wellness – Page 9

October 9, 2006May 3, 2019

Some Employers Look to Break the PBM Habit

Earlier this year, the University of Michigan terminated its relationship with Caremark Rx after the university decided it could save more money by dumping the pharmacy benefit manager and managing its own prescription drug spending.

The university expects to save $2.5 million by handling the estimated $60 million it will spend this year on prescription drugs. Most of the savings come from eliminating fees from the university’s former pharmacy benefit manager and using the claims data of the 80,000 people it provides insurance for—data the PBMs do not share with their clients—to help school officials negotiate better drug prices.

By managing its pharmacy benefit plan, the university is considered the first employer in the country to wean itself off pharmacy benefit managers, the middlemen of the prescription drug world. Critics have argued for several years that PBMs do not deliver the kind of savings large employers could reap if they aggressively managed their own pharmaceutical spending.

Though it may seem like a function beyond the expertise of most benefits administrators, some consultants contend that cutting out the middleman is possible for anyone looking to contribute to a company’s bottom line by reducing one of the fastest-growing costs in health care spending: prescription drugs.

“Why rely on a middleman?” says Chiara Bell, president of Clarus Inc., a health benefits consultancy in West Palm Beach, Florida. Clarus is among the handful of consultancies working with companies to help cut out pharmacy benefit managers. “At the end of the day, employers can build their own in-house piece.”

The University of Michigan, for one, will see its drug costs increase 6.5 percent this year, says Keith Bruhnsen, who manages the school’s prescription drug plan. When compared with the 13.8 percent increase expected nationally, according to an annual survey published by the Segal Co., the school’s cost containment efforts seem to pay off.

The three-year transition from PBM dependency to “insourcing” Michigan’s own drug benefits required Bruhnsen to hire a data analyst, a pharmacist and other support staff. Bruhnsen mined his newfound data to learn which drugs the school’s insured population consumed most. Armed with detailed information about its drug spending habits, the pharmacist built the drug formulary and set up co-pays that would encourage the use of certain drugs. Finally, Bruhnsen, who was already on staff, was able to play the role of PBM and negotiate the prices the school was willing to pay for chain pharmacies to dispense the drugs.

“If (employers) are not managing their claims and looking at their data, they are not going to be managing their drug trend and therefore their overall costs,” Bruhnsen says. “Are employers willing to take on the challenge?”

The Pharmaceutical Care Management Association, the industry group representing the estimated 50 PBMs nationwide, says the marketplace has determined that PBMs save money for employers by offering a service outside the core expertise of most.

“The reason everybody uses a
PBM, though no one is required to,
is because of the savings. If
employers can do it and find new way to build a better mousetrap, more power to them.”
–Mark Merritt, president, Pharmaceutical Care Management Assn.

“The reason everybody uses a PBM, though no one is required to, is because of the savings,” says association president Mark Merritt. “If employers can do it and find a new way to build a better mousetrap, more power to them.”

Bruhnsen says companies with 5,000 or more employees should be managing their own pharmaceutical spending.

Smaller companies and unions can still do so, Bell says, by forming coalitions—which requires cooperation and data sharing.

Bell argues that when a company owns its claims data, it can negotiate prices with manufacturers just as easily as a small or startup PBM.

“The real power lies in who owns the data,” Bell says.

Coalitions, however, do not always succeed. In 2004, the HR Policy Association made a big splash by announcing it was going to eliminate PBMs. By the end of the year the association realized the effort was “unfeasible,” says spokeswoman Marisa Milton. Part of the problem was that while employers pooled their purchasing power, each insisted on administering its own program. As a result, each manufacturer had to deal separately with each employer.

Similarly, Health Insurance Plan of New York tried to manage its pharmacy benefit plan several years ago, but ran into static from manufacturers and chain pharmacies. Manufacturers preferred to deal with pharmacy benefit managers because PBMs, which represent millions of consumers, purchase more drugs, says Edward Kaplan, a health care consultant at the Segal Co.

For companies and coalitions looking to cut out PBMs, the market may be more accommodating now than it has been in recent years. Today, PBMs have also become mail-order pharmacies, which is beginning to change the dynamic of the industry. Mail order is a growing business that competes directly with chain pharmacies like CVS and Walgreens. Employers that eliminate PBMs and negotiate directly with chain pharmacies will likely find a willing partner, Kaplan says.

