Benefits Buzz

A Fully Insured Renewal Story - Feel the Pain...

Here's a fully-insured renewal story from a small company I'm networked with... Feel the pain, my friends....

Here’s What You Need to Know:

1. Premiums paid by company to BCBS: 323K

2. Claims paid out by BCBS to cover company claims: 181K

3.“Pooling Effect” Applied by BCBS: 139K

4. Administrative Costs Applied by BCBS: 56K

5. Sum of #2 through #4, BCBS Stated Cost Line: 376K

6. Result: BCBS gives company 1% rate increase

*** Note: BCBS uses past premiums paid, not resulting in claims cost, to decrease the % increase that would be called for (#5-#1).

That's right - this company had claims representing 60% of the total fully-insured premiums paid into the system for the year - a great year in claims experience by any measure.  And took a 1% increase...

 

Sigh...

 

Obama on BCBS of Alabama: Did He Mean It Was a Good or Bad Thing?

If you saw President Obama's speech on 9.9.09, you heard him reference the medical insurance situation in the state of Alabama.  Here's a rundown of what Obama said with a little analysis from WAAYtv.com:

"One paragraph in President Obama's health reform speech Wednesday night really perked up a lot of ears here in Alabama.

Here is the quote : "Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. In Alabama, almost 90% is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down." 

So what company was the president talking about? And is it true?

According to a report this year from the Government Accountability Office this year, 9 out of 10 insurance holders in Alabama use Blue Cross, Blue Shield. The same report shows less than 10 companies are legally allowed to sell health insurance in Alabama.

But is that a bad thing, as the President implies?

Alabama's Deputy Insurance Commissioner David Parsons doesn't think so. In an interview with insurance industry news site "InsuranceNewsNet.com" last month, Parsons compared BCBS to Wal-Mart, saying "Over time, it's kind of like the Wal-Mart syndrome," "They offer good products at lower prices, and people gravitate to it. They out-competed everybody."

I'm not a healthcare policy wonk.  I'm just a VP of HR trying to offer great benefits and keep costs in line.  But here are a couple of points for those not familiar with how healthcare works behind the scenes from providers like Blue Cross Blue Shield of Alabama:

-Because BCBS of Alabama owns the market, they are able to get huge price cuts from hospitals and doctors.  When I took my first company to self-insured status (for those of you unfamiliar, that means the company pays its own healthcare bills, dollar for dollar, with BCBS serving as the administrator and earning its money through an 8-10% administrative fee), I was shocked to see BCBS paying 40-50% of the retail sticker price for both office visits and procedures.  Hospitals and Doctors have to accept BCBS cutting costs in this fashion since they own the market. (Much like WalMart forcing vendors to cut costs that get passed along to consumers in some fashion).  If they don't agree, 90% of Alabama won't use them.

-The main grind in this situation is for fully-insured companies (meaning they pay set premiums on behalf of their employees, then face rate renewals annually), especially those with fewer than 500 employees.  BCBS uses a pool formula to determine increases, which means you could pay more in premiums than BCBS paid out in claims for your company and still get a hefty increase.  Like the doctors and hospitals, you have to take it because there's no one else in the market.

Again, I'm not a heathcare policy wonk, so I don't have the answer for you.  I know that those who advocate a single payer healthcare system dream, in part, of having the market power that BCBS enjoys.  The scary part?  When the system as a whole pays out more than it takes in, someone has to pay.  Can that be anyone other than the taxpayer, or the federal deficit if healthcare was nationalized?  My experience with BCBS of Alabama, both in a self-insured and a fully-insured environment, says "no".

The alternative is real competition.  I'd love to see some real research on what happens to pricing power related to hospital and doctor payment when 50 or more insurance companies are allowed to do business in a single state.

Editor's Note: By day, Kris Dunn is the VP of People at DAXKO, a cool software firm dedicated to providing solutions to the best membership-driven organizations in America. At night, he morphs into a blogger at The HR Capitalist and the Founder and Executive Editor of Fistful of Talent. That makes him a career VP of HR, a blogger, a dad and a hoops junkie, the order of which changes based on his mood. Tweet him @kris_dunn...

Smoke 'em If You Got 'em - Unless We Have a Policy Against It....

A follow up to one of my first ever posts over at the HR Capitalist.  Scott Rodrigues had been working as a lawn-care employee for The Scotts Co. for only about two weeks when he was fired in 2006 after a drug test found nicotine in his urine, a violation of a company policy forbidding employees to smoke on or off the job. He promptly filed a lawsuit that argued, among other things, that the company violated his right to privacy.

As the Boston Globe reports, that case has made it through the courts, and the courts upheld the Ability of Scotts to terminate Rodriques for smoking:

"Now a federal judge has dismissed the Bourne man’s suit, ruling that Rodrigues’s smoking was not a protected privacy interest because he never kept his puffing a secret.

In granting Scotts’s motion for summary judgment, US District Court Judge George A. O’Toole Jr. said that Rodrigues admitted in a deposition that he smoked while walking down the street and in a restaurant parking lot and was caught by a Scotts supervisor with a pack of cigarettes on his dashboard.

“It is clear from those admissions that Rodrigues has not attempted to keep the fact of his smoking private,’’ O’Toole wrote.

The judge also rejected Rodrigues’s contention that his firing violated the 1974 federal law that protects employees’ rights to their benefits. O’Toole said that law did not protect Rodrigues because he was not yet a bona fide employee and was only working on the condition that he passed the urinalysis.

Jim King, a spokesman for Scotts, which is based in Marysville, Ohio, said the smoking ban has never been used to fire “an existing employee,’’ only to screen out applicants. Since the ban went into effect, he said, the percentage of smokers among the company’s roughly 7,000 employees has fallen from 28 percent to 7 percent.

“We’re obviously pleased with how [O’Toole] ruled,’’ he said. “We think the ruling speaks for itself.’’

Scotts’s smoking ban was announced in 2005 by chief executive Jim Hagedorn, a former two-pack-a-day smoker, and went into effect Oct. 1, 2006, giving the company’s employees nearly a year to prepare. Scotts has paid for employees and their families to take part in smoking cessation programs.

King told the Globe after Rodrigues filed his suit that the tobacco policy was intended to reduce medical costs for the self-insured company, which he described as deeply committed to promoting good health among employees. He pointed out that Scotts built a $5 million wellness center in Marysville and reimburses some workers for fitness club memberships."

Now for the big question based on the wording of the ruling.  What if the prospective employee had attempt to keep his smoking a secret?  Would the ruling have stood?

Interesting stuff.  I'm not sure we can get to wherever it is we are going in the healthcare debate (especially from a cost perspective) until employees have incentives or penalties to motivate them to live healthier.

Time Magazine - Exercise Doesn't Help You Lose Weight...

Weight Loss has long been thought to be a calories in, calories out type of thing that was aided by exercise.  Now, Time Magazine's throwing one of those cover articles out (titled, "Why Exercise Won't Make You Thin") that's sure to make a lot of people say "A-HA!!!"

More from the Time article:

"In general, for weight loss, exercise is pretty useless," says Eric Ravussin, chair in diabetes and metabolism at Louisiana State University and a prominent exercise researcher. Many recent studies have found that exercise isn't as important in helping people lose weight as you hear so regularly in gym advertisements or on shows like The Biggest Loser — or, for that matter, from magazines like this one.

The basic problem is that while it's true that exercise burns calories and that you must burn calories to lose weight, exercise has another effect: it can stimulate hunger. That causes us to eat more, which in turn can negate the weight-loss benefits we just accrued. Exercise, in other words, isn't necessarily helping us lose weight. It may even be making it harder.

Earlier this year, the peer-reviewed journal PLoS ONE — PLoS is the nonprofit Public Library of Science — published a remarkable study supervised by a colleague of Ravussin's, Dr. Timothy Church, who holds the rather grand title of chair in health wisdom at LSU. Church's team randomly assigned into four groups 464 overweight women who didn't regularly exercise. Women in three of the groups were asked to work out with a personal trainer for 72 min., 136 min., and 194 min. per week, respectively, for six months. Women in the fourth cluster, the control group, were told to maintain their usual physical-activity routines. All the women were asked not to change their dietary habits and to fill out monthly medical-symptom questionnaires.

The findings were surprising. On average, the women in all the groups, even the control group, lost weight, but the women who exercised — sweating it out with a trainer several days a week for six months — did not lose significantly more weight than the control subjects did. (The control-group women may have lost weight because they were filling out those regular health forms, which may have prompted them to consume fewer doughnuts.) Some of the women in each of the four groups actually gained weight, some more than 10 lb. each.

