Category Archives: health insurance

The Incredibly Shrinking Carrier Market

It’s official: Anthem announced this morning plans to purchase Cigna for more than $48 billion.

Word Cloud Merger & Acquisitions

Word Cloud Merger & Acquisitions

Coming on the heels of Aetna’s $37 billion proposed deal to acquire Humana, the Anthem-Cigna proposed merger, were it to be given the green light by regulators, would inevitably reshape the health-insurance landscape and provide employers with one less option to consider. But according to experts I spoke to earlier today, deals like the one announced this morning also have the potential of being a boon to employers and employees.

If the Anthem-Cigna transaction goes through, Anthem will have more than $115 billion in pro forma annual revenues, based on the most recent 2015 outlooks publicly reported by both companies. Anthem President and CEO Joseph Swedish would serve as chairman and CEO of the combined company and Cigna’s President and CEO David Cordani would take on the titles of president and COO.

Here’s Swedish’s take on the proposed merger …

“We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve. The Cigna team has built a set of capabilities that greatly complement our own offerings and the combined company will have a competitive presence across commercial, government, international and specialty segments. These expanded capabilities will enable us to better serve our customers as their health care needs evolve.”

And Cordani’s take …

“The complementary nature of our businesses will allow us to leverage the deep global health care knowledge, local market talent, and expertise of both organizations to ensure that consumers have access to affordable and personalized solutions across diverse life and health stages and position us for sustained success.”

There’s been three national players for a while, with all three of them trying strengthen their portfolios through mergers, explained Tucker Sharp, global chief broking officer at Aon Hewitt in Somerset, N.J. “Someone can put out a headline that says, ‘Five carriers become three.’ But there really have been three national players and what’s happening here is really about building scale … .”

Sharp also noted that lately there’s a bit of merger one-upmanship going on between the carriers and providers. For some time now, he said, the hospitals and physician groups have quietly been merging to get the upper-hand in negotiating with the carriers. Now, much like “an arms race,” you’re seeing the insurer carriers trying to improve their leverage.

At the end of the day, he said, the operational efficiencies and greater scale gained from these mergers could lead to better deals with health providers and benefit employers.

When I asked Sharp if there’s anything HR leaders should be doing differently in light of the Anthem-Cigna news, he said nothing at the moment, noting it’s going to take time for things to work their way through the regulators. If you’re an HR executive, he added, there’s probably nothing you need to worry about for the rest 2015 and 2016.

I also asked Steve Wojcik, vice president of public policy at National Business Group on Health in Washington, for his assessment of the announcement.

His response: “There are some potential upsides and some potential downsides. In the end, we’re looking for some of the cost savings and pricing to trickle down to the employers and employees. But there also are obviously some concerns, because there are only a few players left standing—so employers that want to put their plan administration out to bid are going to have fewer bidders … .”

Wojcik predicts that the Aetna-Humana deal will probably meet less resistance from regulators than the Anthem-Cigna deal because Humana is a smaller player in the employer market, though a much bigger player in the Medicare market.

In evaluating these deals, he said, regulators need to factor in that the health insurance market is dynamic, not static. They’re going to need to weigh into their thinking, he explained, some of the new entities, such as accountable care organizations, that have emerged in recent years and the impact they’re having on the overall market.

 

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CDHPs Are Closing the Satisfaction Gap

employee health 1Traditional health insurance plans may still be the most popular option among employees, but consumer-driven plans are beginning to catch on with the workforce.

That seems to be the biggest takeaway from new data coming out of the Employee Benefit Research Institute.

Along with Greenwald & Associates, the Washington-based non-profit research institute recently conducted a survey of nearly 2,000 adults between the ages of 21 and 64, who had health insurance through an employer or purchased health insurance on their own, either directly from a carrier or through a government exchange. According to EBRI’s report on the findings, employees enrolled in traditional health plans are expressing greater satisfaction with their coverage than those in consumer-driven health plans, “but the ‘satisfaction gap’ appears to be narrowing.”

