Total Health Management: Best Practices to Drive Optimal Health and Business Outcomes

1. May 13, 2010 Total Health Management:Best Practices to Drive Optimal Health and Business Outcomes

2. Total Health ManagementEffectively Addressing Key Business Issues The Solution: A Total Health Management Approach The Problem: Health risks and conditions are leading to increased costs of doing business and affecting companies’ ability to effectively deploy talent on a day-in and day-out basis in the US and across the globe Total Health Management is all of the actions an employer can take to engage and support management and employees in making good choices to avoid the cost and consequences of poor health + + = Healthier and Safer Workforce ReducedCost Increased Productivity Competitive Advantage, Positive Company Image

3. THM tackles the business challenge by addressing all the root causes of problems to achieve improvements in health, workforce productivity and cost management Medical Drivers Non-Medical Drivers The Problem: Health risks and conditions are leading to increased costs of doing business and affecting the ability to effectively deploy talent on a day-in and day-out basis • Policies • Work Practices • People Management • Financial (e.g., plan design, variable compensation, reimbursements, incentives, contracting) • Multi-Diagnoses/Risks • Psychosocial Issues • Major Diagnoses • Treatment Variability • Care Coordination • Case Management Critical Business Metrics Health Status Health Care Costs Safety Total Cost Total Lost Time Workers’ Compensation Costs

4. Well Productive, low health care users At Risk Currently productive, potential high cost claimants Illness / Injured Limited to no productivity, high medical costs Catastrophic High cost users, poor prognosis Occ and Non-Occ Absence and Disability Management Health& Safety Promotion Health and Safety Risk Management Chronic Condition and Case Management High Cost Case Management Total Health ManagementAddressing the Entire Health Care Continuum To achieve the following objectives Optimized health, safety and productivity Managed costs Wise allocation and use of resources based on local needs and infrastructure Alignment with broader total rewards and/or talent management strategies Maximized ROI

5. The Hidden Costs of Illness Estimated indirect cost of absences = 2% of payroll $49M Health & Absence Costs* Direct non-occupational absence costs = 2.7% of payroll + Health care benefits costs = 16% of payroll Equals more than 20% of payroll • * Assumptions: • For an employer with 5,000 employees and average salary of $47,060 • * Survey results: • Average salary: $47,060 • % electing employer coverage: 84% • % with dependent coverage: 56% • Average employee age: 41 years • % females/males: 53%/47% $235M Payroll* Payroll Source: Mercer’s 2008 National Survey of Employer-Sponsored Health Plans and Mercer’s 2007 Survey of Health, Productivity and Absence Management Programs Reducedcost Healthier workforce Increased productivity Competitive advantage, Positive company image The Total Health Management Opportunity Total Savings of 1 – 2% of payroll (~ $1Million/1,000 employee) • Address the “hidden” costs associated with poor health with a comprehensive and integrated approach • Manage Total Health to Achieve Total Value + + =

6. Marketplace Trends

7. Marketplace TrendsMercer Health Care Survey • Established in 1986, national probability sample used since 1993 • 2,914 employers participated in 2009 • All employers with 10 or more employees are surveyed using a stratified random sample; large employers are oversampled to permit robust break-outs by size • In this presentation, we refer to: • Small employers – 10-499 employees • Large employers – 500+ employees • Jumbo employers – 20,000+ employees

8. Back in 2006: Health management and consumerism emerge as large employers’ most important cost-management strategies for the next five years* All large employers Jumbo employers * Employers indicating strategy will be significant in efforts to manage health benefit cost. Source: Mercer’s National Survey of Employer-Sponsored Health Plans 2006

9. Sharp growth in use of health management programsPercent of large employers offering programs and offering incentives

10. Return on investment in health managementLarge employers All large Jumbo employersemployers Provide health management programs through specialty vendor/ request optional services from health plan vendor 37% 73% Of those, % of employers that have attempted to measure return on investment (ROI)* 45% 69% Of those, % of employers that are satisfied with ROI 74% 75% *Among employers that offer disease or health management programs