What's going on here? Church calls it compensation, but you and I might know it as the lip-licking anticipation of perfectly salted, golden-brown French fries after a hard trip to the gym. Whether because exercise made them hungry or because they wanted to reward themselves (or both), most of the women who exercised ate more than they did before they started the experiment. Or they compensated in another way, by moving around a lot less than usual after they got home."

The article's a good read, so give it a run.  The problem with mass media articles like this is that they tend to not change anything, with the exception of making those avoiding exercise feel emboldened like they are somehow doing the right thing.  I haven't been exercising, but guess what?  Time ran that big article that said exercise doesn't work - so there's no reason for me to start.

Meanwhile, regardless of the reality regarding exercise's impact on weight loss, that same group gets none of the other postive impacts of exercise in their daily lives.

Worse yet, their kids grow up with no exposure to exercise as a part of a healthy lifestyle.

Thanks Time...

Utah Plans a Marketplace/Exchange for Healthcare....

As the future of President Obama’s health care reform initiative and its ambitious timetable grow more uncertain, you may be interested in learning how some states are taking matters into their own hands with practical solutions that can be quickly implemented – rather than waiting around for a federal plan.
 
The State of Utah passed legislation in late 2008 that mandated the creation of a health insurance “marketplace” or “exchange” that connects consumers to a Website where they can evaluate insurance options and make informed purchasing decisions.  The first phase of the Utah Health Exchange, a “defined contribution” model for small employers (2 to 50 employees), is now underway and will be launched in November, 2009. 

In the first phase of the Exchange’s implementation, the plan will create the “defined contribution” model for small employers (2 to 50 employees).  In this model, employers define a specific dollar amount to contribute to their employees’ health insurance premiums and then employees can “shop” at the Exchange from a menu of plans offered by participating insurers.  This model enhances private competition and transparency in the health care system by giving employees the necessary information and purchasing power to make informed health insurance choices.  It also offers relief to employers who will no longer bear the full burden of administering a health plan for their employees.   

The technology behind the Utah plan is suited to the Exchange’s model because it can present consumers with side-by-side comparisons of plan options and costs with “drill down” details and links to forms and documents all in one location and at the “point of purchase.”  It can also handle the numerous administrative complexities raised by this approach, including the transmission of electronic feeds to multiple carriers and the funding of health insurance premiums from multiple sources such as the government or a spouse’s employer.  

Interesting times...

Getting a Higer Rx Mail Order Rate Takes a PhD in Behavioral Science...

Well - not really, but it might help. 

If you've been responsible for oversight of the medical spend in your company, than you know two things are true related to your Rx plan saving you money:

1.  You need aggressive formularies

2.  You need to max your generic penetration rate

3.  You  need to max your mail order penetration rate (for scripts that are available for mail order).

Not a lot of surprise there, and you're probably familiar with the fact that you can usually get some movement with a little internal PR, then you get to a plateau and get stuck.  What do you do then?

Express Scripts, a St. Louis pharmacy benefit manager that handles drug coverage for large employers and health plans, is out to change that result. The company is applying the principles of behavioral economics to reduce waste, improve patient health, and boost its bottom line.

Here's an example of a behavioral program at Express Scripts via Business Week:

"One example: More than 70 Express clients, including uniform supplier Cintas (CTAS), have signed up for an initiative that focuses on getting employees to order drugs for chronic conditions, such as high blood pressure, through the mail. Home delivery is more efficient and thus a higher-margin business for Express than managing prescriptions filled at drug stores. That's because mail-order prescriptions get processed through its highly-automated pharmacies and come in 90-day packs instead of the usual 30-day supply. At the beginning of a three-month program that Express piloted with Lowe's (LOW), only 14% of the home improvement retailer's employees on so-called maintenance medications received their drugs by mail. When the pilot ended in March, 38% did."

How did they do that that? 

"Express and rivals such as Medco (MHS) typically try to persuade patients to switch by making mail-order drugs cheaper than store-bought ones. (Some employers require mail order for certain medications.) But incentives don't always work. The reason, says Express Chief Scientist Bob Nease, is a phenomenon known as "present bias," one of the principles of behavioral economics, which stresses that humans often act irrationally. People are more inclined to focus on the immediate hassle of changing a habit than the future benefit. So faced with the paperwork to initiate home delivery, most will keep driving to a pharmacy.

Express attacked such inertia by forcing Lowe's employees to make a conscious choice. The company contacted employees with letters and phone calls, asking them to choose between mail and retail. If employees didn't make a decision by their third refill, their drug costs would not be covered until they decided. That forced customers to weigh their options. 

Another theory Express is using is "loss aversion," which says people work harder to avoid losses than to pursue gains. That has led it to change its marketing pitch in other programs from "save money" to "stop wasting money".

Note - the program sounds innovative and it is in many regards, but the "nuclear option" of mail order - leaving employees at the retail pharmacy without having the ability to fill a prescription - is in play here, which always leads to a nice spike in the mail order penetration rate.

Would you take that nuclear option?  More and more companies will in today costs environment...

Can "Bonus Banks" Balance the Long-Term View with Short-Term Incentive Plans?

Hang around any business long enough, and eventually you'll run into circumstances where managers sacrifice the long-term view for short-term gain, usually the result of pressure felt from their boss, the board and/or shareholders in the company.  Here are two great examples:

--Subscriber-based businesses like Cell Phones - you're pinched on subscriber counts in a competitive environment, so you make the short-term decision to move your disconnect threshold, for customers who don't pay you timely, from 30 to 60 days.  In the short term, your subscriber numbers look great, but over time you train your customers that they don't have to pay you timely, and your bad debt goes through the roof.

--Any business where revenue is mined or expense avoided to improve the next quarterly report - We've all been around this one in our careers.  Is it good for the business long term to avoid R&D costs now?  Probably not, but we're doing it anyway...

So, there are levers to pull and decisions to make.  However, the bonuses that are traditionally paid out in a quarterly or annual fashion to managers in many companies are under more scrutiny than ever, based on what's occurred lately economically.  Enter the concept of the Bonus Bank, which defers managers receiving all of an annual bonus until time proves their management to be prudent.

More on Bonus Banks from BusinessWeek:

"Some companies, aware of the direction the regulatory winds are blowing in Washington and other capitals, are making preemptive moves to overhaul the schemes they use to reward top brass. One concept that's gaining traction is that of the "bonus bank." UBS (UBS) launched a bonus bank late last year after the Swiss government tossed the institution a $60 billion lifeline. Investors are pushing for E*Trade Financial (ETFC), Charles Schwab (SCHW), and JPMorgan Chase (JPM) to adopt similar plans.

Here's how the bonus bank works at UBS: One-third of a top manager's annual bonus will be paid out and the rest will be deposited into an account. The money can be drawn down over three years, provided the bank meets or exceeds predetermined operating targets and other benchmarks. If not, the manager stands to lose some or all of the funds in the account. The beauty of the idea, in the eyes of compensation specialists, is that it discourages employees from goosing results one year at the expense of the next. "For a bank, this is an opportunity to move to a system that's far more defensible," says University of Chicago's Booth School of Business Professor Raghuram G. Rajan.

While straightforward in principle, the bonus bank can be difficult to make work in practice. Briggs & Stratton (BGG) in Milwaukee, which has more than $2 billion in annual sales of engines for equipment such as lawn mowers, set up a bonus bank in the early 1990s. It worked pretty well, too, until 2005, when a spell of dry weather drove down demand for the company's products. So even as Briggs & Stratton outperformed rivals, it wasn't hitting return-on-capital targets, a key metric under its plan. By 2008, bonus accounts had moved into negative territory, meaning executives would have to relinquish a portion of their future payouts. The bonus plan had become a "disincentive" for managers to stick around, says CEO John S. Shiely. So the board decided to cap bonus bank losses, and put a temporary, supplemental bonus plan in place. Says William F. Achtmeyer, a member of Briggs & Stratton's compensation committee and CEO of strategy consultant Parthenon Group: "It's a model that is theoretically outstanding, but from an implementation perspective has its limits, too."

I'm a fan.  Of course, there is a lot to figure out in addition to what's mentioned above, such as the treatment of employees who exit the company before past years' bonuses have "vested".

Is IBM the Innovator in the 401(k) Business?