Generally speaking, 61 percent of traditional-plan enrollees described themselves as “extremely” or “very” satisfied with their health plans, compared to 46 percent of those in CDHPs, and 37 percent of employees enrolled in high-deductible health plans.

According to EBRI’s Paul Fronstin, however, overall satisfaction rates have been on the upswing among CDHP enrollees in recent years, while the opposite is true for those participating in traditional health plans.

Cost differences may help explain the emergence of this trend, notes Fronstin, the director of EBRI’s Health Research and Education Program and author of the aforementioned report.

Forty-eight percent of traditional-plan participants said they were “extremely” or “very” satisfied with their out-of-pocket costs when EBRI conducted this same poll in 2014. At that time, 19 percent of high-deductible health plan enrollees said the same, as did 26 percent of CDHP participants. In terms of contentment with what they’re paying out of their own pockets, satisfaction rates for all three groups have been trending upward since 2011, according to EBRI.

In addition, employees in CDHPs or HDHPs were less likely than those in traditional plans to recommend their health plans to friends or co-workers, and were less apt to stay with their current plans if given the option to switch plans—as was the case in past years, according to EBRI.

But, as the survey found on a broader scale, “the percentage of HDHP and CDHP enrollees reporting they would be extremely or very likely to recommend their plan to friends or co-workers has been trending upward,” the report notes, “while it has been flat among individuals with traditional coverage.”

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Looking to the Future for Total Rewards

It’s been 15 years since the American Compensation Association changed its name to WorldatWork, reflecting the group’s decision to increase its footprint beyond the world of compensation and embrace a broader total-rewards approach.

ThinkstockPhotos-175679126This year, the Scottsdale, Ariz.-based HR association celebrates its 60th anniversary. And with that milestone comes a revamped total-rewards model.

Announced during the opening session of this week’s WorldatWork’s Total Rewards 2015 Conference and Exposition in Minneapolis, the new model now includes the verb “engage” (which joins attract, motivate and retain in describing total rewards’ contribution to the organization) and the addition of “talent development” as a sixth element of the total-rewards strategy.

WorldatWork’s previous model, introduced in 2006, featured the following five elements: compensation, benefits, work/life, performance and recognition, and development and career opportunities.

Anne Ruddy, president and CEO of WorldatWork, noted that the time was right for the association to re-examine its total-rewards model and make it more relevant to the kinds of issues members are facing today.

Models aside, it would seem many of those attending this year’s conference have their sights set on the future. On Monday afternoon, I attended a packed session presented by Steven Gross, a senior partner at Mercer, entitled “Total Rewards 2020: What to Expect in the Next Five Years Based Upon a Lifetime of Experience.”

Five minutes before the session began, attendees were being turned away at the door because the room was already filled to capacity. (Fortunately, for those unable to attend, the session was scheduled to be repeated the following day.)

Gross, who is based in Mercer’s Philadelphia office, gave attendees a quick rundown of the external factors influencing total rewards today, a glimpse of what the future might look like five years from  now and what steps employers ought to take to prepare for that world.

As might be expected, Gross led off his presentation by acknowledging the crucial role changing workforce demographics is playing in shaping the future of total rewards.

“It’s not only about people living longer, but people working longer,” Gross said. “Think about the implications of one quarter of folks over age 65 and 15 percent of folks over age 70 in the workforce”—and the kinds of challenges these changes are going to present to employers.

Generational differences, he said, are also likely to have an impact, as employers face the formidable challenge of addressing “the different sensitivities” of traditionalists, baby boomers, Gen Xers and millennials.

Other external factors Gross cited included income disparities, diversity, globalization and technology.

Gross predicted that, five years from now, companies will be much more focused on “core employees” who are viewed as being crucial to their organization’s success, will continue to put more weight on individual accountability, and will pay greater attention to personalizing rewards to reflect greater workplace diversity.

Going forward, he said, companies will also be much more focused on “best fit rather than just best practice.” (In other words, he explained, does your total-rewards strategy fit the culture of your organization?)

What’s more, he added, do-it-yourself benefits programs will be far more common five years from now, with self-service becoming an even greater fixture of tomorrow’s workplace. (Gross also joined the chorus of those predicting employers will increasingly be getting  out of the “healthcare business.”)