“It just depends on how aggressive you want to be,” Bruhnsen says. “For us, we went full-tilt.”

Workforce Management, September 25, 2006, p. 34 — Subscribe Now!

June 24, 2001June 29, 2023

Meditation and Mindfulness at Sounds True

It’s an overcast March morning and Adam Mentzell, director of human resources for Sounds True, is discussing the painful experience of laying off 15 percent of his company’s workforce last summer.

“What did I learn from it?” he asks. “I learned that people are tremendously capable of dealing with hardship. If you hire mature people and treat them well, they can be very resilient.”

As Mentzell finishes his last sentence, the alarm on his sports watch starts beeping. He excuses himself, walks to his desk, switches his telephone to the intercom mode, and strikes a small brass bell sitting next to the phone. He strikes the bell three times, creating low, calming tones that resonate throughout the company’s offices.

“Sorry about that,” Mentzell says as he sits back down to explain that the bell is rung at precisely 11:00 each day to call employees to group meditation — which he usually observes — or to practice 15 minutes of silence. The bell of mindfulness, as he calls it, is a way of reminding employees to slow down and become more present and aware.

Meditation? Mindfulness? These aren’t words normally discussed by corporate HR people. But at Sounds True, it’s fitting that the bell of mindfulness was rung during a conversation about downsizing, for this is a company that deals with all the routine struggles of a growing business, including layoffs, but does so with an eye — and heart — toward the human side of work life.

Sounds True is an audio publishing company based in Louisville, Colorado, a town located 20 miles northwest of Denver along the Front Range of Colorado’s Rocky Mountains. The privately held company was started in 1985 by Tami Simon, a 22-year-old woman who had a $30,000 inheritance and a vision to disseminate spiritual wisdom.

Today, Sounds True is a $9.3 million company that produces spoken-word audio tapes and CDs on topics related to world religion, psychology, and alternative medicine. The company boasts a catalog of more than 500 titles, including Women Who Run with the Wolves, by Clarissa Pinkola Estes, Energy Anatomy, by Caroline Myss, and Breathing: The Master Key to Self-Healing, by Andrew Weil, M.D. In 16 years, Sounds True has grown from a one-person labor of love into a 60-employee enterprise. Along the way, the challenge has always been how to maintain the company’s spiritual focus — and spiritual integrity — while also responding to the gritty, mortal demands of business.

At first glance, Sounds True does seem different from most buttoned-down corporate settings. Walk toward the company’s main entrance and you’ll pass a serene white marble statue of an angel. Once you’re inside, a golden retriever will click across the lobby and greet you. And as you tour the quiet offices, you’ll find employees wearing fleece and khaki and hiking boots. They work alongside rippling desktop fountains, or to the accompaniment of bamboo flutes, or underneath warm reading lamps.

But these are just superficial differences. Within this casual, fleecy environment, employees also have to negotiate contracts, meet deadlines, fulfill orders, and generate profits just like any other corporate workforce. How does Sounds True balance the realities of competitive corporate life — profit goals, employee conflict, and customer demands — with its goal to promote spiritual wisdom? How does the company instill self-awareness in employees alongside the requisite business awareness?

Spend a day with Mentzell and you’ll learn that the company’s desire to create an aware workplace is much like an individual’s attempt to find spiritual wisdom: it’s something that needs continual attention. Just as there is no path to permanent spiritual enlightenment — faith and spirituality being ongoing disciplines — there is also no such thing as an unwavering workplace culture.

The best that Sounds True or any HR department can do is to be continuously mindful of those things that contribute to a positive working environment: hiring the right employees, adhering to core values, and conducting business in a way that fosters both individual awareness and business accountability. Simply stated, creating cultural wisdom is a discipline, not a destination, a discipline that might best be called enlightened leadership.

Hiring: It’s not just a job
The path to enlightened HR starts with hiring, and fortunately, Sounds True is one of those lucky companies that attracts people with a natural affinity for their products. Just as techies head to Microsoft, metaphysically focused people gravitate toward Sounds True, supplying the small company with about 20 unsolicited résumés a week. “We attract employees who want to work in a different kind of way,” Mentzell says.

