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Growth in Health Care Spending Expected to Slow, Government Says

The growth in national health care spending is projected to slow in 2009 compared with 2008, but it will still continue to outpace growth in the economy because of the recession, the Centers for Medicare & Medicaid Services estimates in a new report.


The study, which projects national health care spending trends through 2018, also estimates that health care spending would have reached $2.4 trillion by 2008.


Growth rates for health care spending are projected to remain steady at 6.1 percent in 2008, the same rate as in 2007, and then slow to 5.5 percent in 2009.


Despite the slowdown, however, health care’s share of the economy in 2009 will experience its largest one-year increase ever recorded, from 16.6 percent in 2008 to 17.6 percent, according to the report.


By 2018, health care spending is projected to reach $4.4 trillion and consume 20.3 percent of the gross domestic product, according to the CMS analysis.


In other trends, growth in spending on hospital care is expected to slow to 5.7 percent in 2009 from 7.2 percent in 2008, as a result of slower private spending growth for hospital care.


During the next 10 years, spending on hospital care is expected to reach nearly $1.4 trillion, up from a projected $746.4 billion in 2008.


The growth in spending on physicians also is expected to slow.


Growth in spending among public payers is expected to accelerate from 6.4 percent in 2007, or $1 trillion total, to 7.4 percent, or $1.2 trillion total, in 2009, driven largely by faster growth in Medicaid enrollment and spending.


By comparison, growth in private health spending is expected to fall to a 15-year low of 3.9 percent in 2009, when such spending will reach $1.3 trillion, as a result of slower income growth and an expected decline in private health insurance coverage.


The CMS predicts the growth rate in national health spending will rise again in 2011 as economic conditions improve and as growth in public and private health spending rebounds. Projections reflect current law and do not take into account any recent legislation including the stimulus package signed last week, CMS officials told reporters.


Filed by Jennifer Lubell of Modern Health Care, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Lessons From Flight 1549

I’ll admit it: I’m fascinated with the story of US Airways Flight 1549, the jet that was heading from New York’s LaGuardia Airport to Charlotte, North Carolina, but ended up landing in the Hudson River instead.


    Part of my interest is that I fly a great deal, so I can identify with what happened to the passengers and crew. But my greater fascination with Flight 1549 is that there are larger-than-life management lessons that can be taken from this January 15 incident—lessons that are worth examining and remembering no matter what field of endeavor you’re in.


    Lesson No. 1: Don’t ever discount the value of experience. Experience can bring smart, time-tested thinking to difficult business problems—the kind of thinking that can help organizations perform better during difficult times. US Airways Capt. Chesley B. Sullenberger III safely landed a jetliner in the Hudson River under the most difficult of circumstances. His ability to rapidly size up the situation, weigh the various options and safely execute a seldom-tried emergency plan is testament to his many years of flight experience. “In many ways, as it turned out, my entire life up to that moment has been a preparation to handle that particular moment,” Sullenberger told Katie Couric on CBS’ 60 Minutes.


    Sullenberger’s experience made the difference in this situation, and this speaks to a larger issue: Experience matters in every organization. There’s great value in people who have solid and relevant experience; they can represent the difference between success and failure. I’m sure the passengers on Flight 1549 appreciate the experience Sullenberger brought to bear when he landed in the Hudson. Would all have ended so well if he had been downsized in a corporate cost-cutting move and replaced with a much cheaper, less-experienced pilot? Who knows, but who wants to take that chance?


    Lesson No. 2: Training is important in good times and bad. Training is a line item that’s easy to whack when budgets get tight, because it’s not always easy to see its immediate payoff. That misses the point, however. Training is about getting people ready to execute and put their training to the test when the organization needs it most.


    The New York Times made this point when it noted an exchange between Michael A.L. Balboni, New York state’s deputy secretary for public safety, and Sullenberger. Balboni said that he shook the pilot’s hand, looked him in the eye and thanked him for a job done brilliantly. Balboni said Sullenberger “said to me, in the most unaffected, humble way, ‘That’s what we’re trained to do.’ No boasting, no emotion, no nothing.”


