Author: Jeremy Smerd

Phyllis Delaney’s employer was full of sympathy after the data entry clerk learned her brother would soon die without a kidney transplant. But the good feelings soured when Delaney was told she would not have her job to return to if she took time off to donate her kidney.

    “You can’t hold this job for me for four weeks while I do this for my brother?” Delaney recalls asking her supervisor at the Signature Healthcare Foundation in St. Louis. “I don’t call this ‘working with me.’ “

    What happened next is a matter of dispute—one that may be worked out through a lawsuit Delaney is contemplating. Delaney, who had worked at the foundation for eight months, says she was fired; the company says she left voluntarily to donate her kidney.

    The confusion and bad feelings that resulted exemplify why advocates for organ transplantation are turning to employers to help shorten the wait list of people in need as well as pushing for laws protecting an organ donor’s job while they are away.

    Calling it a creative but relatively inexpensive way for companies to do a good thing, the American Society of Transplantation is hoping employers will make it easier for employees to become donors. The organization would like to see large employers guarantee paid time off for employees who donate an organ. Advocates say the time off—one week for bone marrow transplants and 30 days for organ donations—should not cut into vacation or sick leave.

    As the national organ donation wait list nears 100,000 people, the Mt. Laurel, New Jersey, organization is hoping the good will of employers will increase the rate of living donations, which tend to be more successful than organs transplanted from cadavers. Last year there were 6,306 live organ transplants in the U.S., compared with 22,048 organ transplants that came from cadavers, according to the society. The cost of the transplant is paid by the insurance of the person receiving the organ.

    “For most companies this is not a huge thing, because how many donors are they going to have in one company?” says transplant society president Barbara Murphy, a kidney transplant doctor. “It shouldn’t cause undue financial burden for anyone company.”

    Gary Smith, a lawyer for Signature Healthcare Foundation, says the burden is great for small employers, especially those that are nonprofit organizations. These organizations cannot afford to leave positions open or pay for employees in their absence. Formed in 2002 by multi-practice St. Louis-based doctor’s group Signature Health Services Inc., the foundation employs 15 people. Part of its mission is to provide discounted home health care and rehabilitation services.

    If a law were to protect the jobs of donors, small employers like the foundation would likely be excluded from it, just as they are excluded from having to comply with the Family and Medical Leave Act.

    So far, the only laws that exist pertain to federal employees and to state employees in about half the U.S., all of whom have the right to take a paid leave of absence to donate an organ. Federal law gives employees seven days off for bone marrow transplants and 30 days off for organ donations. Donors say they would have donated anyway, but the job and financial security the law provides makes it easier to do so.

    Julie Russo worked for the state of Ohio when she was cleared by doctors to donate a kidney to her dying uncle.

    “It’s stressful to think you’re going to have surgery; there’s a lot to worry about,” Russo says. “The fact that I didn’t have to worry about money helped a lot.”

    Russo, who now works for a private public relations company in Columbus, Ohio, was in the hospital for four days, immobilized for another week and out of work for six weeks. The guaranteed pay from her employer provided financial stability and convinced her uncle that she wouldn’t suffer any more for the physical risk she was taking.

    While an organ transplant is not a regular occurrence, employers that have put policies in place say they have benefited from doing so. The American Society of Transplantation says 41 employers, many in the health care industry, have paid leave policies for organ donors. Across town from the Signature Healthcare Foundation, Barnes Jewish Hospital in St. Louis has for several years offered paid time for organ donors. The decision was a natural fit for the hospital, which has a transplant center that has more than 600 people on its wait list.

    “I think employees all think it’s a good thing and the right thing to do, whether they ever access it or not,” says Gene Ridolfi, an administrator at the organ transplant center who first broached the question with his senior HR leaders.

    About a quarter of the live kidney and liver donors reported to the society that donating causes them financial stress. Without her $12-an-hour job, Delaney, a single mother of a 14-year-old, relied on family to help pay her bills. For the first time in her life, she says, she has applied for food stamps. She was unable to afford the premiums to continue her health insurance. (Medical costs related to her surgery are covered by her brother’s insurance.)

    Signature Healthcare Foundation quickly filled Delaney’s position as a data entry clerk. Smith, the foundation’s lawyer, says Signature will help Delaney find a position if one is available. But Delaney’s feelings toward her old employer have changed. Now that she has recovered and is fit to work, she plans on returning to her former employer. Instead of working, though, she plans on picketing outside their offices.

