April 20, 2006

1. Benefit Administration Doesn’t Have to be a Gamble! Rich Gordon – Charon Planning Janell Lockhart – Opis Management Resources Patrick Donahue – Saint Barnabas Health Care System April 20, 2006

2. Scope of H&W Administration • Two interrelated components of “administration” • Transactions • Enrollment • Carrier integration • Payroll integration • Retirees • FSA, Parking, Transit • COBRA, Direct Billing • Communication • Personalized communication • Customer service

3. Environmental Factors Impacting Plan Administration & Communication • Rising healthcare costs • Cost of inaccurate data and transaction errors is becoming more significant • Communication/education needs associated with CDHP, HRAs, Wellness, Rx and Life Events • Plan complexity – fewer plans but more employee decisions • Growth of the web and availability of good web solutions

4. Communication Channels • Not Great • Carrier booklets, multiple enrollment forms and Word documents in a folder • Better • Single, consolidated enrollment form and a consolidated booklet • Best • One-on-one enrollment counselors • “High touch” call counselors • Personalized, ‘just in time’ web

15. Communication Solutions Web Technology • Get started! • Today’s Web penetration is significantly higher than it was two years ago—and in another two years it will be significantly higher than it is today • Focus on those who do have access and not solely on those who don’t • Create a short term strategy to get in the game • Build it and they will come! NOT

16. Communication Web-based Technology Solutions • Communication/Education • Imbedded with HRIS or outsource provider technology • Independent 3rd party • Online Benefits • Enwisen • Authoria • Workscape • Others

17. Manual Cost with Percentage Business Process Cost Technology Savings Enroll in Benefits $98.94 $21.79 78% Review Benefits Summary $11.71 $3.39 71% Request Dependent Personal Information $15.55 $3.81 75% Request Dependent / Beneficiary Coverage $15.55 $3.81 75% Request Savings Contributions $5.09 $2.75 46% Request Savings Fund Allocations $5.09 $2.75 46% Family Status Change $29.45 $11.66 60% Why Bullish on Web? • Effectiveness • Cost Source: The Cedar Group, 2005

18. Top 3 DriversOutsource vs. In-House • HRIS automation tools • HRIS automation has improved • ADP – eXpert, Enterprise, HR/Benefits Portal, Perspective • Ceridian – eSource, Source • Oracle/Peoplesoft – v 8.x • mySAP • Lawson • Others • Deployment expertise and support is critical

19. Top 3 DriversOutsource vs. In-House • Perceived value of sophisticated communication alternatives such as Web and professional call center • Short and long term plan design strategy • HSAs, Wellness, CDHC • Employee population makeup

20. Top 3 DriversOutsource vs. In-House • Opportunity to take advantage of transactional efficiencies including human capital resource allocation, data integration and data cleansing sophistication. Identify costs for various alternatives: • Human capital • Technology infrastructure • Technology costs • “Leakage”

21. Case Study Opis Management Resources, LLC.

22. Opis Management - Background • Employee population • 1,900 employees • 80/20 mix of blue/white collar • Predominately female, middle age • High turnover • Administration • Decentralized enrollment – benefit designees • Database maintenance using Ceridian Source 550 • Eligibility keyed/fed to various carrier through portals • Carrier billing – reconciliation nightmare

23. Opis ManagementAdministration Goals • Long term goal • Web-based administration • Short term goals • Reduce time/paperwork of enrollment/activity process • Increase data integrity in HRIS/vendor systems • Reduce premium leakage

24. Opis Management Environmental Analysis • Diagnostic process • Tasks performed on day-to-day basis • Amount of time needed to perform tasks • Corresponding cost for each task • The “why” behind each process • Identified current cost of administration • Enrollment • Response to employee questions • Payroll/HRIS resources • Eligibility transfer to insurance carriers • Carrier billing

25. Opis ManagementChallenges & Weaknesses • Limited resources • Not a lot of people • Not a lot of money • Communication/Technical Hurdle • Benefit designee at each site facilitating enrollment process • Employee population not computer-savvy • Multiple vendors • Each with own way of doing things • Multiple forms, photo-copying • Keying data into multiple portals

26. Opis ManagementOpportunities & Strengths • HRIS • System in place - maximum utilization not realized • Company size • Able to respond quickly • Face-to-face contact with employees • “Quick fix” • Relatively simple solutions to achieve short term goals

27. Opis Management Senior Management Presentation • Presentation to Chief Financial Officer • Delivered objective evaluation • Provided information in an easy-to-digest format • Presented multiple viable options • Full Outsourcing • Partial Outsourcing • Process Improvements

28. Opis ManagementKey Findings • Assumes a 37.5 hour work week and 2 Corporate employees • Does not reflect time spent by bookkeepers in the field

29. Administration Impact with Full Transactional Outsourcing • With electronic interface, accuracy improvement • Saves 64 additional hours of technical resources annually

30. Administration Cost with Full Transactional Outsourcing * Annual Fee

31. Administration Impact with Interfaces & Process Improvements

32. Cost of Administration with Interfaces & Process Improvements * One time fee

33. Opis Management Results • Short Term • Electronic data integration with vendors • Single enrollment form • Self-billing • Cost savings projections were exceeded! • Upcoming • Online communication site – My Benefits View • Reference tool for benefit designees • Employee-based self-service solution

34. Case Study Saint Barnabas Health Care System

35. SBHCS Background • Organizational overview • 14,000 full time employees • 15,000 benefit eligible employees • 37 number of facilities • 7 Unions with 4,400 members • 3,000+ turnover and 2,200 life events annually

36. SBHCS Philosophy • Focus on “three satisfactions” • Patient • Physician • Employee • McDonald’s as template

37. SBHCS Background • History • Multi-hospital mergers in 1996-1997 • Many plans/plan designs/vendors • Limited resources • 78 HR designees in field locations • Small corp HR staff – 9 total/3 benefits & comp • HRIS environment • Peoplesoft – 7.5 (55% of employees) • ADP – 1.0

38. SBHCSOutsource Relationship • 1997: Outsourced benefit administration/call center • 2000: New H&W vendor • 2004: New DC/DB vendor

39. SBHCSAdministration Challenges/Goals • High level of service • Low and declining fees • Proactive account management

40. SBHCS Outsourcing • Enrollment • Paper enrollment kits • Web tools in OE • Face to face for new hires • Call counselors • Carrier data integration • Call center- high touch vs high tech • Fulfillment

41. SBHCS – Lessons Learned • Managing the outsourced relationship • Managing management expectations • Pitfalls • Successes • Results • Future direction

42. Conclusions • Understand your costs • Create costing models for alternative solutions • Have a short term and long term plan • Scour the marketplace • Outsourcing solutions are not for everyone and are not ‘all or nothing’ • Developing a strategic plan • Ensuring that the qualified/expert support is in place prior to moving to implementation

43. Thank You! Questions