    Has there ever been a better example of the value of a training program than that? He could have pointed to any number of factors that helped him, but the fact that he pointed to his training (and experience) shows just how critically important it can be. This makes a great case for why organizations should really resist the urge to slash training budgets when times get tough.


    Lesson No. 3: It’s all about the team. If you watched the 60 Minutes segment February 8 with Sullenberger, you noticed that he had his entire flight crew on camera with him. That’s because he has gone out of his way to emphasize that it wasn’t just him, but his entire flight team that was responsible for safely landing Flight 1549. He said that there has been too much about him in the aftermath of the landing, and “not enough about the team.”


    Sullenberger clearly knows that the best success is shared success. He has gone out of his way to make sure that his team is recognized, because organizational success is rarely about an individual. It’s a principle that too few managers understand, but one that we need a lot more of as we all struggle to keep our organizations afloat in these tough times.


    The lessons of Flight 1549 are well worth remembering. In the end, it was solid, well-executed people management practices that made the difference between “miracle” and what could easily have been a disaster.


Workforce Management, February 16, 2009, p. 50 — Subscribe Now!

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Learning From Chrysler’s Efforts

A decade ago, Chrysler decided it would send process- and quality-improvement specialists into hospitals and doctor’s offices in hopes that helping hospitals reduce costs would benefit the automaker as well. The project came from the company’s former senior vice president for HR, who had had a personal run-in with bad medicine.


    The company brought in four process-improve­ment specialists to go into various hospitals that Chrysler contracted with nationwide. Roger Valen­tine was among the specialists assigned to the project. (He is not related to GM engineer Michelle Valentine, who is featured in related stories in this report.)


    “The first thing we noticed is, there is no standardized practice,” Valentine says. “It just blew us away. Doctors talk a lot about it but they don’t do it.”


    Dave Lalain, a former engineer at PPG Industries who is director of life sciences at the Automotive Industry Action Group, a nonprofit formed by the Detroit Three to improve business practices within the automotive industry and its supply chain, says it brings to mind a popular saying in health care: “If you’ve seen one medical practice, you’ve seen one medical practice.”


    Chrysler also noticed that its costs varied wildly among locations. Though workers in Detroit were older, and New York is known for its pricey health care, the company’s costs were higher at sites in Indianapolis and Kenosha, Wisconsin. The automaker concluded that variation in care led to higher costs that were passed on to the company.


    “Every time a hospital had a cost overrun, they’d jack up their rates,” Valentine says. “You can’t do that in other businesses.”


    Developing a set of best practices, the group was able to save its hospitals millions of dollars. But the savings, for various reasons, never made it back to Chrysler. Some hospitals cooperated only to appease Chrysler, not because they believed in the process, Valentine says. After several management changes, Chrysler pulled the plug on the effort.


    Last year, Valentine was approached by the Automotive Industry Action Group to work in a local doctor’s practice. Chrysler, running low on cash and facing a rapidly deteriorating economy, denied his request. When the company took him off his last in-house health care project, it gave him the option of being reassigned to HR. Valentine took a buyout instead.


    He wanted to parlay his 24 years in the auto industry into what he believes could be the job of the future for professionals like him. In November, Kaiser Permanente health system hired Valentine and nine other people, including another automotive industry veteran, skilled in cost- and quality-improvement techniques to work with doctors and hospitals.


    “The health care industry needs some outside eyes,” he says. “We in health care are where the auto industry was 20 years ago.”


Workforce Management, February 16, 2009, p. 26 — Subscribe Now!

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U.S. Supreme Court Clarifies Anti-Retaliation Rules

After repeated complaints that Gene Hughes, an employee relations director, was allegedly sexually harassing female employees, the Metropolitan Government of Nashville and Davidson County (known as Metro) conducted an internal investigation. Vicky Crawford, a payroll coordinator for 30 years, was interviewed as part of the sexual-harassment investigation. When asked by the Metro about alleged harassment by Hughes, Crawford told Metro’s human resources manager that Hughes had asked to see her breasts on numerous occasions, grabbed his genitals in front of her and once pulled her head toward his genitals.

