Integrating Wellness

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Integrating Wellness Preventive Care into a CDHP
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Sperian Protection A Brief Introduction

• Worlds largest manufacturer of Personal
  Protective Equipment. Headquartered in Paris,
  France.
• 1 billion global sales, 400m in the United
  States
• 1300 Employees insured in U.S.
• 56 PPOs, 30 HSAs, 14 HMOs
• 10 Major locations in 9 States National Sales
  Force
• 2008 US health insurance expense 9.0 million

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• The Healthcare Cost Problem
• Plan Design Strategy
• Employee Communications
• HSA Enrollment Results
• Wellness Results

Agenda
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Sperians Cost Containment Challenge

• Merger in September 2001 need to create a
  common culture
• 5 Health Plans in 2002
• Health Insurance Trend
• 2002 6,616,212 (12.3 increase)
• 2003 7,132,928 (7.8 increase)
• 2004 9,764,864 (36.9 potential increase)

Tried Contingent Premium
Funding Gap When will it occur and how much will
it be?
2004
2001
2002
2003
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Long-Term Cost Containment Required a Strategy

• Key Elements of our strategy
• Support our overall business plan
• Be consistent with our corporate culture.
  Understand our benefits relationship with our
  employees. What is it now and what do we want it
  to be in the future?
• Be implemented in phases so that employees will
  be introduced to healthcare consumerism
  gradually, over time.

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A Solution Must Address 3 Core Issues

• How much can our company afford to spend on
  health care as a percentage of revenue?
• How much can our employees afford to spend on
  health care as a percent of their hourly wage?
• Will our employees see their health plans
  features and benefits as desirable, thereby
  enabling us to attract and retain the best people
  to our organization?

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Our Strategy Start by Phasing in a CDHP

• In 2004 Sperian adopted a CDHP funding
  arrangement by carving out certain parts of our
  insured plans to be self-insured through an HRA.
  Sperian introduced HSAs in 2007.
• 1 National PPO/HSA plan and 2 regional HMOs
• BCBS-RI now covers 1,017 Employees (359 in HSAs)
• A lower health cost trend
• 2004 7,965,538 (11.7 increase)
• 2005 8,320,981 (4.5 increase)
• 2006 8,622,024 (3.6 increase)
• 2007 8,846,197 (2.6 increase)
• 2008 9,005,259 (1.8 increase)
• 4-year plan savings of 8.5 million
• Payroll deductions have remained stable for 4
  years

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Our Roadmap to Containing Healthcare Costs
Reduced Trend
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Average Cost Per Employee

• Avg. Cost of PPO Plans Family Individual
• Kaiser Survey (Sept. 2007)1 12,443 4,638
• Towers Perrin (Jan. 2008) 2 13,704 4,704
• Rhode Island State Employees3 14,388
  5,136
• Sperian PPO Option 10,521 3,983
• Sperian HSA Option 8,925 3,437
• Average Cost Per Employee All Plan Types
• Towers Perrin (2008) 2 9,312
• Sperian 7,332
• Sources 1) Kaiser/HRET 2007 Survey of
  Employer-Sponsored Health Benefits, Exhibit 6.3
  2)Towers Perrin 2008 Health Care Cost Survey,
• 3) Providence Journal, August
  26, 2007 Page A17

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Claims Reduced 24 Over Traditional PPO Design
Comparison of Sperian per member utilization with
BCBS-RI plan-wide data for 2007 plan year
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Plan Design
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Wellness A Key Part of Our Strategy for 2008

• All of our 2008 health plan options offer an
  expanded list of preventative services at no cost
  to employees or family members
• Physicals w/ related lab tests, Well baby
  visits, Immunizations (adult child)
• Pap smears, Screening mammograms, Annual GYN
  exams
• Screening colonoscopies (beginning January 2009)
• Enrollment in 2008 health benefits was tied to
  taking a Personal Health Assessment
• Employees also received their own confidential
  personal wellness report
• One-day Wellness Clinics at all major locations
  during open enrollment
• Free cholesterol, blood glucose, blood pressure
  screening flu shots
• Employee wellness committees were established at
  major locations.
• Sperian will invest 100,000 in local wellness
  programs and 50,000 in increased free preventive
  care in 2008

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Sperian Health Plan Options for 2008

• Wellness HSA Option
• An up-front deductible of 1,100 Single / 2,250
  per Family applies
• Deductible is cumulative for all family members
  - but ALL services are FREE once the deductible
  is met
• You can use a Health Savings Account to pay for
  your out-of-pocket expenses with a 250/500
  Sperian contribution.