Jaime Rochowiak spoke, but the words tripped over her tongue and came out jumbled. The left side of her face was frozen. This was not the first time Rochowiak, a 31-year-old mail handler at Hess Print Solutions in Brimfield, Ohio, felt her body go numb.

“I was trying to talk but nobody could understand me,” she says.

Her facial paralysis scared her into her local emergency room. An MRI of her brain showed eight dark spots. Each one measured a small stroke. Doctors put her on a blood thinner and Lipitor, the cholesterol-lowering medication. Most important, they told her, quit smoking.

It seemed simple enough, but it wasn’t. Rochowiak had been a smoker since she was 13, and for the past 10 years her Newports were a pack-and-a-half-a-day habit. The first smoking cessation medicine she took didn’t work. The next one, Chantix, wasn’t covered by her health insurance.

If Rochowiak was going to quit smoking she was going to need some help. This was just the situation Hess had in mind when it hired Quantum Health Solutions, a Columbus, Ohio, patient advocacy company that believes it can help reduce health care costs by making sure patients do not fall through the cracks of the health care system. Like so many employers, Hess was looking for a way to reduce health care costs while making sure its employees got the care they needed.

“There is waste and extra costs in the system because the process is so fragmented,” says Kara Trott, founder and CEO of Quantum Health. “Patients have no easy way to get the care they need.”

Trott says most of the obstacles are small, but quickly add up.

Since 1997, when Trott founded Quantum after quitting her job as a securities lawyer, the $2 trillion health care industry has become chock-full of companies offering services that are meant to patch the cracks in the health care system: technology that reviews claims and identifies utilization trends, telephone counseling, acute care coordination, patient education, disease management and so on.

“We’re much more focused on the whole continuum,” Trott says.

Quantum employees also act as patient advocates helping to coordinate a patient’s care. They act as social workers, reaching out to health insurers and other caregivers as well as helping patients manage their diseases. The company also helps employers design their health care plans by emphasizing preventive medicine and the value of teaching patients to use their primary care physicians.

“The Quantum health approach is pretty labor intensive, and most other vendors are not willing to put that kind of labor into that approach,” says Dennis Boen, a senior vice president of employee benefits with broker Sky Insurance in Wooster, Ohio. Boen is a broker who regularly reviews the performance of companies like Quantum in order to evaluate their effectiveness. “Most of the other vendors are looking for a technology solution … but in this arena you are dealing with people.”

A service that is labor intensive, however, is also much more difficult to measure.

“I have to tell you initially, it was a hard sell,” says Stacey Irvin, vice president of human resources at Hess. “You have to ask yourself, ‘How in the world can you guarantee savings with what you are going to do?’ “

Another sticking point for many employers is the idea of having to pay for a service that is not guaranteed to save them any money. Most companies charge a per-member, per-month fee. Others, like Quantum, only collect fees if they can prove to an employer that they helped save the company money. This was a decisive difference for Hess when the company hired Quantum four years ago, a time when Hess was experiencing double-digit cost increases. Today, 800 employees and dependents use the service.

A lot of energy, at first, went into patient education. Hess employees did not like the idea of having to submit to Quantum the name of their doctors and their health histories.

“Oh, they were vocal,” recalls Irvin, who called in her broker and held meetings with employees to explain the change. “Our employees interpreted this as ‘Big brother is going to be watching me now.’ “

But soon the employees warmed up to the idea of having someone with whom they could meet every other month to help them deal with their health insurance and their doctors. As anyone who has ever had to find a doctor or been denied a health insurance claim knows, the health care system is porous. Patient advocates can help fill the gaps.

In Jaime Rochowiak’s case, the gap was about $118—the cost of a month’s smoking cessation medicine. Rochowiak, a single mom who makes $12.31 an hour, simply couldn’t afford it.

“If I can get it approved for you do you promise me you’ll quit smoking?” the advocate asked Rochowiak.

Soon after, her insurer agreed to cover her prescription for Chantix for three months.

After the first month, a pack of cigarettes lasted her just over a week. Her care coordinator called every day to check on her. By the second month, Rochowiak was down to one cigarette a day. But that’s where her progress ended. She couldn’t stand the nausea she felt while taking the medicine. She let the third month’s prescription go by unfilled. She’s back up to a half-pack a day and missed her last appointment with her care coordinator, who, she says, no longer calls her.