But even though many people have an interest in working for the company, it’s the job of Mentzell and other managers to make sure that those who are hired fully understand and embrace the company’s mission. “In key positions, such as those in the editorial department, it’s imperative that employees have a deep connection to our product line,” he says. This means recruiting people with education and experience in world religions, and having them demonstrate that knowledge both orally and in writing.

For most of the company’s positions, however, religious knowledge is not as important as the right skill set, which is determined by past experience; the ability to communicate honestly and respectfully, which is assessed through a series of team interviews; and support for the overall mission. The last criterion is trickier to assess, because the mission is spiritual and it’s illegal to ask questions about religion in interviews. How does Mentzell determine whether candidates will uphold the mission to disseminate spiritual wisdom? By asking them to listen to taped products, review the catalog, and visit the company Web site.

“During follow-up interviews, I ask a series of open-ended questions about the candidate’s reaction to our products and ask whether or not it is a problem for them that Sounds True produces products from a wide variety of wisdom traditions and schools of thought,” he says. “Rather than looking for adherents, we are looking for capable people who do not have a problem with our material and support our overall mission.”

Sounds True
Interview Questions

How will you make contributions to our core values?
If you were hired and we could jump ahead six months, what do you think we would be saying about how you helped forward our core values?
What core aspirations excite you or interest you?
Why in the world do you want to work here?
Tell me what is important to you — what do you value deeply?
Tell me about the last time you lost your cool. What was the cause? What action did you take? What did you learn?
What are your expectations from an employer? Name at least four.
Tell me about a specific situation when you were disappointed by an employer or manager.
Whom do you admire? Why?
Tell me about a time when you were overwhelmed at work. What was the cause? What action did you take? What did you learn that you can carry forward?
What in your history are you most proud of and why?
Conversely, what in your work history do you regret the most and why?
What do you understand the mission of the company to be?

The interest of spiritual seekers in working for Sounds True, combined with the company’s diligent hiring practices, makes it possible for the culture to be almost self-generating. Case in point: Three years ago, the company hired a longtime customer to manage its warehouse, a department where profanity and gruffness are the norm in most companies, Sounds True included. The new manager, thanks to his long-term interest in Sounds True products, used professional language, treated employees with respect, and lived the company’s value system. “He changed the way the warehouse was run not by dictating change, but by setting a good example,” Mentzell says.

Honesty, openness, and accountability
Let’s face it. Even if companies hire the right people, the ugly demands of business have a way of inflicting pain and uncertainty on even the wisest and most aware individuals. How does Sounds True make sure that employees don’t revert to nasty reactive behavior in the wake of tough business demands? They do it by adhering to company values. Sure, many companies pay heed to the importance of values. But at Sounds True, the company’s 20 values are integrated into daily business practices — with the emphasis on the word “practice.”

“One thing we are clear about is that our work is a work in progress,” Mentzell says. “We have set aspirations that we continually strive for, but sometimes we fall short of our goals.”

The guiding principles underlying all of Sounds True’s values are mindfulness, honesty, and kindness. “These are the spiritual or wisdom qualities that are taught on the tapes we publish, so we also want to live them in our own work lives,” says company president Tami Simon.

Let’s start with the practice of mindfulness, which Mentzell describes as the art of paying attention and seeing things in a fresh and non-habitual manner. Sounds True promotes mindfulness by encouraging employees to stop what they are doing and become aware of their thought patterns. This is done through the 11:00 call to meditation, by providing an on-site meditation room, and by opening every large staff meeting with a two-minute period of silence. “This contemplative space provides the opportunity, if only for a moment, for employees to set aside their individual agendas,” Mentzell explains.

The ability to set aside individual agendas allows employees to fully engage in the second guiding principle: honest and open communication. “In many companies, people waste a lot of time through backstabbing and office politics,” Simon notes. “This happens because people don’t trust each other.” She believes that the only way to foster trust is to promote open communication, even if employees don’t always like what they hear.

Sounds True encourages open communication in several ways. First, every Monday morning, employees gather in the lobby to discuss business issues with the management team. During this time, employees can ask any manager, including the president, pointed questions about budgets, the hiring processes, whatever. “Tami has admitted to making mistakes on more than one occasion,” Mentzell says.

Second, the company makes extensive use of peer-review processes that allow team members to provide direct feedback to coworkers about how they may be affecting others. Upward review processes are also used to give managers anonymous feedback from those they manage.