• Wellness PPO Option
• Co-payments for Office Visits are 15 or 25 per
  visit
• Pharmacy co-pay is 25 (50 maximum) per
  prescription
• A Deductible of 500 Single / 1,000 Family
  applies to all other services
• You can use a Flex Account to pay for your
  out-of-pocket expenses.

Completing a Personal Health Assessment (PHA) is
required for the plans above
Classic Option Up-front deductible of 1,500
Single / 3,000 per Family - but ALL services
are FREE once the deductible is met. You can use
a Health Savings Account to pay for your
out-of-pocket expenses, but Sperian will NOT make
a contribution to your HSA account.
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2008 Health Plan Cost Comparison
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Communications
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Listen Before You Launch . . .

• To help us understand the decision-making
  behavior of our employees when it come to health
  care decisions and to help us plan our
  communication campaign, we held a series of focus
  groups around the company in June 2006 (and
  repeated the process in 2007 and 2008)
• 71 Employees from 5 key locations
• 12 to 15 per session mixture of salaried and
  hourly
• Participants from all of our health plan
  options, plus non-participants
• Each group followed a structured agenda with four
  main components that allowed us to capture
  consistent information for comparison and
  analysis
• Reasons for selecting their current plan option
• A ranking exercise for key health insurance
  attributes
• Understanding of how they make consumer
  decisions
• Recommendations for improving plan
  communications and education

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Employee Focus Groups Ranking the 4 Cs

• Coverage Comprehensive Network, Providers
  Services
• Cost Payroll Out-of-Pocket Co-pays and
  Deductibles
• Convenience Easy to follow forms and
  processes
• Cash Flow Ability to pay as you go - with no
  surprises

Focus Group Results - of Responses Focus Group Results - of Responses Focus Group Results - of Responses Focus Group Results - of Responses Focus Group Results - of Responses Focus Group Results - of Responses
  Ranking 1 2 3 4
  Coverage 59 24 14 3
  Cost 30 53 10 7
  Convenience 8 11 44 37
  Cash Flow 3 12 32 53

Most Common Response in the Category Second Most
Common Response

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Targeted Employee Communications
Its YOUR money to keep, spend or save!
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Enrollment
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Enrollment Results
Based on 1,219 employees enrolled in ahealth
plan option for 2007 and 1,179 enrolled in 2008
23 HSA enrollment in year 1 2007
30 HSA enrollment in year 2 2008

• 122 Employees switched from PPO to HSA
• 27 switched from HSA to PPO

• Enrollment rate for families is the same (33)
  for PPO and HSA participants

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Enrollment Results by Age
69 of HSA participants age 40 2007
73 of HSA participants age 40 2008

• Average age of Sperian employees in U.S. is 46

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Enrollment Results by Income
52 of HSA participants earnless than
50,000 2007
55 of HSA participants earnless than
50,000 2008
More than100,00011
More than100,00012
75,001-100,00016
75,001-100,00015