Let's face it - it's a bad time to talk 401k to employees.  With a market that topped at 14,000 in the dow and dropped all the way down in the 7,000 range, most employees who were fully invested in stocks took haircuts in the range of 30-40% of total assets.  That means when it comes time to pump up the old 401k, the audience isn't exactly receptive in most companies to benefit and HR pros - in fact, it can be hostile.

One of the areas I've struggled with in the past few years is running HR shops for companies that fall below the Fortune 500 space.  Buying power is a big deal in the 401k business, and if you are a venture capital-held firm with a couple of hundred employees, you've got limited power to minimize the things you might be able to control for employees - plan design, mutual fund fees, etc.  As an example, I was told last year that in order to enter the 401k space with Vanguard (a mutual fund company that believes in "indexing" and thus is among the best in the company at keeping fees low), you need at least 25 million in assets in your 401k.  Less than that?  You need not apply.

I give you that intro as a backdrop to a recent BusinessWeek article on 401ks at IBM, which recently dropped its pension line to create a supercharged 401k for its employees:

"Back in January 2008, IBM (IBM) replaced the last of its pensions with a new-and-improved 401(k). The plan came with plenty of enticements, befitting a company that earned more than $10 billion on $99 billion in revenue the previous year. There were generous matching contributions, super-low fees, custom-designed portfolios, free access to financial coaches, and more. Even so, critics hammered IBM's move as one more sign of retreat from the secure retirement benefits of the past.

Today, hardly anyone is complaining about IBM's 401(k), least of all the participants. The plan is sumptuous compared with offerings from most companies. Across the U.S., 401(k)s have been bludgeoned by the financial crisis. Balances have shrunk to a fraction of their former value, and many companies have slashed matching contributions. Yet IBM is sticking with its plan—one of the largest in the U.S., with $27 billion in assets. "In my job, I often hear horror stories," says J. Randall MacDonald, senior vice-president for human resources, who led the shift from pension to 401(k). "I don't hear horror stories about the 401(k)."

IBM's creation isn't revolutionary in design or implementation. But it combines most of the best features of 401(k) plans at other companies, then leverages IBM's size to wrangle cut-rate fees from investment firms that want to manage its retirement assets. With 94% participation among more than 100,000 active U.S. employees, the plan boasts an average employee balance of $127,000, more than double the national average. Fees, which have a bigger impact on long-term results than most people realize, typically are just 10 basis points, or 0.10%. "IBM takes a very paternalistic and serious attitude in terms of the quality and the cost to participants," says Ted Benna, chief operating officer of pension consultant Malvern Benefits and the man considered to be the father of the 401(k).

Having weathered the recession, at least so far, IBM is now toying with some truly radical ideas. MacDonald hopes someday to meld retirement and health benefits into compensation, leading to a performance-based 401(k) through which top performers could be rewarded with better benefits. Given IBM's size and clout, any trail it blazes in this area could alter the retirement landscape dramatically.

 

Is there any doubt that size matters?  One example - fees in the IBM plan are .10% on average?  That's clearly related to the purchasing power of the small nation that is IBM.  A small company is lucky to have one or two funds out of 15 that have fees of .30%, with the rest of them moving toward 1.00% in a pretty quick fashion...

So, the IBM plan is great, but the biggest benefits are a reflection of the size of the company...

Was Denis Leary Right About Preventative Care?

Denis Leary had a great line from his Broadway show/CD "No Cure for Cancer".  It goes a little something like this:

"I love these little facts. "Well you know. Smoking takes ten years off your life." Well it's the ten worst years, isn't it folks? It's the ones at the end! It's the wheelchair, kidney dialysis years. You can have those years! We don't want 'em, alright!?

The Leary premise is quality over quantity.  If the late years aren't good ones, the theory goes that you may as well do what you want.  No mention of the cost of health care during the late years.  That doesn't translate too well into comedy, especially the Leary version of comedy.

Not to worry.  Arthur Garson's got you covered in this column from Governing Magazine, where he and Carolyn Englehard argue that preventative care just doesn't pay out:

"If you're among those who think prevention saves money, and will help reduce the overall cost of medical care, you're not alone. But while an apple a day might keep the doctor away, at least for awhile, it also might cost more than you think. Preventive medicine can help avoid costly illnesses earlier in life, only to increase the population of elderly and infirmed people who will most likely require expensive treatments for other illnesses later.

Even worse, unhealthy habits such as tobacco smoking may actually save money in the long run as people who smoke die earlier and use fewer health care dollars. "This doesn't make sense," you say, "Smokers are less healthy than nonsmokers." That may be true, and smokers do use up to 40 percent more medical care while they are alive. A recent study from Holland showed that, on average, smokers die at age 77 and save $100,000 in lifetime medical care costs compared with non-smokers who die at 83.

The same is true for people who are obese. While obesity-related conditions such as Type-2 diabetes, high blood pressure and heart disease are associated with high medical expenditures, the costs that are saved by preventing obesity will only be offset later in life by diseases unrelated to obesity that accompany living a longer life. In the Dutch study, obese people die at 80 and save $50,000 compared with non-obese people who die at 83."

Wow, there it is.  It's cheaper to allow people to make their own decisions about lifestyles because we don't have to spend money on them once they're gone - it's cheaper overall to let them do what they want. 

What the column doesn't explore is ramifications of preventative care for employers.  The ten years at the end are largely funded by the government.  What about the 5/10 year ROI scenario for employers that invest in programs that get people to stop smoking or drop their blood pressure.  Is the ROI there for the companies that choose to do that?

That's the million dollar question (literally) for employers in America.

Focusing on Surgery - Part of the Reason Effectiveness Trails Cost in the USA?

I've always been amazed that the USA always shows up in the mid-teens regarding outcomes/effectiveness of care when compared to other industrialized nations.  All the money we spend, and we trail Europe? 

One reason might be a over-reliance on surgery, which we've been trained is the path to take when you're serious about getting healthy.  A recent BusinessWeek article focuses on this tendency in the USA using heart disease and prostate cancer as examples:

"Each year, more than 1.3 million Americans have their clogged arteries widened with a tiny balloon and then kept open with slender mesh tubes called stents, made by companies like Johnson & Johnson (JNJ) and Boston Scientific (BSX). The total bill for these angioplasties is more than $21 billion a year. But while many patients and doctors firmly believe that angioplasties prevent heart attacks, the data say otherwise. A series of studies—the newest published in the June 11 issue of The New England Journal of Medicine—finds that stable patients with chronic heart disease who have the procedure get little benefit compared with similar patients treated just with drugs, such as Pfizer's (PFE) cholesterol-lowering Lipitor and other statins, and aspirin. "There are still many patients who undergo angioplasty without really understanding that it will not reduce chances of heart attacks or death—though it will reduce symptoms," says Dr. Judith S. Hochman, director of the Cardiovascular Clinical Research Center at the New York University School of Medicine.

That's why there's a growing effort, led by physicians, health insurers, and even state legislatures, to make sure patients truly understand the medical evidence about angioplasty and other treatments and procedures. Once informed, the patients are encouraged to make their own choices. This idea goes by the somewhat clunky name of shared, or informed, decision-making. Instead of being routinely whisked in for a prostate screening PSA test, for instance, men would first be told that major studies have failed to show the test saves lives. What's more, the test increases the chances a patient will undergo surgery or treatments that cause incontinence, impotence, and other problems. "The fact that PSA screening is more likely to cause mischief than save a life is not intuitive to patients or even physicians," says Dr. Paul J. Wallace, medical director for health and productivity management programs at health-care provider Kaiser Permanente, which is testing this approach.

Studies show this process, using comprehensive videos and other materials prepared by groups such as the nonprofit Foundation for Informed Medical Decision Making (FIMDM), leads patients to choose conservative options more often. It reduces rates of angioplasty or prostate surgery, for instance, by 15% to 30%. Put into widespread use, the approach has the potential to trim hundreds of billions of dollars from the nation's $2.4 trillion health-care bill. Yet patients do as well or better than if they had opted for the procedures. Surveys done after the decision also show patients to be more satisfied, no matter which choice they made. "That's the kind of win that doesn't fall into your lap very often," says Washington State Senator Cheryl Pflug, a Republican.

Hundreds of Billions.  Kinda catches your eye, although the specter of making decisions in terms of who gets surgery and who doesn't would be a rallying cry for those who claim nationalized health care will take the decision out of the hands of the patient/doctor.

It'll be interesting to see this play out in the scope of nationalizing health care...

Sunscreen Arms Race - How About a 500 SPF Product?

For those of you who haven't met me, to classify me as pasty is fair.  Irish blood has made me that way, which means I need some sunscreen protection when it's beach or pool time.  I've long since given up on the bronze tan, I'll settle now for people not squinting if they look my way, as the sun deflects off of my skin like it was aluminum foil.