I suppose we’ll know in five years which of Gross’ predictions were on target—and which ones missed the mark.  But of this we can be fairly certain: Tomorrow’s total-rewards landscape isn’t likely to look anything like the one that exists today. As Gross reminded those attending his session, there are simply too many significant forces at work to ensure that that’s the case.

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The Pitfalls of Consumerism

Do you put as much thought into selecting your cellphone plan as you do for selecting which doctors and specialists to see for your medical plans?

This question was posed at the National Business Coalition on Health’s annual conference in Washington by Shawn Leavitt, senior vice president of global benefits at Comcast Corp., during his keynote address.

“More than half of all consumers say they’re dissatisfied with the cellphone plan they chose,” he said. “So, if people are having a hard time selecting a cellphone plan that’s right for them, then how do we expect them to make the right decisions with respect to their health plan and health providers?”

The subject of Leavitt’s presentation was that healthcare consumerism — high-deductible plans that put more of the onus for financing and managing healthcare on employees — will not work unless employees receive more expert direction and guidance to help them.

At Comcast, said Leavitt, HR has enlisted so-called “expert shoppers” to help employees with these crucial decisions. It’s coupled that with outreach to certain locations within its vast empire to focus on subsectors — such as call centers — where employees were making heavy use of emergency rooms (and driving up costs) to educate employees on alternatives such as urgent care centers.

“We understand that it’s hard to expect employees who are juggling multiple responsibilities to make the sort of far-sighted decisions we’d like them to make when they’re faced with something as immediate as a sick child,” said Leavitt.

Comcast is using its own marketing wizardry to help educate employees on making wiser healthcare choices, he said. “We have become very good at getting consumers to pay to watch bad movies and reality television shows,” said Leavitt. “We’re focused on bringing that same level of expertise to help our employees make good decisions on healthcare.”

The risks of consumerism were also highlighted by Dr. Mark Fendrick during a panel discussion on pharmacy drug benefits. One of the main questions the panel grappled with was whether it was right for plan sponsors to exclude certain medications from plan coverage.

“If you’re doing that just to save money, I don’t think it’s a good idea,” said Fendrick, director of the University of Michigan’s Center for Value-Based Insurance Design. “I think it’s OK if the drug has been proved to be ineffective or counterproductive or if cheaper generics of equivalent effectiveness are available. But do it for the right reasons.”

The trend of pushing more costs onto employees can end up doing more harm than good if it isn’t managed carefully, he said. “Raising deductibles and pushing more of the cost onto employees without giving them support necessary for needed treatment and medications will simply cause more of them to forgo what they need,” he said. “I’ve had patients tell me that until they exhaust their deductible, they’re not going to do many of the things I’ve told them they need to do to maintain their health. And that goes against what this whole idea of consumerism is supposed to be about.”

 

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Survey Finds Skepticism on Private Exchanges

skepticsimThe National Business Group on Health’s latest health-benefits survey finds that large employers anticipate holding their healthcare benefit costs to about 5 percent next year, in part by continuing to shift more of the cost burden to employees, broadening their use of wellness programs and making high-deductible consumer-directed health plans their only benefit option (the number of employers that plan to do this for next year jumped by 50 percent).

Another option that’s attracting interest from large employers is private exchanges. Just 3 percent of large employers will offer their active employees health coverage through a private exchange next year, the survey finds; however, 35 percent said they’re considering doing so for 2016 or beyond. But employers are skeptical about the ability of these exchanges in two key areas: Only 17 percent said they’re confident that exchanges will do a better job of engaging employees to make better healthcare decisions and just 10 percent believe they’ll control costs better than their own plans.

Another report, this one from Accenture, finds that private exchanges are experiencing “hyper-growth” and that enrollment could exceed that of the public health exchanges (which have enrolled about 8 million Americans so far) by 2017. Approximately 3 million individuals could enroll in health plans via private exchanges this year alone, according to Accenture.