• Average income of Sperian employees in U.S. is
• 40,000 per year

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Wellness
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Healthcare Costs are Driven by 3 Factors (Trend)
14,000
12,000
10,000
Cost the cost of healthcare services. Utilizatio
n the frequency of use of healthcare
services. Case Mix the Age/Gender mix of the
insured population.
8,000
6,000
4,000
We can influence
2,000
2007
2008
2010
2011
2009
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Our Health Status is Mostly the Result of Our
Behavior
We have more control than we think that we do!
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The Wellness Continuum (Just Dont Get Worse)
Because health naturally deteriorates as we age,
keeping people from getting worse is actually the
best way to make them healthier Dee Edington,
University of Michigan
preventionearly detectionearly
interventionmedical interventionmedical
managementend of life initiatives
OPTIMAL HEALTH
CHRONIC ILLNESS
PRENATAL
DEATH
prevention
treatment
preventionearly detectionearly
interventionmedical interventionmedical
managementend of life initiatives
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Reducing Health Risks Reduces Health Cost
Invest your money keeping your low risk people
healthy. Thats the business case for health
Dee Edington
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Shape Up Sperian Our 2008 Wellness Competition
Sperian 12-week Results Participants Weight Loss
Exercise Hours Pedometer Steps 806
3,522 lbs. 29,576
545,896,004
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Shape Up Weight Loss Results
The average Sperian employee who participated in
the weight loss division had a starting Body Mass
Index (BMI) of 30.7. By the end of the 12-week
program, the average BMI was reduced by 1.4
points to 29.4 and the aggregate BMI for the
group was reduced by 542 points.
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ROI of Shape Up Program Due to Reduced BMI

• An individuals BMI is highly correlated with
  medical and pharmaceutical claims costs. A
  decrease in BMI by one point is associated with a
  202.30 decrease in medical and pharmaceutical
  claims costs over one year (Association of
  Healthcare Costs With Per Unit Body Mass Index
  Increase, Dee Edington, American College of
  Occupational and Environmental Medicine, 2006).
• The decrease of 542 BMI points in the Sperian
  employee population over one year is expected to
  result in a decrease in medical claims and
  pharmaceutical costs of 109,647. This does not
  include significant cost-savings associated with
  decreased absenteeism and workers compensation
  claims and increased productivity, morale, and
  retention

Medical and Pharmaceutical Claims Cost Savings
Associated With BMI Decrease Cumulative BMI
Reduction (points) 542 Cost Associated
With One BMI Point 202.30 Total 1-Year
Medical and Pharmaceutical Claims Savings
109,647 Cost of Program
19,950 Return on Investment
5.5
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Our 2008 Wellness Program Strategy Paid Off

• An essential component of our long-term strategy
  to control health cost inflation centers on the
  belief that it is less costly to invest in the
  health of our workforce than it is to pay for the
  cost of treating illness. As part of our
  150,000 investment in wellness programs in 2008,
  we required employees to become more active
  partners in good health management
• All of our 2008 health plan options offer an
  expanded list of preventive services at no cost
  to employees or family members
• Physicals w/ related lab tests, Well baby
  visits, Immunizations, Pap smears, Screening
  mammograms, Annual GYN exams
• Enrollment in 2008 health benefits was tied to
  taking a Personal Health Assessment
• 1480 out of 1535 employees (96.4) completed PHAs
  and received their own confidential personal
  wellness report
• One-day Wellness Clinics at all major locations
  during open enrollment
• 74 of Employees received free cholesterol,
  blood glucose, blood pressure screening flu
  shots. Over 60 employees were referred for
  follow-up medical care, including one person who
  found out they were diabetic
• Our Shape Up Sperian competition was a big
  success.
• 109,647 in expected 1-year medical claims
  reductions and 5.5 ROI.

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What our employees are saying . . .

• I lost 18 pounds and I am getting out and walking
  and feel so much better. I'm not so tired all the
  time. It was a perfect time of year to get
  everyone motivated.
• This was a very challenging experience for me,
  but it was well worth it. I have more energy,
  healthier, sleep better, lost one size and don't
  know how many inches. I would certainly do this
  again.
• Setting up teams was a great idea to make this
  process more competitive. I am kind of sad that
  it's over. I plan on keeping my success alive by
  continuing.
• I have changed my way of living. I have learned
  that exercise is very important every day even if
  it is for a short time. I really enjoy it.
• Im very proud to say that Im more active, more
  productive and Im 20 lbs lighter. But the real
  benefit is how I feel, both mentally and
  physically. Thank you for letting me participate
  I hope to do it again next year.

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Michael Vittoria VP Human Resources Sperian
Protection 900 Douglas Pike Smithfield, RI
02917 401-757-2111 mvittoria_at_sperianprotection.
com
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