“She probably figured I quit because I missed my appointment,” Rochowiak says.

Rochowiak illuminates an important question.

Hess says Quantum has saved the company money. And its health care costs per employee are 23 percent lower than in 2006. A lot of the savings have come from eliminating redundant tests and getting patients to a primary care doctor who can send them to the right specialists.

Some of that savings, though, may come from people like Rochowiak: patients who do not follow their doctor’s orders and simply fall off the radar of their caregivers. Not only did Rochowiak not refill that third prescription, but she also never went back to her specialists at the Cleveland Clinic. She says she found them to be condescending to smokers. She told herself she’d go back when she quit smoking.

Rochowiak knows she is writing herself a prescription for long-term medical problems and high health care costs. Quantum, which had not realized its patient was smoking again, says it will reach out to Rochowiak, who, a year and a half after her trip to the emergency room, says she still wants to quit.

“I have a daughter,” she says, “and she don’t have nobody else but me.”

The decisions by Merrill Lynch and Citigroup to ignore their own succession planning processes and look outside the companies for CEOs represent a failure of their boards of directors to properly plan for a void in leadership, experts say.

    “The board is ultimately accountable to make sure there is succession when it comes to the CEO,” says consultant Gary Rich, a former head of HR for American Express in Europe, the Mideast and Africa. “But I don’t think the board has a clear sense of what [talent] is beneath the CEO.”

    Experts say an over-reliance on incumbent CEOs to plan for succession makes it all but impossible for the board to obtain independent assessments of potential successors. HR, rather than being used as an independent resource, generally plays a supportive role to the CEO in succession planning.

    But when a board loses confidence in its CEO, it loses confidence in successors as well, says Alan Johnson, a compensation consultant. That’s one reason why boards look for CEOs outside the company in times of crisis.

    “The board’s main responsibility is to pick a successor, and some people think that trumps everything else,” Johnson says. “And if they’ve failed on that, they’ve failed on what their major responsibilities are.”

    Implementing its CEO succession plan might not have helped either Citigroup or Merrill avoid the aftershocks of the massive write-downs related to subprime mortgages, but it could have eased the transition, experts say.

    Soon after Merrill’s Stanley O’Neal resigned, the company announced his replacement: New York Stock Exchange Euronext chief executive John Thain. The void left by Charles Prince at Citigroup, which had no ready successor for him, has been more deeply felt.

    Shortly after Win Bischoff was appointed interim CEO at Citigroup, he sent a letter meant to placate employees concerned about massive layoffs, possible restructuring and diminished bonuses. The letter followed closely on the news of companywide cost-cutting measures, like the immediate suspension of all travel and other expenses for employees who don’t generate revenue.

    “We will continue to reward performance, seek to pay competitively and take the steps necessary to help assure your success,” Bischoff, who also is chairman of Citi Europe, wrote in the letter.

    Citigroup declined to comment on its succession planning, and Merrill also did not respond to requests for comment. Both companies state in their corporate governance charters that the board is responsible for succession planning, including executive leadership. The boards are expected to meet with the CEO to ensure succession planning is effectively managed.

    While the shake-ups and the leadership void that followed may not reflect a failure of human resource leadership to effectively steward a company’s succession planning, they offer some lessons.

    Succession planning is fraught with office politics and emotion, especially for a CEO who has spent a life climbing to the top of the corporate ladder.

    “Succession planning is like planning for a funeral,” says Brian Wilkerson, national practice director for talent management at Watson Wyatt. “It really is playing with people’s mortality.”

    A succession plan that evaluates candidates with measurable data is likely to give the CEO’s preferences some additional perspective and is less likely to crumble should the outgoing executive lose the confidence of the board.

    By developing a strong framework for objectively measuring and analyzing the strengths and weaknesses of employees, HR gives the board information it can use to make independent decisions about CEO succession, says Bob Brotherton, the director of leadership resources at Wachovia Corp. in Charlotte, North Carolina.

    “When you go through that process, you’ve got a list of potential candidates that rise to the top,” he says.

   Succession planning may be doomed to failure simply because it is trying to achieve certainty in a future that is anything but predictable, says Peter Cappelli, director of the Center for Human Resources at the Wharton School of the University of Pennsylvania.