11. Innovative Approaches

12. Provide worksite or near-site medical clinic All large employers Jumbo employers Large employers that provide a primary care clinic

13. A strong THM approach can transform the member experience through an integrated approach Traditional Health Management Program Model Integrated HealthManagement Program Model Healthpromotion Lifestylemgmt Diseasemgmt Casemgmt Disabilitymgmt Healthpromotion Lifestylemgmt Diseasemgmt Casemgmt Disabilitymgmt Historical emphasis Integrated approach Healthy At-risk Chronically ill Catastrophically ill Limited participation, effectiveness Greater engagement, better ROI Source: Mercer Oliver Wyman

14. Vendors have been evolving towards more integrated models The marketplace is evolving rapidly: • Expanded and re-tooled product suites • New entrants • More sophisticated offerings • Shift to more consumer centric, integrated models

15. Future Vision – A blended model of care, competing on cost, quality and outcomes BLENDED MODEL Integrated Wellness/Illness/ Injury Management System On- and Near Site Care Model Web and Telephonic based Care Model Value Potential Health Plan based Care Model Physician based Care Model Evolutionary Path

16. Total Health Management Best Practices – Management Practices

17. HERO Best Practice Scorecard -- Version 3Sample Questions and Scorecard Output Sample Scorecard Illustrative purpose only

18. Total Health ManagementCritical Success Factors Measurement and Evaluation Strategic Planning Leadership Engagement Program Level Management Programs Engagement Methods • Integrated data warehouse with individual level data across programs and vendors • Data and process for on-going performance and program evaluation • Cross-functional alignment of THM objectives and planning • Health and wellness objectives linked to annual operating plan • Formal 3-year strategic plan • Dashboard with THM metrics is routinely reviewed by leadership • Adequate funding allocated • Local wellness champions • The link between health and business success is supported at the enterprise-wide, business unit and local levels • Accountability for health and wellness endorsed by senior leadership and cross functional managers • Process and metrics for proactive program and vendor management • Vendor performance guarantees for outcomes • Programs span the health population continuum • Multiple modes of identification (claims, HRAs, screenings, vendor cross-referral) • Multiple modes of delivery (web, paper, telephonic, on-site) • Accessible to Employees, Spouses/DPs, Retirees • Strong branding • Multi-media communication strategy • Simple, on-going messaging • Incentives to drive key behaviors • Overarching/integrated health benefits portal • Integration with other company initiatives • Competitions and other means of group / organizational engagement The above are considered THM Best Practices and can be assessed through the Mercer/HERO Scorecard

19. Total Health Management addresses the full health care continuum… Well Productive, low health care users At Risk Currently productive, potential high cost claimants Ill / Injured Limited to no productivity, high medical costs Catastrophic High cost users, poor prognosis …with tailored approaches… • Awareness • Prevention and Early Detection • Healthy Lifestyle Promotion • Linkage to Safety • Bio-psychosocial Approach to Risk Reduction • Targeted Behavior Modification and Condition Management • Evidence-Based Decisions • Intensive Upstream Cost Risk Reduction • Access to “Top” Docs and Facilities (COEs) • Focused Treatment Compliance • Integrated Medical/ Disability Case Management and Return to Work/Health • Intensive Upstream Cost Risk Reduction • Access to “Top” Docs and Facilities (COEs) • Focused Treatment Compliance Reinforcement through Incentives, Plan Design and Communications

20. Comprehensive Branding and Communication Strategy Key stakeholder involvement is crucial to success Top Down Wellness is experienced by employees as part of the total value of working at the company New healthier behaviors at work and home Improved performance and productivity Goals and Outcomes New conversations between “healthy” and “less healthy” employees Control rising health care costs Sustainable behavior change Bottom Up