Third, the company promotes collaborative decision-making so that managers jointly make key business decisions, and departmental teams determine their own best way of working together. The only way to arrive at mutually beneficial decisions is for managers and employees to engage in honest communication.

Is there any downside to having such an open and honest culture? “Oh my god, yes,” Simon says. “People who are used to being in corporate environments where there is more strategic game playing don’t always make it here.” Why? “Because it often takes a while for people to realize that honesty, even if it pinches, can lead to much higher levels of trust. Some people just don’t make it that far.

“Many people here are very genuine, and they expect you to be genuine, too. If you are a person who doesn’t want to bring your emotional life to work, you may think that coworkers are poking at you to find out what’s going on in your life.”

Tim Bucher, a recently hired network administrator in Sounds True’s IT department, agrees with Simon. “I had wary thoughts coming in,” he admits. “I was used to a large corporate structure, and I was a bit intimidated by how different the culture was here. Now, I’m used to it. I don’t have to work to weed out truth from lies, because everybody here is so honest.”

The other guiding principle embedded in all of Sounds True’s values is kindness, which simply means respecting others and honoring individual differences. The company honors individual differences through such practices as a nonexistent dress code, flexible working hours, and allowing employees to bring their dogs to work.

Sounds True Values

Sounds True is both mission-driven and profit-driven.
We build workplace community.
We encourage authenticity in the workplace.
Open communication.
Animals are welcome.
We place a high value on creativity, innovation, and ideas.
Opportunities exist for flexible work schedules.
Teams determine the best way to reach their goals.
We honor and include a contemplative dimension in the workplace.
We reach out to a diverse community.
We strive to protect and preserve the Earth.
We have a relationship with our customers that is based on integrity.
We take time for kindness, have fun, and get a lot done.
We acknowledge that every person in the organization carries wisdom.
We encourage people to speak up and propose solutions.
We encourage people to listen deeply.
We honor individual differences and diversity.
We strive for clarity of expectations.
We encourage people to realize their creative potential.
Employees participate in profit sharing and ownership.

A complete description of each Sounds True value can be found on the company’s Web site, www.soundstrue.com.

Building financial acumen
In a company driven by spiritual values, capitalistic concerns such as cost and profit easily can become secondary. Such was the case at Sounds True last year, when the company tried to expand in too many different directions at once and ultimately lost money for the first time in 15 years.

Smarting from the loss, the company was forced to lay off employees in unprofitable divisions and also pay stricter attention to financial concerns. This upset a few longtime employees, who felt that the company was “selling out” to capitalism and chose to leave on their own.

“We had to work to create business-mindedness,” Simon explains. “For 15 years the people who worked here did not pay much attention to the critical drivers of financial success such as cost of goods, margins on product lines, and product formats.”

“What we had to communicate to remaining employees,” Mentzell adds, “is that our mission to disseminate spiritual wisdom is not possible unless the company can also pay its bills.”

To make sure that employees are conscious of the relevant measures of financial performance, Sounds True launched an open-book management program called the Great Game of Business, wherein all employees were trained in financial literacy. Today, department representatives provide weekly forecasts against their specific budgets and then present this information in bimonthly business “scoreboard” meetings. All managers are in attendance at this fast-moving meeting and are expected to report financial information to their teams immediately afterward.

“Information on our performance against budget quickly travels to all areas of the organization,” Mentzell explains. This raises employee awareness of financial measures and stimulates employees to take corrective action when necessary.

Although speaking freely about finances has helped the company get back on track, there are some risks involved. “There is a certain kind of anxiety introduced in an environment where people know all about the business and its accompanying uncertainties,” Simon explains. “In companies where the executive team acts like parents who withhold difficult information from workers, people are protected from this anxiety. But I think that approach gives people a false sense of safety. Here, employees may feel anxious about finances more of the time, but at least everyone knows where they stand.”

The role of HR
It may come as no surprise that Sounds True’s HR director personally embodies the company’s mission. On the door of Mentzell’s office are in and outboxes marked with the signs: Breathing IN I feel calm; Breathing OUT I smile. “I’ve been on my own spiritual quest for 10 years,” he says, adding that he not only meditates regularly but also is a serious student of Western psychology and Eastern religion and philosophy.