    “So, instead of succession planning, we need a more flexible, broader process that develops candidates more generally for leadership positions,” he says.

The Conference Board recently named Gail Fosler its 12th president. Fosler has been with the Conference Board for 18 years and is noted for being one of the nation’s most accurate economic forecasters through her development of the Conference Board’s leading economic indicators. Fosler, who will report to CEO Jonathan Spector, this year helped found the Conference Board’s research center in Beijing. Fosler spoke with Workforce Management staff writer Jeremy Smerd.

Workforce Management: How do you see the role of the Conference Board in American business?

Gail Fosler: The perspective we have is like standing on the doorstep of your neighbor across the street and looking back at your house. You always walk out of your own house. Sometimes you look back at it, but you never step out of the circle and look at it in an objective way.

WM: It’s an interesting metaphor. Can you give an example of what you mean?

Fosler: Take the “workforce for the future” issue. We’ve done quite a bit of work in this area. [Employers have] been accustomed to the U.S. labor force as being a very rich pool. They can dip their ladle in as they wish and out come exactly the sets of people they want and need. This seems like a no-brainer, but people have [simply been] filling positions rather than charting over a five-year or longer period what people they are going to need, where are they going to need them and what kinds of skills they are going need.

WM: And what kinds of skills are employers going to need?

Fosler: The skills are not so defined in traditional terms like a Ph.D. or a master’s in journalism. They are defined increasingly in terms of your communications and leadership ability, ability to work in teams and sometimes in terms of geographic specialty. They have to think of this in the same sense they think about whether their energy supplies are going to be secure.

WM: A lot of your work has been in economic forecasting. What workforce management issues do you see taking center stage in the next year?

Fosler: As I look forward I see the overall unemployment rate remaining at 4.5 percent; that’s basically full employment. As we go forward this is going to be almost a permanent feature of the workplace. Companies are going to be struggling to get top talent and they are going to be confronted with a lot of training and education issues that will arise from the nature of the skills and experience of the people who come into the workplace.

WM: Who are these workers that need training?

Fosler: I’m really thinking of three categories: the kids coming out of the top schools and those at the top of organizations; then you have reallocation issues-people moving out of manufacturing into health care and other services. Then you have the final issue of people coming into the workplace. There are two issues here. Folks coming into the workplace with a college education don’t have the necessary skills. A lot of the college kids are not prepared for either the technical jobs that are required or the higher-end communication jobs that are required. In addition, you have in some populations, like the Hispanic population-you’ve got very low college participation and very high high-school.

Hospitals are turning to the manufacturing industry for safety solutions. The goal is to make hospitals mistake-proof by creating processes that catch and prevent potential errors before they harm patients.

    Hospital administrators at Northbay Medical Center in Fairfield, California, have implemented a program called TeamSTEPPS: Strategies and Tools to Enhance Performance and Patient Safety. The program, developed by the Department of Defense based on military and private aviation, is intended to improve communication among staff members to prevent medical errors.

    “Anyone along the line can—and has a responsibility to—let the team know if care is problematic,” says hospital spokeswoman Joanie Erickson. Workers at the hospital can also report problems anonymously.

    The Agency for Healthcare Research and Quality, part of the U.S. Department of Health, published a report in May on how hospitals use process and design to error-proof the care they give. The report made one thing clear: The culture of medicine is such that doctors and hospitals believe the way to eliminate errors is for clinicians to improve their practices.

    “This simplistic approach not only fails to address the important and complex system factors that contribute to the occurrence of adverse events but also perpetuates a myth of infallibility that is a disservice to clinicians and their patients,” states the report, which adds that inadequate staffing levels make process improvement difficult.

“Anyone along the line can—and has a responsibility to—let the team know if care is problematic.” –Joanie Erickson, Northbay Medical Center spokeswoman

    With this in mind, Virginia Mason Medical Center in Seattle took a systematic approach toward reducing human errors and turned to auto industry leader Toyota.

    Dr. Robert Mecklenburg, chief of medicine at Virginia Mason and now director of the hospital’s Center for Health Care Solutions, which was established in September, referred to Toyota during the 2006 World Health Care Conference as “everything we weren’t and everything we desired to be.”

    Specifically, the auto manufacturer was customer-focused, defect-free, low-cost and driven by innovation for quality improvement. Hospital executives spent two weeks on a Toyota assembly line learning how to avoid mistakes.