   Metro fired Crawford, alleging embezzlement. No action was taken against Hughes.

   Crawford filed suit in U.S. District Court in Tennessee under Title VII of the Civil Rights Act of 1964, claiming that Metro retaliated against her for reporting on Hughes’ behavior. The court found in favor of Metro, and the U.S. Court of Appeals for the 6th Circuit in Cincinnati affirmed, holding that the “opposition” clause of Title VII demanded “active, consistent” opposing activities, whereas Crawford had not initiated any complaint prior to the investigation.

   On review, the U.S. Supreme Court reversed and remanded, ruling that Title VII’s anti-retaliation protection extends to an employee who speaks out about discrimination not on her own initiative, but in answering questions during an employer’s internal investigation. Crawford’s statement is covered by the “opposition” clause, as a disapproving account of Hughes’ “sexually obnoxious” behavior toward her represented “active, consistent” opposition to unlawful actions. Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, No. 06-1595 (1/26/09).

    Impact: Title VII covers an employee’s report of discrimination, whether on his own accord or in response to the employer’s internal investigation of such matters.

Workforce Management, February 16, 2009, p. 23 — Subscribe Now!

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Worker Screening Overseas Is Limited

The background screening industry in the United States is a relatively unregulated multibillion-dollar sector that has no comparable foreign counterpart. U.S.-based employers with screening policies designed to meet their domestic needs and the U.S. legal framework face a completely different reality when they move abroad. Particularly in the European Union and increasingly across the developing world, a job applicant’s right to privacy trumps an employer’s right to collect information about a potential employee.


    “What works in the United States doesn’t work abroad,” says Andrew Boling, partner at Baker & McKenzie in Chicago. “You have to assume that your screening practices will be restricted. And in the European Union, background screening is much more limited, even for an applicant who is applying for a job in the United States. Criminal background checks are limited if they are allowed at all. Credit checks are even more restricted and seldom done, with very limited exceptions.”


    In many overseas locations, employers are not plagued by the same levels of employee theft and fraud and workplace violence that prompt high levels of screening in the United States. “Anecdotally, if you look at issues like workplace violence, the incidence is much lower in Europe,” Boling says. In addition, sharp differences in legal liabilities diminish the need for screening. “The negligent hiring concept is a very U.S.-centric risk,” Boling says, “so screening issues abroad are not as grave as in the United States.”


“What works in the United States doesn’t work abroad. … In Europe, what’s private stays private.”
 —Andrew Boling, partner,
Baker & McKenzie, Chicago

    The severe limitations placed on screening in other countries arise from a fundamental appreciation for and deference to individual privacy rights. “Outside of the United States, individual privacy rights enjoy the same protections that we give to our First Amendment rights,” Boling says. “In Europe, what’s private stays private.” In France, for example, credit checks generally are not permissible even if a job applicant consents.


    The levels of consumer debt are also generally lower outside the U.S., and personal bankruptcy is much more uncommon, so credit checks commonly generate a lower number of negative hits in the countries where they are permissible. Non-U.S. employers also take a different approach to the financial status of job applicants. “How you manage your personal finances is considered to be irrelevant to how you qualify for or perform on a job,” Boling says.


    U.S. employers operating abroad often do the maximum amount of screening allowed by law, but they are likely to encounter greater limitations going forward, Boling notes. Although laws concerning background screening are still emerging in the developing world, he sees a trend toward adopting the more restrictive approach to screening that is common in Europe rather than the more unregulated U.S. approach.


    “In Asia, there is embryonic legislation that is following the European model, but is somewhat less restrictive,” he says. China’s 2008 workforce legislation, for example, embraces the European model of employment rights. U.S.-based screening companies are now marketing their services outside the United States, but employers should be aware that the information they can legally generate is likely to be more limited.


