5 Years)

Intermediate-Term Measures (12-24 Months)

Short-Term Measures (0-12 Months)

Total Health Management Best Practices – Case Studies

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Result

70% + health assessment participation (60% was the goal)

40% + high/moderate risk population participates in lifestyle management programs

Medical trend averaged 5.6% annually from 2004 to 2007

2007: Received the prestigious C. Everett Koop National Health Award for their health and wellness program

THM Capabilities and Expertise in Action Case In Point: Large beverage manufacturer, seller and distributor

Situation

About 30,000 employees, primarily male and hourly workers

Leverage emphasis on safety to build a culture of health

Geographically dispersed with 300+ work locations with limited access to computers for online communication and health assessment

High prevalence of obesity, hypertension and stress

Action

Health and wellness brand and multimedia campaign

Developed targeted wellness program to deliver at specific worksites

Incentives to complete HA and lifestyle management program including national competition and volunteering

Implemented onsite clinics at about 25+ locations

Engaged on-site wellness champions, clinic nurses and safety resources to promote on-site screenings, health assessment and programs

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THM Capabilities and Expertise in ActionCase In Point: High-tech manufacturer

Situation, Challenge

High-tech manufacturer: 10,000 employees– Low morale after 2001-2002 layoffs– Rising health and absence costs– Increasing pressures by overseas competition

HR saw value in the THM model as a benefit to employees and a necessary medical/absence cost management strategy

Capitalize on a new integrated data warehouse: health/medical, pharmacy, behavioral health, disability, workers’ compensation data

Facilitate collaboration among historically siloed internal and external stakeholders in order to ensure effective integration

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Result

Financial indicators signal that employer is on the right track: 2008 medical trend was 3% (compared to 19% at baseline year 2002) and pharmacy trend was 5.4% (compared to 5.7% at baseline)

Over same period Short-Term Disability PEPY costs dropped by 33% and STD incidence rates dropped by 28%; workers’ compensation PEPY dropped by 13% and WC incidence rates dropped by 29%.

THM Capabilities and Expertise in ActionCase In Point: High-tech manufacturer (continued)

Action

Data warehouse and THM modeling tools:– Business case for THM investment and five-year

potential savings– Multi-year comprehensive strategies regarding

medical, pharmacy, behavioral health, and occ- and non-occ disability management

– Metrics dashboard to monitor program and results

Best-in-class THM programs across the continuum of care regularly monitored and audited to improve performance

Business rules and shared performance guarantees to enhance member experience and improve care management

Transitional and proactive return-to-work program for occupational and non-occupational disabilities

Incentives for positive behaviors

Local 24/7 Total Health teams at all locations to engage local leadership and employees

Closing Thoughts

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Key Points to Remember

Consumer Centric Design and Delivery

– Intuitive, Empowering and Easy to Navigate

Balanced Portfolio of Investments

– Across the Entire Care Continuum

Continuous Improvement Approach

– Rigorous Monitoring, Evaluation and Process Improvement

Shared Accountability

– Alignment of Internal and External Stakeholders with Key Objectives

Engagement, Engagement, Engagement

– Focus on W.I.I.F.M. to Drive Best Outcomes

Services provided by Mercer Health & Benefits LLC