    “This was so impressive to folks at Virginia Mason that we decided all the executives would get certified to teach the Toyota production system,” Mecklenburg says.

    The hospital standardized hundreds of processes, including mistake-proofing hoses and tubes so wrong medicines could not be administered through them.

    Like at many hospitals, it took a tragedy to change practices prone to error.

    On November 23, 2004, Mary McClinton, a patient at Virginia Mason, died after she was mistakenly given the antiseptic chlorhexidine. In a memo written by Mecklenburg, the hospital acknowledged the mistake was preventable.

    “Many were aware of the hazard in the system that could lead to injection of the wrong solution and aware of a simple method to prevent this occurrence,” the memo said. “No one took action to change the process before this tragedy occurred.”

Workforce Management, November 19, 2007, p. 19 — Subscribe Now!

The federal government’s effort to curb illegal immigration by targeting the workplace was dealt a severe blow this month by a California judge.

   While it wasn’t a knockout punch, the Bush administration likely will be tied up in court for weeks or even months rather than implementing a Department of Homeland Security regulation forcing companies to resolve within 90 days discrepancies between a worker’s name and Social Security number or fire the employee.

   But employment lawyers caution that U.S. District Judge Charles Breyer’s preliminary injunction against the regulation doesn’t mean the government’s increased work-site enforcement efforts will slow down. The DHS also might appeal Breyer’s decision or revise the “no-match” rule to satisfy the court’s concerns.

   Under the proposed regulation, a company’s failure to act on a so-called no-match letter could be construed as a violation of immigration law. But if it follows the rule in good faith, the DHS would not use the letter in an enforcement action. Companies currently aren’t compelled to clear up inconsistencies.

   Breyer blocked the rule, however, holding that the DHS failed to articulate why a no-match letter by itself should indicate that a worker is illegal. He also said the agency did not analyze the compliance costs for business and exceeded its authority in offering protection from prosecution to companies that adhere to the no-match rule.

   Although the case was heard by the Northern District of California—a jurisdiction normally not sympathetic to the government—Breyer shot down several of the arguments against the regulation made by business and labor group plaintiffs. In addition, it is conceivable the DHS could provide sufficient answers to the court’s questions.

   “It’s the court saying to DHS: You need to explain yourself,” says Elena Park, an attorney at Cozen O’Connor in Philadelphia. “It’s definitely not over. I don’t think we can assume it will be a slam-dunk, even in California.”

   But so far, the plaintiffs have the upper hand. They argue that millions of mistakes in the Social Security database would create havoc for businesses and lead to discrimination against ethnic and minority groups.

   “There is a strong likelihood that employers may simply fire employees who are unable to resolve the discrepancy within 90 days, even if the employees are actually authorized to work,” Breyer wrote in his opinion.

   But Homeland Security Secretary Michael Chertoff indicated the government won’t back off the work-site crackdown that has been under way for more than a year.

   “We will continue to aggressively enforce our immigration laws while reviewing all legal options available to us in response to this ruling,” he said in a statement.

   Employers should heed that warning, says Angelo Paparelli of Paparelli & Partners in Irvine, California.

   “I’m fearful that employers will think [the court injunction] is a reprieve when they should be thinking of it as a time to prepare for the next wave of enforcement,” says Paparelli, president of the Academy of Business Immigration Lawyers.

   Now may be the worst moment to ignore a notice that a worker’s tax information doesn’t align with government databases.

   “Employers should implement a policy on how to address no-match letters when they receive them,” says Gregory Wald, an attorney with Squire Sanders & Dempsey in San Francisco.

   Although business, labor and the DHS may battle over the no-match rule all the way to the U.S. Supreme Court, they all want to fundamentally change immigration policy—something Congress has failed to do.

   “It does underscore the need to fix the system,” says Laura Foote Reiff, a lawyer at Greenberg Traurig in Washington. “That’s where we agree with the administration.”

Health experts are worried that employers underestimate the cost threat posed by increasingly unhealthy younger workers.

In the past five years, according to the Hartford Financial Services Group, the percentage of disability claims among workers under 40 increased. The percentage of claims for people over 40, meanwhile, has dropped.