Given my history as pasty-man, I've grown skeptical of the need for even 50 SPF sunscreen.  After all, if I burn in 20 minutes without sunscreen, 50 SPF means I have the ability to stay out in the sun (properly applied with no water erosion) for 1,000 minutes, right? 

As it turns out, there's a SPF marketing arms race that's going on right now.  More from the New York Times:

"LAST year, Coppertone rolled out two easy-to-use sprays with its highest-ever sun protection factor: SPF 70+. Not to be outdone, Neutrogena offered its Ultra Sheer Dry-Touch lotion in SPF 85 strength, that year’s big gun.   This sun season, Banana Boat is retaliating with a pair of SPF 85 sprays, which it trumpets on its Web site as “our highest SPF level in a continuous spray formula.” 

But now, SPF creep has hit the triple digits with Neutrogena’s SPF 100+ sunblock, leading some dermatologists to complain that this is merely a numbers game that confuses consumers.  The parade of stratospheric SPFs is “crazy,” said Dr. Barbara A. Gilchrest, a dermatology professor at Boston University School of Medicine. “For a normal person who is fair-skinned and concerned about skin damage and photoaging,” Dr. Gilchrest said, “it’s really in my opinion tremendous overkill.”

But that’s not necessarily the case. No SPF, not even 100+, offers 100 percent protection. What’s more, both UVA and UVB radiation can lead to skin cancer, which is why dermatologists now advise using sunscreens with an SPF of at least 15 and UVA-fighting ingredients like an avobenzone that doesn’t degrade in light or Mexoryl SX.

The difference in UVB protection between an SPF 100 and SPF 50 is marginal. Far from offering double the blockage, SPF 100 blocks 99 percent of UVB rays, while SPF 50 blocks 98 percent. (SPF 30, that old-timer, holds its own, deflecting 96.7 percent)."

Good to know.  Remember, when you see me on the beach, be sure your sunglasses are on.  The glare can be blinding...

Editor's Note: By day, Kris Dunn is the VP of People at DAXKO, a cool software firm dedicated to providing solutions to the best membership-driven organizations in America. At night, he morphs into a blogger at The HR Capitalist and the Founder and Executive Editor of Fistful of Talent. That makes him a career VP of HR, a blogger, a dad and a hoops junkie, the order of which changes based on his mood. Tweet him @kris_dunn...

Fat Is the New Skinny - Trends in Classifying Yourself As Overweight...

That's right.  Our kids have been fat so long that our expectation of what fat is has started to shift.  See this research abstract from Burke, Heiland and Nadler and exhale:

"We test for differences across the two most recent NHANES survey periods (1988–1994 and 1999–2004) in self-perception of weight status. We find that the probability of self-classifying as overweight is significantly lower on average in the more recent survey, for both men and women, controlling for objective weight status and other factors. Among women, the decline in the tendency to self-classify as overweight is concentrated in the 17–35 age range, and, within this range, is more pronounced among women with normal BMI than among those with overweight BMI. Among men, the shift away from feeling overweight is roughly equal across age groups, except that the oldest group (56–74) exhibits no difference between surveys. In addition, overweight men exhibit a sharper decline in feeling overweight than normal-weight men.

Despite the declines in feeling overweight between surveys, weight misperception did not increase significantly for men and decreased by a sizable margin among women. The shifts in selfclassification are not explained by differences between surveys in body fatness or waist circumference, nor by shifting demographics. We interpret the findings as evidence of a generational shift in social norms related to body weight, and propose various mechanisms to explain such a shift, including: (1) higher average adult BMI and adult obesity rates in the later survey cohort, (2) higher childhood obesity rates in the later survey cohort, and (3) public education campaigns promoting healthy body image. The welfare implications of the observed trends in self-classification are mixed.

Hat tip to Marginal Revolution...

Digital Medical Records - Not A Clear Winner?

Much has been said recently about the promise of portable, digital medical records, but there are two sides to the story.  For every authority that touts the efficiency, safety and cost benefits of an electronic medical record, there are others who say it's not as simple as the current administration and IT vendors would have you believe.

From BusinessWeek:

"Under the federal stimulus program enacted in February, hospitals can seek several million dollars apiece for tech purchases over the next five years. Individual physicians can receive up to $44,000. These carrots should encourage the proliferation of technology that will computerize physician orders, automate dispensing of drugs, and digitally store patient records. If providers participate broadly, those files are supposed to be accessible no matter where a consumer goes for treatment. President Barack Obama says the changes will improve care, eliminate errors, and eventually save billions of dollars a year. There's also a stick: The federal government will cut Medicare reimbursement for hospitals and medical practices that don't go electronic by 2015.

The incentives are working. R. Andrew Eckert, CEO of tech provider Eclipsys, says one client, a 250-bed hospital that shelved a software order in the fall after losing $50 million in the stock market, has reinstated the order. The move is "100% due to the stimulus," says Eckert (who won't name the hospital). Brandon Savage, chief medical officer at GE's health unit, says his company's technology will leapfrog the competition by not just replacing paper but also guiding doctors to the best, least-costly treatments."

But not everyone is sold.  It's Amercia - we like it that way: 

"That rare agreement, however, is obscuring the checkered history of computerized medical files and drowning out legitimate questions about their effectiveness. Cerner, based in Kansas City, Mo., and other industry leaders are pushing expensive systems with serious shortcomings, some doctors say. The high cost and questionable quality of products currently on the market are important reasons why barely 1 in 50 hospitals has a comprehensive electronic records system, according to a study published in March in the New England Journal of Medicine. Only 17% of physicians use any type of electronic records.

But so far there's little conclusive evidence that computerizing all of medicine will yield significant savings. And improvements to patient care may be modest. An analysis of four years of Medicare data published in March in the scholarly journal Health Affairs found only marginal improvement in patient safety due to electronic records—specifically, the avoidance of two infections a year at the average U.S. hospital. "Health IT's true value remains uncertain," wrote Stephen Parente and Jeffrey McCullough, researchers at the University of Minnesota.

Part of the problem stems from a fundamental tension. Info tech companies want to sell mass-produced software. But officials at large hospitals say such systems, once installed, require time-consuming and costly customization. The alterations often make it difficult for different hospitals and medical offices to share data—a key goal. Meantime, the health IT industry has successfully lobbied against government oversight.

"Most big health IT projects have been clear disasters," says Dr. David Kibbe, senior technology adviser to the American Academy of Family Physicians. "This [digital push] is a microcosm for health-care reform....Will the narrow special interests win out over the public good?"

What special interests you ask?  When in doubt, the cynics follow the money in D.C.  For my money, as a software firm employee, it's almost impossible to serve a market this big without some significant level of customization on a big customer basis, and as the article points out, that makes sharing data difficult.

And if we can't get a portable medical record, and it really doesn't drive safety, why would we do it?  Got to get to one standard and force it on people for the economies of scale to work.

Shocker! - COBRA Subsidy To Cause Increase In Utilization

Last week, I wrote about the fact that scared employees are motivated to use benefits to a higher degree, in essence "stocking up" and getting procedures that could easily be classified as voluntary in nature.  The reason?  The economy has many scared that they may not have a job for long, so they're using the benefits to a larger degree while they have them.  Makes sense...

The only thing that motivates an employee to use benefits more than economic fear?  How about the fact that you've lost your job, and you're on a subsidized form of COBRA?  From Employee Benefit News:

"This likely won't come as much of a surprise, unfortunately, but new survey numbers from Aon show 60% of employers expect their overall health care costs to increase as a result of implementing the federal COBRA subsidy.

Polling some 300 employers who attended recent Aon COBRA webinars, the consulting firm finds 40% expect their overall health care costs to increase 1% to 5% because of the subsidy; another 40 percent expect costs to spike between 6% and 10%; 12 percent forecast increases from 11% to 15%; 8% expect an increase of 16% or more.

“Typically, 5% to 10% of former employees enroll in COBRA, and we expect that number to increase to 14% to 18% as a result of the subsidy. As employers begin to plan for their 2010 health benefits, they must take the new COBRA subsidy costs into consideration,” says Tom Lerche, Aon’s health care practice leader. “Most plan sponsors continue to experience a 7% to 11% health care cost trend rate, so additional costs from this subsidy will impact overall health care plan strategy for 2010.”