Workforce Management, February 16, 2009, p. 37 — Subscribe Now!

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Cutting Costs the Toyota Way

For at least a decade, other industries including health care have embraced the ethos of high quality and super-efficiency pioneered by Toyota, now the world’s largest automaker by sales volume.


    But it took the initiative of a medical director at Toyota before the company applied its own Toyota Production System principles to its health care providers in the U.S. in the same way it did its suppliers of auto parts.


    “We got elbow-deep into the activities of our radio manufacturer, but we were totally hands off with all of our health care suppliers,” says Ford Brewer, medical director for Toyota Motor North America, which is based in Lexington, Kentucky. “I felt, ‘Dang, there aren’t a few things we can apply to health care; there are tons of things we can apply, an unending number of applications.’ “


    About five years ago, with pressure mounting to shift rapidly rising health care costs to employees, Brewer began tackling the problem of reducing those costs by using the Toyota Production System. Toyota’s competitors in Detroit had already begun sending employees to improve the efficiency of local hospitals.


    Toyota looked at inefficiencies in its benefit design. Among other changes, it established an on-site pharmacy to reduce time and movement and to avoid higher-priced retail outlets. Then the company looked at its on-site health clinics.


    The engineers who once worked with radio makers were soon standing in doctor’s offices with clipboards, noting each step in the process of visiting the doctor. The engineers eliminated obvious forms of waste, known as muda in Japanese.


    “When we took out what was obvious muda, we realized we didn’t need 3.5 of the nine people working in the clinic,” he says.


    Other examples of muda were quite simple. The laptops used by doctors in the clinics needed their batteries changed several times a day. The engineers moved the batteries from the back of the clinic to the front, making them more readily available to the doctors. It was a classic redesign to reduce unnecessary effort and wasted movement.


    Because of Toyota’s policy against laying people off, other health care workers were reassigned—for example, to treat only those patients who come into the clinic without an appointment. Employees afraid that improved efficiency will cost them their job are unlikely to support any waste-reducing changes the company is trying to make, Brewer says. Reassigning employees rather than firing them is a good way to ensure employees are supportive of these kinds of quality- and cost-improvement efforts.


    In 2007, the Toyota Production System faced a big test when the company looked at the quality and cost of a local hospital’s emergency room that was used by employees.


    “Anytime you try to introduce TPS you hear, ‘Look, you don’t understand, this is not an assembly line; we’re not making cars, we’re seeing patients,’ ” Brewer says.


    Toyota asked for patience, and the hospital cooperated. Soon, engineers discovered that two nurses averaged three minutes to do triage on a patient, while most others took 15 minutes.


    “Anytime you have that kind of variation, a TPS engineer will perk his ears up,” Brewer says.


    The wide variation was a sign that engineers would likely find big savings by introducing standardization in the triage process. Changes introduced by Toyota reduced emergency room wait times from 53 minutes to less than 20 minutes with the same amount of staff. Volume increased by 25 percent. The company, however, did not look at the quality of care provided, just its efficiency.


    Brewer credits the improvements to the fact that the engineers came to health care with a fresh perspective.


    “That’s probably the biggest difference between having TPS people go into a hospital versus having hospital people run their process improvement,” he says.


Workforce Management, February 16, 2009, p. 23 — Subscribe Now!

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Engineering Better Care

On a December day, as General Motors chief executive Rick Wagoner beseeched Congress for a bail­out, GM engineer Michelle Valentine stood in a doctor’s office in suburban Detroit, extolling the virtues of efficiency.


    Valentine was visiting the St. John Family Medical Center in St. Clair Shores, Michigan, not as a patient, but as part of an effort by auto industry engineers to show how the techniques that have helped automakers build better cars more efficiently can help reduce medical costs and improve the health of patients.