21. Key Metrics and MeasuresDemonstrating effectiveness of THM Short-Term Measures (0-12 Months) Intermediate-Term Measures (12-24 Months) Long-Term Measures (2-5 Years) • Program Delivery • Process Flow • Vendor Cross-referrals • Participation • Baseline Utilization • Characteristics of Participants • Awareness • Program Awareness • Name/Brand Recognition • Program Perception • Program Satisfaction • Impacts • Knowledge, Attitudes, Beliefs • Self-Efficacy • Behaviors • Baseline Analyses • Health • Health Status • Health Risks • Prevalence of Chronic Conditions • Health x Costs Relationships • Program Delivery • Process Flow • Vendor Cross-referrals • Participation • Repeat Program Utilization • Characteristics of Repeat Participation • Completion Rates • Awareness • Program Perception • Program Satisfaction • Impacts • Change in Health • Health Status • Health Risks • Clinical Values • Outcomes • Health Care Utilization • Lost Work Time • Productivity • Employee Turnover • Employee Satisfaction/Culture • Program Delivery • See Intermediate-Term • Participation • See Intermediate-Term • Awareness • Program Perception • Program Satisfaction • Impacts • See Intermediate-Term • Impact on Organizational Culture • Outcomes • See Intermediate-Term • Medical Costs • Trend • ROI Leading Indicators Lagging Indicators

22. Total Health Management Best Practices – Case Studies

23. THM Capabilities and Expertise in ActionCase In Point: Large beverage manufacturer, seller and distributor Situation • About 30,000 employees, primarily male and hourly workers • Leverage emphasis on safety to build a culture of health • Geographically dispersed with 300+ work locations with limited access to computers for online communication and health assessment • High prevalence of obesity, hypertension and stress Action • Health and wellness brand and multimedia campaign • Developed targeted wellness program to deliver at specific worksites • Incentives to complete HA and lifestyle management program including national competition and volunteering • Implemented onsite clinics at about 25+ locations • Engaged on-site wellness champions, clinic nurses and safety resources to promote on-site screenings, health assessment and programs • Result • 70% + health assessment participation (60% was the goal) • 40% + high/moderate risk population participates in lifestyle management programs • Medical trend averaged 5.6% annually from 2004 to 2007 • 2007: Received the prestigious C. Everett Koop National Health Award for their health and wellness program

24. THM Capabilities and Expertise in ActionCase In Point: High-tech manufacturer Situation, Challenge • High-tech manufacturer: 10,000 employees • Low morale after 2001-2002 layoffs • Rising health and absence costs • Increasing pressures by overseas competition • HR saw value in the THM model as a benefit to employees and a necessary medical/absence cost management strategy • Capitalize on a new integrated data warehouse: health/medical, pharmacy, behavioral health, disability, workers’ compensation data • Facilitate collaboration among historically siloed internal and external stakeholders in order to ensure effective integration

25. THM Capabilities and Expertise in ActionCase In Point: High-tech manufacturer (continued) Action • Data warehouse and THM modeling tools: • Business case for THM investment and five-year potential savings • Multi-year comprehensive strategies regarding medical, pharmacy, behavioral health, and occ- and non-occ disability management • Metrics dashboard to monitor program and results • Best-in-class THM programs across the continuum of care regularly monitored and audited to improve performance • Business rules and shared performance guarantees to enhance member experience and improve care management • Transitional and proactive return-to-work program for occupational and non-occupational disabilities • Incentives for positive behaviors • Local 24/7 Total Health teams at all locations to engage local leadership and employees • Result • Financial indicators signal that employer is on the right track: 2008 medical trend was 3% (compared to 19% at baseline year 2002) and pharmacy trend was 5.4% (compared to 5.7% at baseline) • Over same period Short-Term Disability PEPY costs dropped by 33% and STD incidence rates dropped by 28%; workers’ compensation PEPY dropped by 13% and WC incidence rates dropped by 29%.

26. Closing Thoughts

27. Key Points to Remember • Consumer Centric Design and Delivery • Intuitive, Empowering and Easy to Navigate • Balanced Portfolio of Investments • Across the Entire Care Continuum • Continuous Improvement Approach • Rigorous Monitoring, Evaluation and Process Improvement • Shared Accountability • Alignment of Internal and External Stakeholders with Key Objectives • Engagement, Engagement, Engagement • Focus on W.I.I.F.M. to Drive Best Outcomes

28. Services provided by Mercer Health & Benefits LLC