Mentzell’s personal connection to the company’s mission helps him to be mindful of the never-ending work involved in creating an aware culture. As HR director, an unusual position in a company of this size, he oversees hiring, mediates disputes, communicates financial results, negotiates benefits, and trains managers. He reports directly to the CEO. “I’m responsible for how management happens here,” he says. Other than that, most of Mentzell’s job is typical HR: recruitment, benefits, compensation, performance reviews, and training.

“I’m surprised how much of my job is routine,” he says, almost sheepishly.

It could be routine because Sounds True is as mindful of human needs as it is of business needs, although Mentzell would be the first to say that maintaining the balance between financial and human goals is not easy. Shift too far in one direction and business suffers. Shift too far in the other and morale withers. But by staying aware that both goals are important — and by integrating that awareness into daily business practices — Sounds True has been able to weather hard times.

“Enlightened HR?” Mentzell asks. “Sounds True should not be portrayed as having figured it out, but merely striving to find a better way of doing business.”

Workforce, June 2001, pp. 40-46 — Subscribe Now!

June 23, 2000January 13, 2020

I’m Important, You’re Important, We’re All Important

When I spent two years interviewing people about their work and workplaces, the concept of “self-worth” came up time and again. “I don’t feel important.” “I’m a worker bee.” “I’m just not valued.”

Worth emerged as such a dominant theme that it’s on my list of the 22 keys to a meaningful workplace.

No, worth can’t be measured like ROI or turnover. But it sure as heck can be increased. Below are some thought-provoking ideas and reminders for nurturing a stronger sense of self-worth among employees in your workplace. I hope you’ll print the list and use it to stir conversation, discovery, and action.

1. Those hallway “hellos” really do matter. Make them count.

2. Someone somewhere in your organization has the answer to that problem you’ve been struggling with. Turn off your computer, and surf the sea of knowledge that surrounds you.

3. We’re obsessed with knowledge, skills, and abilities. Shouldn’t we also tap into our deep interests?

4. Internal competition always produces at least one loser, which is one too many. Especially when we’re the loser.

5. The fancy award dinners and wall plaques aren’t essential. This is: “thank you.”

6. Let’s have a month when everyone is named employee of the month.

7. Co-creation may be the most time-intensive, frustrating, exhausting, and surest way to foster true empowerment and a deep sense of worth.

8. People are moved by compelling missions–not by run-on mission statements.

9. Plenty of organizations have complaint departments, complaint forms, and complaint-resolution personnel. Will someone please create a compliment department?

10. Who should have easy access to all customer input? Easy answer: everyone.

11. Employee attitude surveys are an exercise in tree-killing unless they’re used to generate rich dialogue and focused action. Save a tree: Just say no to employee surveys that are destined for a dusty shelf.

12. Okay, it’s a cliché, but it’s so true: Respect takes years to nurture, but it can be destroyed in seconds.

13. Can you cite one example of a performance evaluation that truly informs, inspires, and energizes?

14. Few people expect high pay. Everyone expects fair pay.

15. For years, we’ve used terms like boss, subordinate, my people, your people, and upper-level. Should we be surprised that some employees feel like second-class workplace citizens?

16. Space matters. If some people are jammed into tiny cubicles while others get cavernous offices, what kind of message is being sent?

17. If you don’t think Dilbert is funny, you need to worry.

18. If you think you’re turning into Dilbert, you really need to worry.

19. If your workplace is a Dilbertesque universe, engage in random acts of positive change management. Focus on the one positive thing you can do instead of the 100 things you can’t do.

20. If you’re unwilling to do a thing about it, stop off at the local office-supply store, buy some resumé paper, and get busy. A better situation awaits–but only if you seek it out and seize it.

Other columns by Tom Terez:

September 1, 1992June 29, 2023

Sony Promotes Wellness To Stabilize Health Care Costs

In 1990, after several years of double-digit inflation, executives at Sony Corp. of America decided to take a closer look at the health care claims of their 12,000 employees.

An exhaustive study of medical care claims filed during a three-year period—1988, 1989 and 1990—turned up two disturbing trends:

Approximately 50% of total claims costs were for illnesses and accidents that might have been preventable or modifiable through behavioral changes
The company was paying what it considered to be retail prices for hospital and medical services that could be obtained wholesale through preferred provider arrangements.