So, add the COBRA factor to the list of reasons why your trend rate will be greater than it might have been for 2009, as well as 2010.  The only saving grace?  It's the COBRA subsidy mandated by the stimulus package itself.  It could be that former employees who know they have a 2/3 subsidy for the cost of COBRA for the better part of a year might be less inclined to get the optional knee operation right away due to the security of the package.

We'll see. Of course, you'll have to fork over that $600-800 per month for the 2/3 cost of family coverage up front. 

See you at tax time.

The Utilization Gold Rush - Scared Employees Rushing to Use Benefits...

In a down economy, there's plenty of humanity to go around.  Layoffs, how to find the next job, financial stress, etc.  One thing you may not have added to the list.  A mushrooming utilization of your medical plan, including big ticket items, as employees rush to have procedures that (1) they might have put off having done, or (2) are borderline necessary.

Bad knee?  Sure you might be able to work through the issue with some therapy, but if you're worried a job loss might be in your future, you might want to go ahead and get that 30K knee surgery performed next month.

Multiply that by 10% of your employee base and you've got an issue.  From Time Magazine:

"When Sophie, a financial analyst in Paris, learned that her bank would lay off 50 employees by this summer, she didn't react by mailing out résumés or trying to ingratiate herself with her managers — she scheduled arthroscopic knee surgery. "I'm doing it now because I won't be able to if I wait and lose my job," says the 27-year-old, who, fearing questions from her employer, spoke with TIME on condition of anonymity. By going under the knife ahead of her potential job loss, Sophie can use the firm's supplementary health insurance to cover the $4,000 procedure. As she says: "Insurance is one of the parts of having a good job you take for granted until you realize you may lose it all."

Sophie isn't alone. As the global economy continues to tank — the U.S. shed 663,000 jobs in March, and millions of jobs are disappearing from Madrid to Mumbai — employees are scurrying to exploit company benefits while they have them, scheduling dental exams, indulging in massages, utilizing company-covered therapists and buying bicycles at discounted rates. "People are petrified," says Dai Williams, an occupational psychologist at Eos, a career-consulting firm in the U.K. "It's a question of grabbing what you can while you can."

You can't really stop the thought process, and for the most part, you won't be able to stop the marginal calls on whether to have a procedure performed.  The economy's doing what I always thought about employees who opted for COBRA - my take was that if an employee takes COBRA, why wouldn't they take every opportunity to get procedures completed ASAP, in case they couldn't afford the payments down the road?

Now the economy's taken that same fear to employees who won't be impacted by layoffs, etc.  Nice...

Is It The Government's Job To Make You Aware of Calories?

Generally speaking, I like to know the nutritional data of the food I eat.  I'm more hung up on fat grams than I am calories, because generally I think my calories are under control for my activity level. 

With that in mind, I respond well to seeing nutrition information at fast food outlets, and I think it's good business for those outlets, especially for return business from me.  If I know I can get something I like that's relatively healthy, by sharing that data, those chains have generally won loyalty from me over time.

That's how I roll.  BUT, I'm not sure restaurants should be required to provide that data, because I think 80% of the folks ignore it anyway.  Here's a snapshot from Forbes of what's going on in West Virginia, not known as a health mecca, regarding the posting of calorie/nutrition data:

"West Virginia state Sen. Dan Foster should have known his bill to require restaurants to post calorie counts was in trouble Tuesday when he walked into a House of Delegates committee room and found lawmakers scarfing down doughnuts and breakfast sandwiches from fast-food locations.

Before Foster could defend the bill, delegates were asking questions with their mouths full of complimentary food from fast food restaurants that had been laid out on a committee table before the meeting.  Ninety minutes later, the committee voted to kill the measure, which was billed as a way to combat the state's obesity epidemic.

"It's disappointing," Foster said. "The industry certainly spread their message."

Foster, a Kanawha County Democrat and physician, had been one of the bill's most passionate supporters. He helped secure its passage in the Senate and attended the two House committee meetings on the bill, answering questions from delegates about its intent and provisions.

"They clearly don't want people to know the calories, otherwise they'd do it voluntarily," Foster said.

A call to the West Virginia Hospitality and Travel Association, which lobbies for restaurants and opposed the measure, was not immediately returned Tuesday.  In previous meetings, lobbyists from the group have said that most large chain restaurants provide nutrition information, whether on the Internet or at their physical locations.

The bill would have applied to restaurants with more than 15 locations nationally. The goal was to post calorie counts on menus or menu boards in a bid to steer West Virginians toward healthier food choices. West Virginia has the second-highest obesity rate in the country, and ranks high in linked ailments like diabetes and high blood pressure.

Members of the House committee said even the watered-down version created by the committee's amendment would hurt free enterprise.  "I worry that what's in here is blaming the cause of all obesity on restaurants," said Delegate Daryl Cowles, R-Morgan."

Would the bill have made a difference?  I doubt it.  I think the folks who are drawn to healthy lifestyles provide return business loyalty to outlets that provide the information, and the obese generally ignore calorie/fat data in the same outlets. 

If the obese ignore the data, there's really not an ROI for the burden of providing the data.

The Pefect Storm - Reporting ACTUAL Liabilities for Municipal Retireee Health Benefits...

If you've been in HR for more than 5 years, you've been a part of what I'll call the "Great Benefits Crunch", which has forced your company to reduce overall benefit levels and/or pass along greater costs to employees.

You don't have to explain it to me.  I've had to explain those decisions to employees, and I'm aware that you didn't create the economic problem that is the "state of health care".  Sadly though, if you're in HR, you're left to explain the realities to a set of employees that doesn't feel great about costs being shifted their way.

You and I can understand that, because we're employees too.  Just because you manage the plan doesn't mean your health insurance is free. 

With all that said, a crazy day of reckoning is probably on the horizon for city employees nationwide. From the Whittier Daily News:

"For the first time ever, cities in the San Gabriel Valley are providing realistic estimates on the future costs of retirement benefits for their municipal employees - and the amounts are in the hundreds of millions of dollars.  But in the San Gabriel Valley and Whittier areas, only 12 of the 24 cities that responded to public records requests seeking retirement cost estimates know what their actual anticipated employee retirement obligations are.

Of those 12 cities, only four have started socking away money in preparation for the increasing costs, which total more than $200 million in the two eastern county regions.This year alone, 24 cities in the Valley and Whittier area will spend nearly $11 million on retiree health benefits. That number is expected to grow exponentially as the number of retirees grows, life expectancy rates increase and health premiums continue to rise.

"Up until this point, no one knew how big these unfunded obligations were," said Dean Mead, research manager for the Governmental Accounting Standards Board (GASB), a nonprofit board that sets financial reporting standards for public agencies.

That changed three years ago, when the standards board implemented regulation GASB 45, which requires public agencies to report what retirees' health benefits will cost before they retire."

Just so you know, here's what the public meetings look like when the city in question comes to the conclusion that in order to survive the real cost structure, they need to reduce retiree benefits.  Watch it and ponder...

Caffeine - It Does a Body Good....

Caffeine - I know I like to load up with a venti before I go for a long run, and now I know why.  From the New York Times:

"Starting as long ago as 1978, researchers have been publishing caffeine studies. And in study after study, they concluded that caffeine actually does improve performance. In fact, some experts, like Dr. Mark Tarnopolsky of McMaster University in Canada, are just incredulous that anyone could even ask if caffeine has a performance effect.

“There is so much data on this that it’s unbelievable,” he said. “It’s just unequivocal that caffeine improves performance. It’s been shown in well-respected labs in multiple places around the world.” The only new questions were how it exerts its effects and how little caffeine is needed to get an effect.

For many years, researchers thought the sole reason people could exercise harder and longer after using caffeine was that the compound helped muscles use fat as a fuel, sparing the glycogen stored in muscles and increasing endurance. But there were several hints that something else was going on. For example, caffeine improved performance even in short intense bursts of exercise when endurance is not an issue.

Now, Dr. Tarnopolsky and others report that caffeine increases the power output of muscles by releasing calcium that is stored in muscle. The effect can enable athletes to keep going longer or to go faster in the same length of time. Caffeine also affects the brain’s sensation of exhaustion, that feeling that it’s time to stop, you can’t go on any more. That may be one way it improves endurance, Dr. Tarnopolsky said.

The performance improvement in controlled laboratory settings can be 20 to 25 percent, Dr. Tarnopolsky said. But in the real world, including all comers, the improvement may average about 5 percent, still significant if you want to get your best time or even win a race.

For years, researchers believed that you needed about 5 to 6 milligrams of caffeine per kilogram of body weight. An 80-kilogram, or 176-pound man, for example, would need about 400 milligrams of caffeine, or 20 ounces of coffee."

