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Drewco Finds Relief with New Health Care Program

Two years ago, a custom machining shop in Franksville, Wisconsin was experiencing what companies of all sizes are now struggling with. Drewco's healthcare costs were increasing at a rate of 19 to 28 percent annually. So, they sought relief. What they found was an innovative healthcare demand management program through Corporate Health Concepts (CHC), a WMEP Resource Network Partner.

Putting the brakes on inaction

Increases in healthcare costs can often single-handedly cause a company to lose so much money that it is no longer profitable. CHC helped Drewco analyze what CHC affectionately calls "The Train Wreck" to show the impact of healthcare costs on the company's future bottom line. In this exercise, they analyzed what would happen financially, based on healthcare costs alone, if Drewco did nothing about its current healthcare situation.

CHC and Drewco then developed the firm's healthcare mission and identified the direction its people needed to head in that area. Since implementing that program, the 28-person custom machining shop has realized significant short-term savings and made progress towards controlling its long-term healthcare costs.

Drewco's CEO, Ann Pettibone, emphasized that her company views this initiative specifically as a cost-savings program. She estimates Drewco received a 3:1 return on investment in the first year. On insurance coverage alone, the company will save between $175, 000 and $200,000 over 5 years. Other savings are noted in terms of doctor visits avoided and the financial impact of improved employee health. When these are all factored in, Pettibone estimates a 24:1 return on the investment.

The program created for Drewco included:

Annual Health Risk Assessment. The group's health is assessed relative to the U.S. population. Risk mitigation strategies are developed for the group. Pettibone notes, "What drops out of this survey are the top health risks you have to deal with."

Biometrics screening. Blood pressure, cholesterol, and blood sugar are measured for each employee. These numbers become a baseline from which progress can later be measured. They often present a "wake up call," for people who had previously undetected conditions.

Presentation to employees. CHC educated the employees and their spouses about the program and how it might impact their own health and the financial health and sustainability of the company. This educational component empowers employees and their families to make important changes in lifestyle and diet.

Ongoing onsite counseling and group education. The weekly group education program specifically targets the high-risk issues of Drewco's employees as an aggregate. Class topics might include: stress management, nutrition, specific self-care subjects, and exercise. Each employee also received an individualized plan of actions to optimize his or her health.

Changes to the company's insurance coverage. CHC helped the company to evaluate the various insurance options available. CHC also surveyed Drewco's employees to find out what they felt was most important in an insurance program. They then designed a plan to meet the corporate fiscal goals while incorporating what the employees wanted. Drewco chose a traditional insurance plan with an increased deductible, then supported its employees in that gap with the demand management program (reduces the need for doctor visits) and added an alternative insurance option.

Follow-up. CHC evaluates the doctor visits avoided and the subsequent savings. Drewco receives an evaluation of the success of the program and a cost savings analysis. For example, CHC can detail the savings achieved from weight loss, smoking cessation, or lowered cholesterol levels.

"The assessment piece helps us know how to spend our healthcare dollars, in terms of education," Ann noted. She emphasized that the company doesn't see any individual's health information, only aggregate figures and with new HIPA regulations, CHC can provide a buffer between employers and individual case data.

Results are rewarding

"Our employees have been extremely appreciative," Ann noted. "When an employee stops you to say that he's improved his health due to this program, it's a great feeling." One employee lowered his cholesterol from 270 to 137 and lost 20 pounds. He said the biometrics and health risk information were a wake-up call. Ann said he told her, "I want to be here for my boys."

Drewco's program includes weekly counseling or education by CHC staff. It speaks volumes that a job shop whose mission is to complete custom projects on tight deadlines is able to carve out time each week for the employees to attend these functions. Pettibone finds it is time well spent. "It's worth it, dollar-wise."

"Our employees clearly understand now how their own health impacts the whole company." The increased profit can flow back to Drewco employees through profit sharing. "It's a dollars and cents thing. In this recessionary period, we've cut many items. But we won't cut this program. It's definitely a bottom-line experience."

Copyright 2003 by WMEP.org

WMEP provides technical expertise and hands-on implementation assistance to small and midsize manufacturing firms on advanced manufacturing technologies and business practices includinglean manufacturing, ISO, value chain management, and strategic repositioning services for manufacturers and manufacturing facilities located in Wisconsin.

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