As a result of these discoveries, Sony embarked on an Employee Wellness Campaign for 1992, designed to raise the health-consciousness of its employees as well as stabilize the cost of providing health care coverage. Two major features of this campaign are the addition of coverage for preventive care under Sony’s indemnity plans and the provision of incentives in the form of flex benefits credits for employees who take advantage of certain health screenings. These credits can be applied to the following year’s flex benefits’ elections.

“Over the last several years, we had experienced a 15% to 16% increase in the cost of health care to our employees,” explains Alfred E. Hayes, vice president of benefits and administration at Sony’s Corporate Human Resources Group in Park Ridge, New Jersey. “During that time, the concept of wellness coverage was being raised by our employees and by our benefits committee members. Consequently, we decided to look at the demographics of where we were with our claims—what claims were heavy compared with industry standards, what risks were prominent and what we were paying.”

To conduct a thorough study of its claims, in mid-1990 Sony retained Hewitt Associates of Bedminster, New Jersey. Because Sony’s health care plans are self-insured, it was merely a matter of having its benefits administration company turn over three years of computer tapes for analysis by Hewitt’s corporate physician.

Hewitt ran the tapes through its Health Information Systems, which examines several factors: The types of claims submitted, patterns of claims utilization and costs of claims. That information then was compared to similar employer data and adjusted for Sony’s particular medical plan design, employee demographics and geographic locations.

What they found was that one-third of the claims resulted from what they believe to be modifiable conditions. Further, the study showed that about half of that group—17% of all employees—were responsible for 50% of all of the medical claims.

Supplied with that information, Sony “first looked at the risks we have with actual claims, to find areas we could do something about,” says Hayes. Smoking, alcohol abuse and not wearing seat belts figured high on the list of risks that could be reduced through behavioral changes. Other potentially preventable risks included medical conditions such as heart disease, induced by stress-related factors like high blood pressure and high cholesterol levels.

Believing that early detection and treatment of some medical conditions might lead to lower claims costs in the long run, Sony adopted many wellness features in its 1992 medical coverage plans.

First, Sony initiated improved coverage for preventive care and wellness programs, regardless of whether employees enroll in an HMO or in one of three indemnity plan options. For 1992, this coverage includes:

Annual blood screening. Sony employees age 30 or over are reimbursed in full for the cost of obtaining a blood-pressure reading and blood tests, which include testing of cholesterol levels, blood sugar and red blood cell count. (At some locations, testing is available on site at no cost for all employees, regardless of age.)
Annual pap smear. Female employees are reimbursed in full for the expense of having a pap smear once each year. Additional pap smears in a year also are reimbursed in full if recommended by the employee’s physician.
Mammograms. Female employees are reimbursed in full for a baseline mammogram anytime after age 35 and then once every two years after age 40. Employees are reimbursed for mammograms given on a more frequent schedule if recommended by the employee’s physician.
Physical exams for children covered by health insurance up to age seven. Reimbursement is 100% for children younger than age two and 80% from age two to seven for routine baby and child care exams, including the cost of immunizations. However, the annual benefit maximum for each child is $150.
Smoking cessation programs. For employees who smoke, 80% of the cost of completing a program to stop smoking is reimbursed. The benefit maximum is $300 for each program, and no more than two programs will be reimbursed over an employee’s lifetime.

Previously, these types of preventive care and wellness coverage were available only to employees enrolled in the company’s HMO option, says Hayes. However, he points out, “HMOs aren’t available at all locations and only cover about 20% of our employee population. Employees have been asking for this coverage, and the need became more pronounced and visible to us over the last several years.”

For all of these new coverage, no deductible is applied. In addition, employees choosing to have a blood screening, pap smear and/or mammogram can earn up to $130 in additional flex benefits dollars for 1993. Fifty dollars in flex credits can be earned with a blood screening and $40 each for a pap smear and mammogram.

“Each employee receives a flexible benefits allowance each year, and these credits are added to that allowance,” Hayes explains. “It will make it easier for employees to buy insurance coverage or reduce the cost of their contributions toward that coverage.”

To receive these extra flex dollars, the health screenings were to be performed between January 1, 1991 and August 31, 1992. Appropriate forms for each test must be obtained, certified and returned to the employees’ HR representatives by September 10, 1992.