    Pointing to a homemade flowchart on the wall, Valentine demonstrated the wayward path of a lowly medical form. Half the time, forms are filled out incorrectly at the doctor’s office and sent back there by patients or employers.


    “That’s rework,” says a billing clerk, using the lingo of process improvement that had been imparted by Valentine.


    “Big time!” Valentine says.


    The ethos in car making is to get it right the first time. When it came to such basics as filling out a common medical form, this small medical practice seldom got it right.


    “This is why health care costs are so high in this country,” says Joseph Fortuna, a former medical director with parts maker Delphi. “It’s not because of errors; it’s because of this crap. This waste is what doctors are held responsible for, but have no idea how to fix.”


“Flow is the key to eliminating waste. Waste costs money.”
—Michelle Valentine, GM engineer

    Multiplied across America’s hospitals and doctor’s offices, such inefficiency totals more than half of the $2.1 trillion spent on health care. Defensive medicine, inefficient health care administration and the cost of treating preventable conditions such as obesity account for $1.2 trillion annually, PricewaterhouseCoopers estimated in a study published in April 2008. Employers, which provide insurance to about 60 percent of Americans, absorb the bulk of that cost, which does not include the cost to worker productivity.


    The debilitating economic cost of health care waste is especially painful for struggling Detroit automakers GM, Ford and Chrysler.


    GM spent $5.6 billion on health care in 2006, which the automaker says added at least $1,500 to the sticker price of every automobile. Chrysler spent $2.3 billion on health care, an expense that added 7 percent to a vehicle’s cost. Looming in 2010, the Detroit Three will be expected to fund a multibillion-dollar health care trust that will be operated by the United Auto Workers.


    Concerns over health care costs have spurred a concerted effort by automakers, insurers and medical providers to send engineers like Valentine to volunteer in doctor’s offices, helping primary care physicians improve operational efficiency and the quality of care. At the same time, the effort may offer career opportunities to the engineers, who in some cases find their Detroit careers hanging by a thread.


    The thinking behind the health care process-improvement project is that despite the industry’s woes, automotive engineers are experienced in making companies more efficient and producing better products. They learned their streamlining lessons by using the quality- and cost-improvement techniques that came to prominence in the U.S. with the rise of Japanese automakers in the 1980s. These techniques—known variously as kaizen, lean manufacturing, Six Sigma and total quality management—have become commonplace among businesses across many industries, including health care, where some hospitals and health systems have already embraced them.


“As we downsize our industry, we have a resource, a human resource, that we can use in other verticals.”
—J. Scot Sharland, executive director, Automobile Industry Action Group

    The Detroit project, called Improving Performance in Practice, is sponsored by the Automotive Industry Action Group and the Michigan Primary Care Consortium. The Automotive Industry Action Group is a nonprofit formed by the Detroit Three to improve business practices within the automotive industry and its supply chain. The consortium is a membership organization of employers—including GM, Ford and Chrysler—as well as insurers and medical providers.


    The idea grew out of research among health system experts who found that physicians need to operate more efficiently to meet the needs of chronically ill patients, as well as demands from employers that the care they pay for meet evidence-based standards. While some hospitals and health systems have embraced manufacturing’s process-improvement techniques in piecemeal fashion, new attention is being focused on primary care practices.


    Organizers in Michigan hope that an effort that started last year with more than 50 engineers from auto manufacturers, suppliers and the United Auto Workers working in 14 primary care practices in Michigan will spread across the country. In September, Fortuna, along with the medical directors of Ford and Toyota, pitched their idea to executives at the American Medical Association.


    The hope was that the AMA, along with other health care organizations and the American Society for Quality, would endorse what they are describing as a Marshall Plan for health care: the placement of some of the 100,000 quality engineers in the U.S. in doctor practices with the goal of improving the quality and efficiency of medical care nationwide.