Here's the bummer - too much might hurt you, although I have to say I've never experienced that:

"It’s also possible to get diminishing returns.

Terry Graham, chairman of the Department of Human Health and Nutritional Sciences of the University of Guelph in Canada, found that at 9 milligrams per kilogram, athletes actually did worse."

 

 

 

Have You Tried to Relocate A Candidate Lately?

Cross one category of candidates off your prospect list - homeowners you have to relocate...

Relocating employees has always had a "haves" and "have-nots" type of feel.  Back in the 90's, most Fortune 500 companies had the "gold-plated" standard of employee relocation - covered physical moves, lump sums to handle all types of misc. costs and the ultimate in closing remote candidates - the home purchase program.   Throw that package at a candidate, and you were closing business regardless of their financial situation..

Flash forward to 2009.  Since the market crash of 2000, Fortune 500 companies have been steadily eliminating relocation packages including a home purchase program.  Eager to slash the expense associated with such programs, big companies first moved to reserve home purchase programs for director-level and above candidates only.  Over time, many Fortune 500s have restricted the availability of these programs even further, and many have eliminated the programs altogether.

That means most of us don't have a home-purchase program in our arsenal as we try and recruit candidates requiring relocation.    So we limp by with these components at our disposal - usually a physical move (perhaps capped at a certain $$ amount to limit the exposure) and a lump sum to handle misc. costs and to provide assistance, to the extent we can, with realtor's fees and the potential costs of having two residences at the same time (which frequently occurs until the candidate gets their house sold on their own).

That package worked OK when the housing market was hot.  Of course, now it's not, which means you won't be relocating many candidates for a while.    Here's data on the drop in home values from a couple of years ago via the New York Times:

"Prices fell 6.1 percent from October 2006 in 20 large metropolitan areas, according to Standard & Poor’s/Case-Shiller indexes, compared with a 4.9 percent decline in September. On a monthly basis, prices fell 1.4 percent in October, the fastest they have declined in at least the last seven years.

All but three of the 20 regions experienced a fall in real estate values, and even the three areas — Seattle, Portland, Ore., and Charlotte, N.C. — where prices were up from a year ago, had a decline from a month earlier.

Prices have fallen the most in Miami (down 12.4 percent from a year ago), Tampa (11.8 percent) and Detroit (11.2 percent). Prices are also falling in the nation’s two largest metropolitan areas — Los Angeles (8.8 percent) and New York (4.1 percent)."

That data means two things.  Homes are taking much longer to sell, and many candidates will find themselves scrambling to cover drops in overall home values.  Many will consider the potential loss unacceptable as they consider selling.

Which means they won't be accepting your limited relocation assistance offer.

Time to add "are you a homeowner" to your initial phone screen when talking to remote candidates, if you haven't already. 

A Soft But Heavenly Benefit - Chaplains Rotating Through Your Workplace...

I'm a HR guy by trade, and one of the things that's always made me a bit queasy is taking a stand on religion in the workplace.  I feel myself softening on that concern as I grow older, although in supporting a workgroup where they're are at least six different religions represented, it's still on my mind.

Additionally, times are tight and you have to find benefit value where you can find it.  With Medical expense bearing down on all of us, it comes as a surprise that some of the benefits that have the most impact could cost relatively little. 

Like what you ask?  How about a non-denominational Chaplin rotating through the plant or call center floor?

What? More on offering some old-time religion as a benefit to your employee base from the Bradenton Herald:

"During a routine visit at Manatee Diagnostic Center, Jim Jaeger greets employees as he makes his way through the building. He asks employees how they’re doing, follows up with some on previous concerns discussed, while some workers ask Jaeger for some time to talk. Jaeger is a corporate chaplain and he has a position in the workplace that is becoming increasingly more sought after by businesses nationwide.

He is one of 104 chaplains employed by Corporate Chaplains of America, which was founded in 1996. The program is available to employers on flat fee basis and is offered much like an extension of employee benefits.

As a member of Corporate Chaplains of America, Jaeger serves about nine companies in Manatee and Sarasota counties. His job duties are to visit local businesses that have recruited the program’s services at least once a week.

During visits, the chaplain reserves a couple hours to meet with employees and managers, on a voluntary basis, to discuss personal and professional issues on a confidential level. “We talk about anything they would like to cover,” Jaeger said. “It’s quite a bit — from family concerns, to financial concerns, to work-related stress.” 

Corporate Chaplains of America is growing so much so the organization is projecting it will employ more than 1,000 full-time chaplains and serve more than a million employees by 2012.

Currently, the corporate chaplains, who are nondenominational, serve 450 firms in 26 states. Eight years ago, Corporate Chaplains of America served fewer than 50 companies.

Like I said, I feel myself loosening up on the religion front as I turn into a crusty veteran of the HR game.  Add some positive comments from my Muslim and Hindu friends who have experienced this type of Chaplin, and I just might give it a try...

Can a Widespread Rollout of EMR Really Save $7 Billion?

You start finding a billion here, and a billion there, and pretty soon you're talking about real money...

More on the cost/benefit of EMR from Forbes:

In addition to funding an expansion of state Medicaid and the State Children's Health Insurance Program, the Washington Post has reported there are plans to allocate upward of $10 billion to implement a nationwide, interoperable electronic medical records (EMR) system. The investment could jump-start a flurry of spending on health information technology (IT).

This sounds ideal, but it's an expensive proposition. Campaign for America's Future, a liberal think tank based in Washington, D.C., expects a nationwide electronic medical records system to cost $7.6 billion a year over 15 years.

The high cost is due partly to the fact that few providers currently use health IT. By 2006, only 12% of America's physicians and 11% of its hospitals had adopted computer applications to help modernize their record keeping, according to the Congressional Budget Office.

But there's a potential return on the high cost. Last week, the CBO released a study estimating that the implementation of health information technology, including EMRs, could save $7 billion in the first five years."

You buy it?

People: Take Your Drugs, Please...

The big idea to control medical trend this year, and every year after that?  Get in shape?  Well... yeah, but let's start with something that isn't at the apex of behavior modification and for the most part, doesn't hurt.

Take your drugs people.  That the hundred billion dollar idea is what CVS CEO Tom Ryan is pushing. Before you get up on your soapbox about the overmedicated state of the United States, hear him out, please... (?)

More on the CVS dream from BusinessWeek:

"During his 15 years as CEO of CVS (CVS), Tom Ryan transformed the company from a New England drugstore chain into a national health-care colossus with $76.3 billion in annual sales. He did that through a string of major acquisitions, paying $27 billion for drug middleman Caremark in 2007 and $2.9 billion for West Coast regional chain Longs Drug Stores (LDG) last October.

CVS/Caremark is now one of the 20 biggest companies in America, surpassing Boeing (BA), Target (TGT), and Johnson & Johnson (JNJ). The Woonsocket (R.I.) outfit is the largest single buyer and dispenser of prescription drugs in the nation. The Longs deal extends the chain's retail presence from Maine to Hawaii, with nearly 7,000 stores and more than 50 million users of its CVS loyalty card in the U.S.

What does Ryan intend to do with his drugstore empire? His goal, he says, is to help transform America's expensive and often ineffective health-care system. Seeking to take advantage of President Barack Obama's commitment to health-care reform, Ryan wants to use CVS's vast prescription database and burgeoning network of in-store clinics to treat patients with chronic diseases and help keep them out of the hospital, where most medical costs are incurred. "I don't think our health-care system is broken," Ryan says. "We are just spending too much, and it's unproductive."

Few industry experts would argue. Hospital visits prompted by chronic illnesses such as diabetes, heart disease, and arthritis impose an immense burden on health resources in the U.S. The total annual bill for diabetes alone is upwards of $170 billion, according to the American Diabetes Assn. Many of these costs would evaporate if patients simply complied with their doctors' orders and took their medications. In fact, about one-third of all patients who begin a drug regimen never refill the prescription, either because they don't feel sick, they forget, or they don't want to spend the money.

Ryan believes CVS could help solve this problem and, in the process, boost its own bottom line. As a pharmacy benefit management company, the Caremark unit handles drug coverage for large employers and health plans, negotiating discounts with drugmakers. It owns a treasure trove of prescription drug data, as does CVS. The merged company is thus an info tech Goliath, filling or managing more than a billion prescriptions a year. It can use that information to figure out which customers require a gentle reminder to come in for a refill."

The key issue here is privacy, how hard the nudge can be, and what the penalty could be if people don't follow the drug regiments. 

