Eastman Chemical Company Total Integration and Vendor Management

1. Eastman Chemical CompanyTotal Integration and Vendor Management HERO Forum for Employee Health Management Solutions Chicago, IL September 18-20, 2006 David Sensibaugh Lloyd Herlong Director, Integrated Health Manager, Vendor Relationships

2. Agenda • Background • Integrated Health Model • Employee Involvement • Health Risk Management • Vendor Management • Lessons Learned • Questions & Discussion

3. Eastman Chemical Company • $7B Annual Sales • 10,000 US Employees and 6,000 Retirees • Majority Of US Employees At 4 Major Sites • Non-Union • Margin pressures • (raw materials, energy, and labor costs) • Rapidly rising health care costs • Relatively unhealthy workforce

4. Background • Long history of wellness; no integration • Recognition of employee health as business issue was elevated in 2003 • Established cross-functional strategic team • No blank check; funded thru plan design changes • Budgeted at corporate level • Implemented integrated model during 2004 • "Structure follows strategy" – EIH organization • Change management is key

5. Eastman Integrated Health Mission Positively impact Eastman's financial performance by: • Containing direct health care spend for employees, retirees, & dependents • Decreasing the indirect cost of poor health We accomplish this by integrating all health-related services to improve the health of employees, covered dependents, and alumni "Building a Culture of Health"

6. Eastman Integrated Health Goals • Healthier and more productive workforce • Greater responsibility for one's health status • More cost effective purchase of medical care • Improved quality of health care delivered • Lower rate of increase in overall cost of medical, disability, and related expenses

7. Integrated Solutions Across the Health Continuum Population Health Management 15% members = 85% cost Well At Risk Acute Illness Chronic Conditions Complex Care • Predictive Modeling • Lifestyle Modification Programs • Health Promotion & Prevention • Screenings • Health Risk Assessment • Chronic Condition Mgmt • Empowering Education and Support • Nurse Line • EAP • Medical Decision Support • Case Management • Health Advocacy Occupational Health/Work Re-entry 85% members = 15% cost

8. Eastman Care Management Model Health Plan Health Plan Pharmacy Benefit Manager Network UM/CM Claims Risk Identification and Stratification Predictive Modeling On-line HRA Health Promotion Member Engagement and Intervention Vendors NurseLine EAP Chronic Condition Management Health AdvocacyOutreach Medical Decision Support Eastman Medical Department Occ Health/ WREMP Absence Mgmt

9. EASTMAN INTEGRATED HEALTH (EIH) Measuring the impact of our EIH strategy on costs, productivity, and quality. Integrating all health care-related components into a single integrated approach. Plan Design Strategy Measurement Strategy Employee Involvement Strategy Provider Engagement Strategy Working with EIH partners, local physicians and hospitals to improve quality of care. Strategies to involve employees, dependents, and alumni in their health.

10. EmployeeInvolvementStrategy • Health Risk Management (HRM) strategy • Comprehensive marketing strategy to increase employee involvement • Engage division/site Wellness Teams • Increase manager awareness of health & productivity impact upon business results • Provide financial stake to maximize positive employee response

11. Health Risk Assessments Note: Risks include biometric measures (i.e. blood pressure, cholesterol,…) and lifestyle measures (i.e. high-fat diet, physical inactivity,…)

12. Health Risk Assessments Note: Risks include biometric measures (i.e. blood pressure, cholesterol,…) and lifestyle measures (i.e. high-fat diet, physical inactivity,…)

13. Now that you have more HRA data… Sowhat?

14. Healthy Steps • Tobacco use • Lack of physical activity • Obesity Risk Factors • High cholesterol • High blood pressure • High blood glucose • Program • Risks identified through online HRA (T1) • Eight monthly counseling sessions with Health Educator, Registered Dietician, • Exercise Specialist, and Registered Nurse (two sessions with each one) • Sessions are to be completed within a 12 month time period • Progress on goals assessed at each session • Designed to assist individuals in understanding their risks, setting goals to • address risks, and changing behavior for a lifetime • Follow-up HRA at 8th session (T2) and one year after completion of program (T3)

15. Healthy Steps Participation

16. Healthy Steps GraduatesT1 and T2 HRA Improvement • Of the 135 graduates in 2004, statistically significant improvement levels were seen in the areas of systolic and diastolic blood pressure, LDL, weight , and BMI • Of the 64 graduates at mid-year 2005, improvement was noted in the areas of: - BMI - Systolic Blood Pressure - HDL - Diastolic Blood Pressure - LDL - Total Cholesterol - Triglycerides - Physical Activity • 45% of the 64 brought at least one risk factor into desirable ranges • 81% of the 64 progressed in their Stage of Change • 72% of the 64 progressed to the Maintenance Stage

17. Vendor Management

18. Eastman Care Management Model Health Plan Health Plan Pharmacy Benefit Manager Network UM/CM Claims Risk Identification and Stratification Predictive Modeling On-line HRA Health Promotion Member Engagement and Intervention Vendors NurseLine EAP Chronic Condition Management Health AdvocacyOutreach Medical Decision Support Eastman Medical Department Occ Health/ WREMP Absence Mgmt

19. Vendor Management Process Scope Development & Evaluate Need for Vendor KEY Pre-Engagement Engagement Post Engagement Complete Due Diligence on Vendors, identify vendors to send the RFPand select vendor using scorecards Yes Assign Vendor Manager Incorporate Vendor Accountability Modelinto contract Strategic? No Negotiate Contract Enter into Contract Management System Enter Purchase Requisition Assign Purchase Order Profile Vendor Conduct Team Reviews Evaluations Opportunities for Collaboration Monitor Performance Yes Strategic? No Manage to ensure contract and specifications compliance

20. Components of Vendor Management • Integrate with other vendors • Measurement system • Yearly formal performance review • Constant "Plan-Do-Check-Act" • Scheduled Eastman-to-vendors meetings • Scheduled vendor-to-vendor operational meetings • Yearly summit

21. 2004 Summit Objectives • Get to know all Eastman participants and vendors • Understand Eastman's Integrated Health Strategy • Understand impact on Eastman's business • Understand role of each vendor • Formulate a draft implementation plan • Leave summit with roles and responsibilities for implementation identified

22. Lessons Learned Employee Involvement & Health Risk Management • Provide employee incentives commensurate with your goals. • Stratify risks and the corresponding level of health coaching needed. • Sustained improvements in outcomes result only from programs that focus on long-term lifestyle changes.

23. Lessons LearnedIntegration & Vendor Management • Total integration requires much work, but is necessary to optimize results. • Integration should be seamless to users • Create expectation that vendors continually improve their processes and service offering. • Create a teamwork atmosphere among vendors. • Measurement of vendor performance is vital to long-term success and viability.

24. Questions & Discussion