    “We’re not saying we’re experts in health care,” says Ford Brewer, medical director for Toyota Motor North America, explaining his pitch to the health care industry. “We’re saying, ‘We’re experts in logistics, and you’ve got a ton of logistics you’re managing, and you’re managing them poorly. Let us help you with that and you go deal with the health care.’ “


‘Flow is the key’
    A handful of states have launched projects to improve the efficiency of the primary care system, teaching process-improvement methods to health care professionals. But by having auto industry engineers as volunteers in doctor’s offices, Michigan is taking a different tack, one that might provide new career opportunities for laid-off auto engineers.


    “Our culture in the auto industry, even though it’s in a state of chaos, [is that] a lot of people have a lot of good experience in improving efficiency and improving quality,” says Lou Ann Lathrop, a GM engineer and volunteer. “That just didn’t happen by taking a one-day seminar. It’s years of training and applying the principles.”


“We’re not saying we’re experts in health care. We’re saying, ‘We’re experts in logistics, and you’ve got a ton of logistics you’re managing, and you’re managing them poorly. Let us help you with that and you go deal with the health care.’ “
—Ford Brewer, medical director for Toyota Motor North America

    The specter of bankruptcy for U.S. automakers has provided further incentive to automotive engineers to bring their skills to health care.


    “As we downsize our industry, we have a resource, a human resource, that we can use in other verticals, namely health care,” says J. Scot Sharland, executive director of the Automobile Industry Action Group. “We don’t have time to train doctors and nurses in quality improvement when they are desperately needed to treat people.”


    While most practices are set up to react to people’s problems, treat them and send them on their way, they are not organized to manage chronic illnesses, which require ongoing care and greater planning. Making the change requires special skills, says Ed Wagner, director of the MacColl Institute at the Group Health Center for Health Studies in Seattle.


    “What is particularly helpful is having someone—we call them a practice coach—who comes in, understands the changes that need to be made and helps the practice make the changes,” Wagner says.


    Valentine, the GM engineer, helped the managers at St. John Family Medical Center see that the office’s quality varied. It had no way to ensure that medical forms were filled out correctly. She acted as a guide as the practice discovered its shortcomings. The exercise led to changes that will help save the practice $90,000 a year.


    “Flow is the key to eliminating waste,” Valentine says. “Waste costs money.”


    Thirty miles from the Family Medical Center, a similar experiment is unfolding in Pontiac, Michigan. Every day, primary care Dr. Khurrum T. Pirzada confronts the costly diabetes epidemic. More than half of the patients who come to the Baldwin Avenue practice, owned by the not-for-profit POH Regional Medical Center, are insured through Medicare or Medicaid, are elderly, poor or both.


    Because the government has not increased significantly in recent years how much it reimburses primary care doctors, Pirzada’s practice has increased the number of patients it sees each day to remain profitable, he says.


    “If we’re not getting reimbursed more, we need to see more people,” Pirzada says. “But if you see 40 people a day and spend five minutes with them, what kind of quality can you provide? If the patient isn’t getting the time they need and is getting sicker, then we need to look at the quality of care.”


    Pirzada’s predicament is typical. Many doctors know the standards of care for treating diabetics, but they don’t have the time or skills to implement them uniformly in their practice.


    Kush Shah, however, does. A product quality engineer with GM’s powertrain division, Shah has visited the practice several times with a colleague.


    “For a long time, automakers worried, ‘How many cars can you produce?’ ” he says. “But it’s not that simple. You have to focus on quality. It’s the same thing here. We can’t just focus on wait times. We have to focus on quality of care.”


“If we’re not getting reimbursed more, we need to see more people. But if you see 40 people a day and spend five minutes with them, what kind of quality can you provide?”
—Dr. Khurrum T. Pirzada,
POH Regional Medical Center
Baldwin Avenue practice

Managing disease
    Doctors want to cure what ails patients, but only now, with so-called pay-for-performance incentives, are they beginning to get paid specifically for doing so. The assistance of auto engineers is intended to make it easier for doctors to meet the standards that they are increasingly being expected to meet.