So we have Billions on the table that can be captured by allowing hard nudges?  I'm for it, but only if we're willing to withdraw funding or coverage who don't do what they need to do.

Portable Medical Histories - Is Walmart Now Progressive with Employees?

The company many of you love to hate - Walmart - hit the headlines recently for being progressive via a company-wide rollout of digital medical history technology across its employee-base. 

Why's that news?  A quick jog of your memory might have you recall this is the same company that once wrote a memo to its board on controlling healthcare costs and - get this - recommended job redesign so checkout employees had to go retrieve carts in the parking lot during their shifts.  The thought was that the most unhealthy in the ranks wouldn't be able to do that part of the job, so they'd have to leave the company and take the high cost of sponsoring their healthcare elsewhere.

Nice!  If you forgot that blast from the past, you can see the entire memo of Darwinian ideas here.

Still, Walmart's been doing better on the PR front lately, so let's give them a chance.  More on the e-Health initiative from Walmart from BusinessWeek:

"Starting early next year, Wal-Mart Stores (WMT) employees will spend less time filling out forms in the doctor's office. They'll be able to log on to the company's intranet to download and print any medical records their physicians require: allergy information, prescriptions, blood tests, entire health histories if necessary. After nearly a year of pilot tests, the Bentonville (Ark.) retailer made this option available to 1 million U.S. staffers who are eligible for insurance under its benefits enrollment program this fall. Thousands of employees have signed up, making this initiative one of the most ambitious thrusts into digital medical records, or "e-health," by any U.S. company.

Wal-Mart's program is part of a larger strategy embraced by incoming Chief Executive Michael Duke both to improve the company's image as an employer and to cut long-term costs. The retailer faces steadily rising health-care expenses, and it's not alone. A recent survey of nearly 3,000 U.S. companies by global consulting firm Mercer found that health-related costs are up 6%, on average, for the fourth straight year. Linda M. Dillman, Wal-Mart's executive vice-president for benefits and risk management, believes digital records will help by fostering "healthier associates who are more productive." And the move has an impact on other companies wondering "how to make a business case," she says. "It's easier when someone like a Wal-Mart goes first."

Walmart's biggest challenge with potable medical histories will be getting past the employee trust issues based on the PR of the past.  Even though the service is provided by a non-profit technology collective, as long as Walmart is footing most of the bill, many employees will remain skeptical of the service.

Also, as someone who pays medical costs for my employer, I don't know how the medical histories create healthier associates who are going to save the company a lot of money.  As the article says, I know accurate medical histories enhance the accuracy of care, but to really have healthier employees, you need them to do two things - exercise and eat right. 

Sadly, I don't think the software will create opportunities in either of those areas.

The company many of you love to hate - Walmart - hit the headlines recently for being progressive via a company-wide rollout of digital medical history technology across its employee-base. 

Why's that news?  A quick jog of your memory might have you recall this is the same company that once wrote a memo to its board on controlling healthcare costs and - get this - recommended job redesign so checkout employees had to go retrieve carts in the parking lot during their shifts.  The thought was that the most unhealthy in the ranks wouldn't be able to do that part of the job, so they'd have to leave the company and take the high cost of sponsoring their healthcare elsewhere.

Nice!  If you forgot that blast from the past, you can see the entire memo of Darwinian ideas here.

Still, Walmart's been doing better on the PR front lately, so let's give them a chance.  More on the e-Health initiative from Walmart from BusinessWeek:

"Starting early next year, Wal-Mart Stores (WMT) employees will spend less time filling out forms in the doctor's office. They'll be able to log on to the company's intranet to download and print any medical records their physicians require: allergy information, prescriptions, blood tests, entire health histories if necessary. After nearly a year of pilot tests, the Bentonville (Ark.) retailer made this option available to 1 million U.S. staffers who are eligible for insurance under its benefits enrollment program this fall. Thousands of employees have signed up, making this initiative one of the most ambitious thrusts into digital medical records, or "e-health," by any U.S. company.

Wal-Mart's program is part of a larger strategy embraced by incoming Chief Executive Michael Duke both to improve the company's image as an employer and to cut long-term costs. The retailer faces steadily rising health-care expenses, and it's not alone. A recent survey of nearly 3,000 U.S. companies by global consulting firm Mercer found that health-related costs are up 6%, on average, for the fourth straight year. Linda M. Dillman, Wal-Mart's executive vice-president for benefits and risk management, believes digital records will help by fostering "healthier associates who are more productive." And the move has an impact on other companies wondering "how to make a business case," she says. "It's easier when someone like a Wal-Mart goes first."

Walmart's biggest challenge with potable medical histories will be getting past the employee trust issues based on the PR of the past.  Even though the service is provided by a non-profit technology collective, as long as Walmart is footing most of the bill, many employees will remain skeptical of the service.

Also, as someone who pays medical costs for my employer, I don't know how the medical histories create healthier associates who are going to save the company a lot of money.  As the article says, I know accurate medical histories enhance the accuracy of care, but to really have healthier employees, you need them to do two things - exercise and eat right. 

Sadly, I don't think the software will create opportunities in either of those areas.

You'll Have Stained Teeth, but a Starbucks Jones Keeps It Real as you Age....

Why do I have an IV line into my arm from Starbucks?  Glad you asked, this clip from MedHeadlines makes it clear:

A collaborative team of researchers from Sweden and Denmark enrolled 2,000 adults in the study 21 years ago.  Participants self-reported their dietary habits, including their daily coffee consumption.  After over two decades, more than 70% of the participants could be tracked for follow-up evaluations.  That the research team could find 1,409 now-middle-aged participants out of the original 2,000 is considered an unusually high number.

During those 21 years, 61 people developed dementia.  Of those 61, 48 developed Alzheimer’s disease.

After evaluating the effects of many health and socioeconomic factors, including high cholesterol counts, the research team concluded the participants who drank between three and five cups of coffee a day were 65% less likely to develop dementia than those who drank less.  Drinking even more than five cups a day was also associated with a reduced risk of developing dementia but the number of participants drinking this much coffee was too small to be statistically significant.

So sure, I've got stained teeth, but I'll be sharp as a whip when I'm 85.  Checkers anyone?

Compensation Dreams...Massage Therapist Gig at Google - Priceless!

I once had a drawer full of optons from a previous employer that were granted about a year before the dotcom crash.  Total value today?  Zero - not much of a retention tool when I was pondering another opportunity.

Of course, I didn't work at Google.

Put down your HR trade and start rubbing backs for profit (they really don't go together anyway, know what I mean?).  It can work out pretty well if you work at Google.  From a clip in the NYT:

"Bonnie Brown was fresh from a nasty divorce in 1999, living with her sister and uncertain of her future. On a lark, she answered an ad for an in-house masseuse at Google, then a Silicon Valley start-up with 40 employees. She was offered the part-time job, which started out at $450 a week but included a pile of Google stock options that she figured might never be worth a penny.

After five years of kneading engineers’ backs, Ms. Brown retired, cashing in most of her stock options, which were worth millions of dollars. To her delight, the shares she held onto have continued to balloon in value.

“I’m happy I saved enough stock for a rainy day, and lately it’s been pouring,” said Ms. Brown, 52, who now lives in a 3,000-square-foot house in Nevada, gets her own massages at least once a week and has a private Pilates instructor. She has traveled the world to oversee a charitable foundation she started with her Google wealth and has written a book, still unpublished, “Giigle: How I Got Lucky Massaging Google.”

Ugh.  I can't even follow that up with clever analysis...

Pharma Rep Playbook - 4 Minutes with Doctors = 52% Jump in Scripts Written...

I want all of our employees to have the medical care they need.  Let's start there before anyone brands me as a fiscal hawk looking at numbers rather than employee well-being...

If there's one area of Medical care that drives me crazy, it's got to be big Pharma vs. doctors, patients, and yes, your local company medical plan. 

Big Pharma gets paid off of blockbuster drugs that they hold exclusive rights to.  That part of the system I get, since there are development costs tied to the R&D effort.  It's the repackaging of brand name drugs, once generics are available, that drives me crazy.  Hey, why take that generic every day?  We've just revamped the brand name equivalent with enough potency to last 5 days.   Uh, yeah... It'll cost your medical plan $1,000 more per year, but who cares?  Your employee contribution is the same regardless.

