DR. JAMES TRUCHARD’S PRESCRIPTION FOR CUTTING HEALTH CARE COSTS & BOOSTING EMPLOYEE WELLNESS
The fitness center on the first floor of National Instruments Building B bears a striking resemblance to workout rooms in any health club. The usual collection of machines stands ready – treadmills, elliptical trainers, devices that work arms, shoulders, legs – and in the late afternoon, traffic picks up as people come through the door for their daily exercise session. Several staffers from the Cooper Institute in Dallas stand by to help with individual exercise concerns.
The fitness center is perhaps the most visible aspect of National Instruments’ emphasis on employee health and wellness. But right out the door are sand volleyball courts, and scattered around the company’s three-building campus in Austin are basketball courts and walking trails. Dr. James Truchard, the company’s CEO, has viewed employee health and wellness as an important component of NI’s culture since he started the company in 1976. Truchard was joined by Mark Finger, NI’s VP of Human Resources, to discuss the company’s health and wellness efforts.
“We want National Instruments to be a national role model in employee health and wellness,” Truchard said.
The emphasis on healthy employees stems from pragmatic concerns. Like other companies, NI saw its health care costs going up as much as 13 percent each year. As a self-insured company, NI was spending a lot of money on health care.
“When you forecast that out, eventually it doesn’t work,” said Finger. “We saw a car crash coming.”
Finger said NI did its best to negotiate its health care costs.
“At first we did some plan design changes and then we rebid our network,” he said, “all things I’d call low hanging fruit. But eventually, there just wasn’t any low hanging fruit anymore to impact our incremental costs.”
The answer: Either get healthier or pass a lot more in health care costs on to employees.
Finger cited a Michigan study charting age and the number of risk factors for health – things like smoking and high cholesterol.
“If you can move people from five risk factors to two, the cost is one-third,” he said.
NI began offering health risk assessments – HRAs – to its employees. The company encountered some resistance from employees who didn’t want to go through the process, so it used a carrot-and-stick approach.
“We make it personal,” Finger said. “We say, ‘If you want your premium to stay where it’s at, let’s get healthier.’”
NI employees pay $15 per month for health insurance, but if they don’t take the HRA, the cost is $60 per month. All but seven of NI’s 2,500 Austin employees took the HRA the first year it was offered. The company established an onsite clinic because the doctor has a strong impact on an individual’s health.
“A lot of our folks are new grads who came in from other parts of the country and they don’t have a doctor,” said Finger. “When they don’t have access to a doctor, how do you make an impact on health?”
The clinic, managed by Take Care Employer Health Solutions, LLC, was set up to offer only acute care. Now it also offers preventive and primary care.
“I tell the story of one of our engineers who had some health concerns,” Finger said. “He said, ‘I’m a guy and I’m not going to the doctor, I’ll tough it out.’ But then he decided to see the doctor, who said, ‘Go across the street immediately.’ [St. David’s Hospital is across the street from National Instruments.] I don’t know if we saved his life, but maybe.”
Spouses have always been covered under the NI plan.
“When we were starting the company we were all fairly young,” said Truchard, “and having care for the family was part of our philosophy, and that set the stage for how we were going to operate over the years.”
But spouses account for 40 percent of a company’s health care costs. Finger said there are limits on covering them.
“The spouses that are covered on our plan – most of our employees have their spouse on the plan – can come to the clinic,” he said. “If you’re not covered on our plan, we don’t want to get into the paperwork of billing.”
Most of NI’s employees are male, and because they’re generally young, baby issues are common, said Finger.
“When you hire new grads, those new grads get married and have kids,” he said. “We deal more with baby issues and adoptions, which is a great thing to deal with.”
But it’s the youth of those employees that can also open them up to potential health problems.
“We have a lot of young folks right out of school, so they are learning,” Truchard commented. “In college you don’t always follow the best routes or rules. They do need to grow up a little bit.”
For example, eating habits might need attention. National Instruments participates in the HEED program (Healthy Eating Every Day) to encourage employees to adopt good eating habits. The program is run through the Cooper Clinic, and covers 12 or 13 weeks. But some employees rejected the program, because their weight loss needs were greater than the average employee. NI responded by developing a Super HEED program. Finger said employees who have poor HRA results consult with a doctor.
“When you find out your cholesterol is high and your blood pressure is high, you come back for the physical,” he said. “Now you have a chance to change behavior – you’ve got to get educated first. That’s the bet we’re making.
“Obesity is really the issue,” he said. “Smoking is bad, but obesity is really the issue – that’s where the costs are. If we could reduce that number, that’s the one. If you reduce weight, that weight loss would have the greatest impact on their health and our costs.”