    Shah is designing a standard for how to best organize a primary care practice to manage diabetes. Once he completes it, he will move on to asthma and heart disease. He sets forth the guidelines, which also are the tenets of lean manufacturing: Increase standardization, reduce complexity and simplify variation.


    With those principles in mind, the POH Regional Medical Center staff made a few changes and decided it would set aside an hour each morning and afternoon to see only diabetic patients. The practice is establishing a checklist of items that need to be accomplished during every diabetic’s visit: Check the feet, check vision and check sugar levels.


    Shah has developed a questionnaire of commonly asked questions of diabetics. The questionnaire is a classic example of reducing non-value-added work. Doctors are least cost-effective when doing something someone less qualified can do, Shah says. That includes asking routine questions of patients.


    The practice also reasoned that teaching diabetic patients to eat right or to take their insulin was not the best use of a doctor’s time. A better idea would be to hire a medical educator, something the office staff felt would be cost-effective now that a group of diabetics would be visiting the office at a set time.


    One problem arose, however: Doctors are not reimbursed for educating patients, making it impossible for a doctor to recoup the investment. The office decided to accept an offer by Great Lakes Medical Supply, a supplier of diabetes medical devices, to provide a medical educator. Pirzada says he isn’t concerned that a medical supplier might put sales ahead of a patient’s health.


    The more Pirzada talked about improving the way his practice operates, the less he sounded like a typical doctor.


    “We want the focus to be on the patient, customer service and communication,” he says. “This is a service industry, and customer service is important.”


Potential seen
    Shah and other engineers volunteering at practices say with confidence that simple changes could produce big economic savings, given the level of inefficiency they see.


    “When you wait in line at a doctor’s office, you ask: ‘Why don’t they have a better scheduling system? Why don’t they contact me by e-mail? Why do I have to wait 30 minutes to get a 30-second answer from my doctor? Why do I have to fill out the same information every time I go to the doctor?’ ” says Lathrop, the GM engineer and volunteer. “In your day job, you are constantly drilled to take out waste in the system.”


    It is still too early to show savings, says Shah, who has worked at the Baldwin Avenue practice since late fall. But other projects have shown that the tools of manufacturing can reduce costs. An ophthalmology practice in Lansing, Michigan, reduced wait times for patients receiving eye exams. Changes made with the help of engineers allowed the practice to hire fewer people when it brought on two new doctors.


    The ophthalmology project has helped sell others on the idea. The goal of the other pilot programs is to develop a track record of cost savings and quality improvement in the care of chronically ill patients.


    The biggest cost is the engineers’ time, estimated to have totaled $20,000 for the Lansing practice. Currently, the engineers volunteer, with many taking paid community service hours offered by their automotive employers. But given the crisis in the auto industry, companies may decide to withdraw their support, as Chrysler did earlier this decade with a similar health care cost-management project.


    If these initial experiments show success, a new primary care model may emerge that holds the promise of improving care and reducing costs. Auto engineers may find practices willing to pay for their skills.


    “Right now, a lot of the doctors don’t think they need any help,” Lathrop says. “And that’s the same way the auto industry was 25 years ago. … We hope we show doctors something that gets them excited and makes them want more, because in the long run we can’t do this as volunteers.


    “We’re trying to create a market for quality professionals and other engineers.”


Workforce Management, February 16, 2009, p. 1, 18-26 — Subscribe Now!

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Hit Parade

Hits may include criminal convictions, motor vehicle violations, discrepancies in employment and education verifications, positive drug test results, derogatory credit information, prior workers’ compensation claims, etc. The report is derived from a sample of Kroll’s background screening clients. The highest hit ratio in each industry category is highlighted.

Click here to download infographic ▼




Adobe Acrobat required.
Infographic by Gonzalo Hernández

Workforce Management, February 16, 2009, p. 35 — Subscribe Now!

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5 Questions Cutting With Kindness

In January, Dutch insurance conglomerate ING Group announced that it would be cutting 7,000 positions this year. For Tom Waldron, executive vice president of HR and brand at ING Americas, that meant cutting 750 positions and not filling an additional 250 jobs. Although Waldron has been through layoffs before, he says this time it’s much more difficult. Waldron recently spoke with Workforce Management New York bureau chief Jessica Marquez.