In case you needed more examples of the power of the Pharmaceutical Rep over most doctors, consider this article in a recent BusinessWeek entitled "Just Say No to Drug Reps":

"Dr. Adriane Ugh-Beman wishes more doctors would greet marketing pitches from drug companies with skepticism. So she is taking her message to medical schools. An associate professor of physiology and biophysics at Georgetown University, she has spent the past six months lecturing med students at Georgetown and neighboring schools on how to resist sales reps' overtures, such as doling out free drug samples to physicians and bringing lunches for office staff.

Often, the audience starts out belligerent, Ugh-Beman says, protesting that they're "too smart to be bought by a slice of pizza." But that changes when "we correct them with the numbers," she says. A doctor who spends just one minute with a sales rep typically ends up prescribing 16% more of that rep's product than he or she was prescribing before. And a four-minute encounter is likely to prompt a 52% jump in prescriptions, says Ugh-Beman."

I didn't dig around on the net for the white-paper behind Ugh-Berman's claims, but I am assuming if it made BW, it's legit research.

Let's assume programs like this can prepare doctors for the drug rep pushing product.  No sweat to Big Pharma, because they've got an even more powerful marketing tool.   It's called the demands of their patients after watching 20 Pharma ads every night during American Idol... What's a busy M.D supposed to do when someone brings him an ad for Paxil during a routine visit?  Prescribe (gasp) exercise? 

Every seen a Viagra ad?   All they have to do is create a market with a couple of Billion dollars worth of ads, and all of a sudden the pressure is on to pick up the full tab for each new class of drugs that's introduced... 

Man, am I tired of scrambling for the remote during a basketball game on the weekend or during prime time when the Viagra ads come on (hello? kids are watching when these things run!).  But those guys throwing the football sure are accurate throwing it through that tire in the back yard... 

If This Were a Division, You'd Shut It Down Tomorrow - The Cost of Health Care to Double By 2017...

Hey dude... The light at the end of the tunnel?  It's a freaking train, and it's coming to run you over....

Seriously, can there be a more desperate situation than the state of US Healthcare?  The population is aging, the mostly good capitalist society creates drug companies that create billion dollar markets out of vapor, and you are in the middle of the fray, trying to be the Daddy Warbucks of healthcare by providing medical and Rx to your workforce.  That's what you're supposed to do as an employer, right?

Sure, that's been part of the employer role.  But, it's getting ready to be very painful.  From the Associated Press:

"By 2017, total health care spending will double to more than $4 trillion a year, accounting for one of every $5 the nation spends, the federal government projects.

The 6.7 percent annual increase in spending — nearly three times the rate of inflation_ will be largely driven by higher prices and an increased demand for care, the Centers for Medicare and Medicaid Services said Monday. Other factors in the mix include a growing and aging population. The first wave of baby boomers become eligible for Medicare beginning in 2011."

That means total health-care spending in the year 2017 will average out to $13,101 per person.  By contrast, that spending in 2006 worked out to an average of $7,026 per person. 

WOW... 6.7% actually sounded OK to me, until I realized that compounding, which is good for my 401k, really hurts when it impacts the expense side of the P&L.

If it were a division, you'd shut it down tomorrow.  But it's not...

The Problem with HR Pitching Voluntary Benefits.....

Remember when critics were lashing out at the state of California and Arnold for aggressively pitching Long-Term Care to its residents.

It seems as if many expect state governments to avoid being a marketing channel, even if the product is in the state's own interest.

Some would say the same burden should apply to employers.

Warning - HR Capitalist opinion ahead which many Benefit professionals will not agree with....

Topic - "Voluntary Benefits", defined as benefits in which the employee pays all of the cost, provide employees with options for benefits and insurance coverage they might not otherwise be able to afford.  The affordability of such benefits is usually enhanced by the face that employees can often pay for voluntary benefits with pre-tax dollars.

Sounds noble, right?  Here's are a few problems that are often overlooked:

-Voluntary benefits usually include benefit classes like supplemental life insurance, long-term care and auto/property insurance that can have wildly variable cost structures based on the provider and the demographics that are insured.

-HR shops don't do RFPs that closely canvas each class of voluntary benefits.  They usually are hit by a comprehensive provider like an ADP, which provides a package of voluntary benefits with some high margin products built in.  If an HR shop doesn't do a comprehensive provider of the benefits, then they are usually assaulted by the bank, or insurance agent with the most aggressive marketing strategy.  In that scenario, HR people are often bad at saying no.

-Everyone, including the employee and the voluntary benefits provider, loves the concept of voluntary benefit costs being automatically deducted from their paycheck.   Employees love it for the convenience and the fact they don't have to track it.  The providers love it because they don't have to collect money.  Once the automatic deduction is in, it's hard to get out.

Put all that together, and it's complicated.  Here's the biggest issue I have, and one of the reasons I haven't opened my shop up to voluntary benefits since I arrived at my current company - I feel responsible for the solicitation.  If I'm going to open up our employee base to a voluntary benefit, for which the employee is going to pay 100% of the cost, I feel like I am VOUCHING for its quality and value across the marketplace.

And there's no doubt that employees expect you to be looking out for their best interests.  So, they take the voluntary coverage, if available, often without shopping. 

If I am going to allow an auto insurance product to be marketed to my employees through our normal channels, I feel like I need to say the quality/price combination is the best in the marketplace.   And that, my friends, is hard to do.

And that's why I traditionally have said no to the concept of voluntary benefits. 

Superbad Graph - "Total Odds of Dying, Any Cause: 1 in 1"...

Sometimes you run across a graphic that says it all - and this one (pictured below) from the WSJ journal does just that. 

We're all going to that "big records retention facility" in the sky at some point.

Want to make sure you have the longest period possible before your "records" go to deep storage?  Then take Bob Coffield's advice on the Health Care Law Blog and do the following:

"the graphic highlights advice from my dad, a retired physician in West Virginia, who always warns us of such risks. He says, "eat better, eat less, take small bites, drive defensively with two hands on the wheel, don't climb ladders and be careful with guns." Looking at the graph if we listened to this advice we would take care of most of the larger circles"

Good advice.  But what about death from hot weather? (odds of croaking from that - 1 in 13,000) 

I gotta get out of the South.  I don't see cold weather on the chart....

   

Sometimes you run across a graphic that says it all - and this one (pictured below) from the WSJ journal does just that. 

We're all going to that "big records retention facility" in the sky at some point.

Want to make sure you have the longest period possible before your "records" go to deep storage?  Then take Bob Coffield's advice on the Health Care Law Blog and do the following:

"the graphic highlights advice from my dad, a retired physician in West Virginia, who always warns us of such risks. He says, "eat better, eat less, take small bites, drive defensively with two hands on the wheel, don't climb ladders and be careful with guns." Looking at the graph if we listened to this advice we would take care of most of the larger circles"

Good advice.  But what about death from hot weather? (odds of croaking from that - 1 in 13,000) 

I gotta get out of the South.  I don't see cold weather on the chart....

   

Smoke 'Em If You Got 'Em - German Company Fires Non-Smokers....

Has there ever been a harder transformation in societal expectations than the one that has occurred in the last 30 years regarding smoking?  I was raised in a family of smokers, and in the 70's and 80's, as a kid, it really never occurred to me that the whole habit was dangerous.  In a weird twist, it also never occurred to me that I should smoke. 

I hear I beat the odds...

Then, society got cracking and made all who smoke a little uncomfortable.  Don't smoke here, here or here, and just so you got the message, here's a fishbowl to smoke in at the airport with your friends.

Of course, the whole thing has been good for our health care plans.  Fewer people smoking is good for what ails your PPO.  I'm channeling John Lennon when I say "imagine" if the U.S. made the same shift with Crisco.  Now that would really help the PPO trendline.

Of course, smoking is now seemingly uncool in the U.S.  Other countries however, like Germany, would like to thank you for smoking:

"The owner of a small company in Germany fired three workers because they were not smokers. It seems that their boss (evidently a smoker himself) felt that they were “disturbing the peace” in the workplace by being vocal about their smoking colleagues.

“I can’t be bothered with trouble-makers,” said the boss. “We’re on the phone all the time and it’s just easier to work while smoking. Everyone picks on smokers these days. It’s time for revenge. I’m only going to hire smokers from now on.”

Of course, being anti-smoking doesn't fall in a protected class.   Here's my ridiculous list of other things that are easier while smoking:

1.  Filling out a health history at your local doctor's office.
2.  Helping your son bat during a father/son baseball game.
3.  Engaging a fire extinguisher.
4.  Typing a Blackberry message while driving, and smoking...

Hat Tip to Andrew Scott-Holman, keeper of the best blog in Kiwi-land....