“I think there’s reason to be concerned,” says Carol Harnett, national group disability and life practice leader at the Hartford. “We’re just starting to see the tip of the iceberg; we’re starting to see people get disabled in their 30s.”

Employers should take a hard look at what they can do to defuse these health care time bombs, says Michele Dodds, vice president for health and wellness at employee assistance and wellness company ComPsych.

“Looking at overall disability claims and other indicators, we’ve begun to see a stabilization with boomers, but not with Generation X and Generation Y,” Dodds says. The message has not reached them, she says. “They still see themselves as invincible.”

Employers with younger populations, like Nike and Google, have been particularly good at creating a culture of fitness aimed at younger people. Some employers make bicycles available rather than providing shuttle services to get around a corporate campus. Others, like Pitney Bowes and the Centers for Disease Control and Prevention (CDC), have redesigned their buildings to make staircases a central feature and have focused on offering healthy foods at work.

The upside is that this generation is, in Dodds’ words, “particularly good at sitting at the computer for hours and hours on end,” so communicating health information using the Web, text messaging and instant messaging is a very effective approach.

Employers also may want to tailor incentives to the sensibilities of younger workers, who, Dodds says, want good behavior rewarded immediately with cash and prizes—not with discounts on health insurance and gym memberships.

For most employers, however, the health of younger workers is an afterthought, if only because, in absolute numbers, older workers represent a larger percentage of chronic illnesses and those costs are threatening productivity and competitiveness today.

According to the CDC, the prevalence of chronic illnesses, which often represent the highest health care costs to employers, is greatest among older workers. Among Americans age 56 and older, 24 percent have a chronic illness. Half of them have diabetes, and 25 percent have two or more conditions. That number drops to 11 percent for people age 40 to 55, and to 5 percent for people 25 to 39.

With the exception of asthma, rates of chronic illness and medical costs are significantly higher for older people, according to the CDC.

Campaigns aimed at making younger workers aware of their health risks may not resonate with them, even if it’s a message they need to hear, says Tony Merlo, national practice leader with disease management company HealthDialog.

“You can imagine that with younger people there’s less of a sense of urgency,” he says.

This lack of urgency is exactly what worries health experts, who say young workers—and some employers—live in the false belief that because of their age, young workers are not at risk for chronic illness.

In the past 30 years, obesity rates have climbed in every age group, according to the CDC. But with new research showing that obesity tends to increase among people with obese friends, the social network of the workplace can play an important role in reducing health risks.

“They’re young enough that they’re just going to cost a lot before they die,” Dodds says. “Don’t kid yourself: The poor health habits of a 28-year-old may soon turn into diabetes.”

Workforce Management, September 10, 2007, p. 36 — Subscribe Now!

Since 2002, health insurance premiums have increased by an average of 72 percent, according to the Kaiser Family Foundation. One small company, however, is paying the same for health care as it did five years ago.

    The company, Alliance Underwriters of Lake Mary, Florida, has combined a free primary care clinic at the workplace with a high-deductible health plan, and teaches employees how to bargain for deep discounts from their doctors.

    Two years ago, when the company switched to a high-deductible health plan with a health savings account, executives knew such plans had two major weaknesses: People may forgo necessary medical care if they must pay for it; and it’s impossible to be a consumer in a marketplace where the price of medical care is random and opaque.

    Critics of high-deductible health plans point out that the more people have to pay for medicine, the less likely they are to purchase it. This is particularly true with prescription drugs. The executive leadership at Alliance Underwriters felt it would be equally true for the company’s 80 employees when it came to doctor visits and lab tests.

    Legislation governing high-deductible health plans allows patients to see doctors for care that is considered preventive, like an annual physical. But often, medicine that treats chronic illnesses, like a cholesterol-lowering drug, is not covered as preventive.

    Alliance Underwriters felt that the best solution would be to create a workplace health clinic that would replicate a primary care physician’s office. The company’s executives liked the idea so much they started an on-site health clinic company, We Care TLC, and turned themselves into their first test case.

    Open half a day every week, the clinic is staffed by a doctor and a nurse. Employees can sign up for a 20-minute visit—no time spent in a waiting room, no commute and minimal time away from work. Doctors can address everything from treating a common cold to managing a chronic illness. The company provides an array of commonly used generic prescription medicines.

    Everything at the clinic is free, including the drugs.