    Workforce Management: Why were the recent layoffs more difficult than past reductions?


    Tom Waldron: Usually in the past, when you downsize in a particular area, you have somewhere else to put people. But because you have this incredibly shrinking economy, the company has to shrink globally and our options to redeploy are tremendously reduced. I have never had so many high performers on a reduction list ever.


    WM: What do you offer to those employees who lost their jobs?


    Waldron: I would say on a scale of severance arrangements, we are on the very fair to richer side. That does cost us more money, but it’s a wise investment because you want to treat people who have worked for you with dignity and respect. We also offer outplacement services to employees to help them find other opportunities.


    WM: How did you conduct the layoffs?


    Waldron: I am not a big believer in everyone getting called into a room and then they all leave immediately. You have to weigh the risk that you could have isolated employees who don’t take the situation well, and we have to be very conscious of that. We told people that the layoffs would be coming during the second week of January and that they would be leaving two to three weeks after that. There were a few people who stayed on longer. In many offices, we had representatives from Right Management to answer displaced employees’ questions and schedule appointments with them to help with career transition.


    WM: What’s the business case behind offering “rich” severance packages and outplacement services?


    Waldron: You need to treat people with dignity. That’s important for the morale of the people who are remaining with you as well as for the people who are leaving. This is our brand and those are our customers. I can say that we will never look at cutting severance payments to reduce costs when we are laying off people. Not over my dead body. People come and go. We believe these people will be our customers and that many of them will come back to work for us.


    WM: What are your top priorities today during these difficult times?


    Waldron: From an HR standpoint, part of our role is to be the conscience of the organization and make sure that managers are thinking about questions like ‘How do you handle people in situations likes this?’ We also have to help make sure the business strategy is secure while motivating and engaging people and retaining our top talent. It’s mind-boggling from an HR perspective, but I just tell my people, ‘Have your meltdown later.’


Workforce Management, February 16, 2009, p. 8 — Subscribe Now!

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Obama Budget Plan Raises Employer Issues

Among the most notable ideas proposed by President Barack Obama in his $3.5 trillion budget unveiled Thursday, February 26, is a big-ticket health reform plan and a proposal to require employers to automatically enroll employees in retirement accounts.


Though details remain sketchy, here’s a quick look at some of the ways employers might be affected:


Retirement
Addressing low savings rates among U.S. workers, the proposed budget states that employers that “do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems.” Employees could opt out but would automatically be enrolled in a retirement account if they did nothing.


Health care
Among the bigger-ticket items is health care reform. Other than setting aside $634 billion as an initial earmark for reforming the country’s health care system, the budget proposal offers few details.


It does state that the administration’s plan would give workers the option of keeping their employer-based health plan. The proposed budget also mentions—but does not endorse or reject—other health reform ideas such as capping the tax exclusion for employer-sponsored health insurance.


Unemployment insurance
Under the heading “Extend, Expand and Reform Unemployment Insurance Benefits,” the budget proposal would curb benefits fraud that, according to the Office of Management and Budget, cost taxpayers $3.9 billion in 2008. It calls for increased “funding for program integrity” and legislative changes to reduce employer tax evasion.


Immigration
Having taken E-Verify off the table in the stimulus package, the system that checks new-hire information from I-9 forms against Social Security and Department of Homeland Security databases, is now back in the proposed budget with $110 million to expand the program.


Federal wage reporting
The budget contains a proposal to increase the frequency employers report wages to the Social Security Administration. Currently, employers report employee wages to the federal government once a year using W-2 forms. The administration says more frequent reporting would improve tax administration and make it easier to implement their proposal to institute automatic enrollment into retirement savings accounts. The administration says it will work with states so that “the overall reporting burden on employers is not increased.”


—Jeremy Smerd


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