Productivity would be enhanced, said Finger. Absenteeism reduced.
“I think we’re on that path and healthier, but we have to get even healthier,” he added.
Finger elaborated on the company’s strategy to get a healthier work force.
“It’s likely we’ll go smoke free next year,” he said. “At Dell, they had 12 percent smokers and they are now down to 3 percent. We’re at 6.5 percent, and we want that to go down to two percent. We’re going to require an HRA every year. We’ll also require age-based physicals. I’m over 50, so I need to get a physical every year, instead of an HRA. Under 30, the physical will be every three years, 30 to 50, every two years. We’re going to require that so you start to catch some of this stuff via screenings, and catch it earlier.”
Like most companies these days, National Instruments is keeping an eye on the Affordable Care Act – health care reform. Right now, they’re unsure how it will affect the company’s efforts to keep employees healthy.
“Obvious things that could have been done were not done,” Truchard remarked. “Some of the things you’d hope for like tort reform, for example, that should have been a part of this weren’t done. Expecting something different would be challenging.”
Although tort reform is not an issue in Texas, NI has employees in California and other states, and is affected by the issue there.
“The health care reform act promises a lot,” Finger commented. “So far all we’ve seen is it increases costs. From our perspective there’s nothing that begins to manage costs until 2014 with the health exchanges. We don’t know whether that’s real or not.
“Covering children up to age 26 sounds great, but for NI to be covering the cost of an able bodied 24-year-old? Our competitors are not doing that – our competitors outside the U.S. are not doing that.”
When 2014 rolls around, it will be time to make a crucial decision.
“Do we continue with the current coverage or get out of the health care business?” Finger asked. “As it now stands, the decision will be in 2014 – if you pay a $2,000 fine [per employee] you can get out of the health care business.”
A recent McKinsey study found that 30 percent of the nation’s employers plan to get out.
“If enough big companies go, you may see a tidal wave,” continued Finger. “We don’t want that to be the answer, but we cannot exclude it as an alternative because at some point, it’s a math issue. It’s not that NI is not spending enough in health care – it’s that the cost is too high.”
Finger and NI’s COO/CFO, Alex Davern, conducted town hall-style meetings on the issue with employees.
“It was straight talk,” he said, “trying to stay out of the politics and just give you factual information. I think a lot of people came out of those meetings thinking, ‘This is not what I thought it was going to be.’ It has and will bring in a lot of cost in taxes.”
Companies smaller than NI face a tougher struggle to hold down their costs. Finger says it’s insurance. Typically, a smaller company has to be fully insured. That is, the company buys insurance and the insurance company assumes the risk.
“So, regardless of what your health and wellness efforts are, your premiums are set by what happens in the community,” Finger said. “You can drive health and wellness from the aspect of the right thing to do, but you may not be getting any benefit from your efforts because you’re rated against the whole community.”
Which brings us back to NI’s employee health and wellness program. Because it’s important for its people to be healthy, the company is flexible when it comes to working out.
“Most people work out at lunch,” said Truchard.
In the evenings, employees can pursue team sports. NI has 30 sand volleyball teams, as well as basketball leagues. A cycling team boasts more than 100 members. Truchard says small companies can take a page from NI’s playbook and start an athletics program.
“Even as a small company we had sports teams and cycling is inexpensive – those kinds of activities can be encouraged,” he said. “As a small company, you work into things you can afford. You can’t have everything a large company would, but even as a small company we had memberships available to the local gyms. There are alternatives.”
“If you’re with your friends playing volleyball against the archenemies, it just helps build the community we are,” added Finger. “I look back to when I played softball – they are still some of my best friends because when you do athletics together it’s pretty enjoyable. When you’re together with other NI employees participating in sports we think we win, so we encourage it.”
Truchard thinks the company’s health and wellness plan is good for employee retention, too.
“We’ve been one of the Fortune 100 “Best Places to Work” 12 years running,” he said. “There are a lot of elements that go into that, but obviously health benefits are a part of that.”
Finger added: “I think part of retention, in today’s workplace, is trust. When our employees see the kind of investment we’ve made in their health it builds trust. They see long term decisions to balance the needs of the employees, shareholders, customers, and suppliers, and trying to be fair and reasonable.”
“We talk about the one hundred year plan – it’s about trust and the environment where they can count on you as an employer to do the right things,” said Truchard.
Part of building trust is setting an example. So do NI employees see Truchard in the workout room?
“No, but I do have a very large garden I take care of,” he said with a smile. “That’s my alternative plan.”
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