    Having pharmaceuticals on hand in the clinic is one way to get people to come for the treatment they need, says Alliance Underwriters CEO Lynn Jennings. “Since the clinic is not part of the plan, there’s no insurance involved, no claims involved.” And technically it’s not considered a benefit that would disqualify it under consumer-driven health plan regulations, he says.

    For many employees, this is the extent of their medical care.

    Before the high-deductible plans were implemented two years ago, individuals paid $800 in premiums and families paid $5,000 premiums. Now, individuals pay $300 in premiums and families pay $2,000 annually.

    Deductibles went up—way up. Individuals today must pay $2,800 before their insurance kicks in, compared with $300 when the company had a low-deductible plan. Families face a $5,600 deductible. The company contributes $800 to individuals’ health savings accounts and $1,600 to families’ HSAs.

    Under the new plan, those who consume the fewest medical dollars pay the least. While some may view this as unfair, Jennings does not.

    “Indirectly, I think that encourages people to get healthy and stay healthy,” he says.

    The free health clinic is a big part of that encouragement, he says.

    Jennings also recognized that high-deductible plans force patients to act like consumers in a health care marketplace where the price tag of a medical service—if it even has one—is arbitrary. So the company taught its employees how to make a deal with their doctor.

    To show that it could be done, Jennings turned to his COO, Vince Butler.

    “I love to negotiate; I love to make deals,” Butler says. “But I’ve got to tell you, I would never ever have considered negotiating with a doctor or a hospital. To me it would be almost sacrilegious. That’s the mind-set I had.”

    It’s a mind-set many people have. But what Butler found out is that doctors whose patients pay cash don’t have to spend time and money wrangling with insurance companies for repayment. Administrative costs are said to account for about 30 percent of the nation’s $2 trillion health care bill. That’s why some doctors no longer take health insurance.

    “The key,” Butler says, “is cash.”

    His daughter’s tonsillectomy gave him his first bargain-hunting opportunity. The doctor recommended an outpatient facility, which cost $6,000.

    “I want to negotiate a cash deal,” he said. They came down 20 percent.

    Good, but not good enough, Butler went to another facility recommended by his doctor. They told him $2,500.

    “I said, ‘That’s not bad,’ ” he says. Then he asked them what would happen if he paid in advance. Their answer: the surgery would cost $1,600.

    Because Alliance Underwriters is self-insured, meaning the company pays for all its health costs, individuals who save money also save money for the employer. That is why Alliance is willing to do just about anything to encourage employees to negotiate how much they pay the doctor. A human resources manager helps employees understand the basic costs of a procedure by showing how much Medicare pays, since the government usually sets the standard cost for any given medical service.

    Butler has had an easier time negotiating prices with doctors than with hospitals. Administrators do not know how much a procedure will cost until after it has been performed, since each item dispensed and service rendered is billed individually.

    Alliance Underwriters also recognizes that not everyone is in the financial position to pay cash. So the company advances employees the money they need, interest free.

    “If you can advance the money in order to pay cash, you can get a sizable discount,” Butler says. “It’s in the interest of the company to do that.”

    Educating employees about the plan’s benefits and teaching them to measure their relationship with a physician in terms of the quality of care and cost are the two biggest hurdles. Getting employees to believe in the plan requires the support of a company’s executive leadership, says CEO Jennings.

    “It takes a commitment by senior management to do something, which is probably the biggest challenge today: convincing corporate America that you can do something about the cost of health care,” Jennings says. “For 20 years all they’ve done is listen to people who say, ‘Do as I do and I’ll control your health care costs.’ And every year the costs go up 10 to 15 percent. So there’s understandably some skepticism in the boardroom.”

    Jennings believes that continually refining a company’s health care benefits makes employees less sensitive to change.

    “My attitude is, do something different,” he says. “I don’t think you can unequivocally say, ‘This is the right thing for you.’ What I can say is, ‘If you don’t do anything different, you will get the same results.’ ”

Velichati Satyanandam runs his office with military precision.

As head of corporate services at business process outsourcer Nipuna Services Ltd., a subsidiary of Satyam Computer Services, he must ensure that 250 cars and drivers carry 3,000 employees from their homes to one of three offices in Hyderabad, India, every day.

Every week scores of people quit while new employees are hired to work the nine-hour shifts for the U.K. market (start time: 3:30 p.m. local time) and the U.S. market (start time: 6:30 p.m.). On a recent day in late May, two rows of chairs for potential applicants outside Nipuna’s offices all were filled.