Hayes believes these new provisions will raise employee awareness of potential health risks, as well as provide an incentive to undergo health screenings to detect high-risk medical conditions. Although for 1992, these incentives are available only to Sony employees—not their dependents—Hayes says the company will consider expanding the coverage in coming years.

To help employees further assess their individual health pictures, Sony also gives them the opportunity to receive a customized health risk appraisal.

Through Staywell Corp., an independent third party, employees were mailed a three-part health assessment questionnaire in the fall of 1991. Called Health Path, the study solicited information about the individual employee’s health, such as pulse rate, blood pressure and cholesterol levels, as well as behaviors related to diet, smoking, alcohol use and exercise. Employees choosing to participate received a confidential report rating their health habits and identifying those that could be most harmful to their health.

“Each report gives employees an estimate of their health age, based on their health practices,” Hayes elaborates. “Someone might be 40 but have a health age of 45 or more because he or she smokes. The report suggests the person stop smoking, and also provides three areas of risk where there’s a chance of modifying behavior.”

Hayes says Sony is encouraged by the questionnaire’s reception—it received a response rate of 36%—and will consider making it an annual or biannual part of the overall wellness campaign.

To further involve employees in the concept of wellness and the benefits of participating in preventive care, Sony also produced and mailed to each employee’s home an audiocassette tape on wellness. Called “Sony’s Flex Steps to Good Health in 1992: Lend Us Your Ear,” the tape shares tips and facts on leading a healthy lifestyle.

Using a game-show format called Health Quest—similar to Jeopardy—the tape leads listeners through a series of health categories: exercise, nutrition, cancer prevention, smoking, safety, stress and kids’ health.

Under the topic of nutrition, for example, a panel of contestants is presented with the answer: “A high level of this substance in the diet contributes to elevated blood cholesterol.” A contestant gives the question, “What is saturated fat?” and the game-show host elaborates for the audience by adding, “A diet high in saturated fat—the kind found in most meats and whole-milk dairy products—can boost cholesterol. Heredity also can play a role.” A brief discussion of Sony’s preventive care coverage and the importance of testing cholesterol levels follows.

Another category, safety, gives the answer: “The leading cause of death among teens and young adults.” The question: “What are car accidents?” The game-host elaborates again: “Many deaths and serious injuries could be prevented by wearing seat belts. In fact, many states require it. So, if you’re listening in on your car radio, make sure you buckle up every time you drive.”

In addition to raising the health-consciousness of employees, Sony is attempting to control the rising cost of medical care by introducing the preferred provider organization (PPO) concept. To establish the pilot PPO, Hayes says the company looked for an area with a large concentration of employees and a well-established network of hospitals and physicians. He says that California became the ideal geographic location for several reasons, the greatest being that the majority of the 4,500 employees there already received services from providers within the Benefit Panel Service network. A review of past claims showed usage of those network hospitals to be above 80%, while network physician usage topped 70%.

Now, by using physicians and hospitals within the Benefit Panel Service network, California workers who choose one of the three indemnity plan options will have lower deductibles and higher coinsurance.

Using a physician within the network lowers office-visit copayments to $5 to $15 and provides an 85% hospital copayment— 5% more than out-of-network coinsurance. Annual hospital deductibles are reduced as well, by $50 to $200 for a single employee and by $150 to $600 for a family, depending on the medical plan option.

“Most employees can continue to use their own doctors, and we get an automatic reduction in the cost of those services,” says Hayes. “Most employees will receive lower deductibles and higher coinsurance payments overall.”

The benefit of this PPO to Sony, says Hayes, is an anticipated savings in claims costs of between 15% to 20% for 1992. He says, however, that for these new initiatives overall, it will take much longer to realize the full benefits of these cost-savings efforts. Hayes estimates that the cost of the preventive care and wellness program initiatives will run into “hundreds of thousands of dollars” initially, and will take several years before that expense is offset in lower claims’ costs.

“We don’t expect to reduce our overall medical claims’ costs, but to keep them from skyrocketing,” Hayes says. “Inflation in medical costs isn’t going away, so we want to control that increase. We believe that employees who take care of themselves properly are going to become more useful to the company. These initiatives are designed to produce a more healthy, productive group of employees in the long run.”

Personnel Journal, September 1992, Vol. 71, No. 9, pp. 40-44.