Satyanandam is well-equipped to deal with this ongoing logistical crisis because like many executives in India’s new economy, including some human resource executives, he cut his managerial chops in the Indian armed forces. He retired in 1998 as a wing commander after 21 years in the Indian air force. He now brings a can-do attitude to his work running the logistical end of a BPO, which includes managing the company’s facilities.

“Running a BPO is more like crisis management,” Satyanandam says. “You can’t hide behind bureaucratic rules and say, ‘It can’t be done.’ “

With India’s economy on a tear and companies hiring thousands of people a year, the armed forces have become a logical and bountiful place from which to hire employees, from the entry level on up. Approximately 60,000 army personnel retire every year; 3,000 are officers, most of them in their mid-50s, according to numbers provided by the Indian Ministry of Defence. This means many are in the prime of their working lives, retiring with an abundance of experience that they can ply in the private sector.

“In society, all the main management principles are developed by the armed forces,” says S. Raja Gopal, a retired army colonel who lives in Hyderabad. That was the case even in ancient times, he adds.

Gopal, 48, spent 25 years in the army, beginning with three years of training at the National Defence Academy, the Indian version of West Point. Eventually he became a “Black Cat” commando, part of the army’s special forces. He served in hot spots like Kashmir, where the country has fought a protracted border war with Pakistan. He says the leadership skills he learned during more than 20 live operations, which included the capture of 400 Islamic militants, helped him start a private security company.

He now manages more than 500 employees, many of whom are security guards who also got their training in the Indian army. Gopal says his experience helps him know how to motivate employees and develop loyalty secured by more than just receipt of a paycheck. He has been able to retain 99 percent of his employees during the past three years, though he says his is not the highest-paying security company in Hyderabad.

A man prone to understatement, Gopal recalled one mission from his army days, when he and his men were airlifted into the Himalayas on an eight-hour mission that stretched into five days. With only enough food for 24 hours, Gopal had to keep his troops motivated as they crossed the rugged terrain.

“Have I eaten? No. Am I moving? Yes,” he told his men. “So move with me.”

So how does this translate to the private sector?

“It makes you realize, ‘I can do anything,’ ” he says. “If the work is there, you don’t go home and go to sleep.”

The government has institutions, such as the Directorate General of Resettlement, to help ex-servicemen find training and employment. But one Indian headhunter has found a niche placing retired military personnel in private-sector jobs. Appropriately named Bridgehead Consulting, the year-and-a-half-old company that was started by former military personnel has found upper management jobs for about 40 former officers.

Venkat Ramana Rao, a former captain who served under Gopal, helped launch Bridgehead after completing a six-month course in human resources management at the state-run Indian Institute of Management in Lucknow in 2005. Rao says the new economy’s high demand for managers has made it easier for officers to penetrate a company’s upper management.

“Earlier, for officers to start above the vice president level, it was not possible,” Rao says. That’s because jobs were scarce and promotions were based more strictly on hierarchy, not merit, he explains.

Now that some former officers have reached the management ranks, they say they prefer hiring ex-military personnel like themselves. At his previous employer, Satyanandam hired 10 employees with a military background; seven were senior managers. Since arriving at Nipuna, he’s hired 10 people from the military, five of whom are in senior positions.

C.K. Veeresh, vice president of business operations for Computer Associates in Hyderabad, says he learned discipline during the five years he spent in an artillery regiment. Veeresh, 45, went from the army to the private sector in 1990 and was later hired by the public sector to promote economic development. Now he is in charge of business development and external and government relations for Computer Associates.

Ravi Babu, a retired colonel, has been in the corporate world since he left the army in 1996 after 22 years. During his tenure in the army, Ravi, 53, completed a master’s degree in computer science and taught computer science. While looking for a private-sector job in 1996, his future boss said to him: “We need a guy who can manage things.”

Until the recent private-sector tech boom, the army was the center of technological innovation in India, and those who served in the service were the sources of that innovation. Today, Ravi says: “Indian companies want to create wealth, they want to innovate. They don’t just want to provide services.”

Officers, he says, have the management and people skills to do that.

“You get fresh guys from IITs to do programming,” Ravi says, referring to the Indian Institutes of Technology. “But you need people who can deal with client relationships. This is more important.”