Whether or not these exchanges will be successful in engaging employees and lowering or stabilizing healthcare costs may depend on the features they offer: According to an Accenture survey of 2,000 U.S. consumers, 87 percent identified “tools to help project my expenses and select coverage levels” as an important feature, and 58 percent identified this as a “very important” or “critical” feature.

For readers wanting a bit more information on private exchanges, check out this comprehensive checklist by HREOnline’s benefits columnist, Carol Harnett.

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A Few Surprises in Study on Hourly Workers

490136049 -- gavel and clockI met with some folks from St. Louis-based Equifax Workforce Solutions during the Society for Human Resource Management’s conference in Orlando (June 22 through 25) and they shared with me some stats they compiled recently reflecting the potential impact of the Affordable Care Act that even they admitted had some surprises in them.

Working toward Jan. 1, 2015, when the majority of the ACA’s employer mandate takes effect, the company had just released its Equifax Workforce Solutions June 2014 report, highlighting “key indicators of how the ACA will affect business[es] and what they can do to ensure compliance [thereby avoiding penalties] as the regulations continue to go into effect,” as Mike Psenka, senior vice president of Workforce Analytics for Equifax Workforce Solutions (formerly TALX), put it.

For the record, and some important reading, here is the press release and here is the infographic, based on Equifax data culled from 500 million consumers and 81 million businesses worldwide.

Surprisingly — and in keeping with employers making employee-schedule-and-status adjustments to prepare for the ACA’s mandate that all employees working an average of 30 hours or more per week be offered healthcare coverage — 66 percent of the current U.S. workforce is now hourly, accounting for more than 73.6 million active employees, and 59 percent of them are working more than 30 hours per week, according to the study. (Those numbers were higher than anticipated, the folks from Equifax told me.)

Remember, for these workers, employers must track hours for each employee over a 3-to-12-month measurement period to determine healthcare-coverage eligibility. The study found average workloads vary greatly by industry and can be a key indicator of workforce eligibility. “For example,” the report states, “hourly employees in the finance industry work an average of 37 hours per week while those in the restaurant industry work an average of 23 hours per week.”

Also somewhat surprising — to me as well — was the fact that 71 percent of hourly employees have been at their jobs longer than 12 months, which represents “a significant number of workers who may become eligible for coverage after their employer’s first measurement period,” the report says.

And don’t forget employers must also offer affordable coverage to all eligible employees, meaning the monthly premium cannot exceed 9.5 percent of the employee’s income. Based on the average hourly pay rate by industry, as computed by Equifax, estimated maximum premiums can range from $108.80 per month (in the restaurant industry) to $251.20 per month (in the healthcare industry).

The goal here in releasing these stats, Psenka said, is not only to offer employers a few more tools for protection from potential penalties, “but also [to] ensure their valued employees receive appropriate — and affordable — coverage.”

Just bear in mind, as was underscored in an otherwise enjoyable, stress-free SHRM meeting, the clock is ticking and time to get this whole hourly, ACA-eligibility thing right is running out.

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Listening to the Data

I was having lunch the other day across the street from a noisy construction site. It wasn’t the best location in the world to read a book and enjoy a sandwich, but it was one of the few places I could find with some comfortable shade.

122399493As I sat there consuming my sandwich (and drink), I remember thinking to myself, “How in the world do these folks work eight hours straight with all that banging and clanging? I’m sure they were wearing protective gear to diffuse some of that noise, but despite the protection, it still had to be loud enough to drive a sane person crazy. (I eventually moved.)

If you’re like me, you probably know a few folks who’ve lost a decent amount of hearing as a result of the work they do. Some recognize they have a problem and have taken steps to remedy it, say by acquiring a hearing aid. Others are less aware, perhaps in denial or simply reluctant to do something about it. (According to the National Center on Hearing Assessment, only one in four people with hearing loss use hearing aids.)

When we think of the health and well-being of employees, a host of issues comes to mind. Diet. Exercise. Regular checkups. Hearing loss? Not really. But as a Better Hearing Institute press release sent out the other day to raise awareness on this issue points out, the problem of hearing loss is widespread, affecting more than 40 million Americans. And costly.

In an effort to bring attention to the issue, the American Tinnitus Association recently sent out its own press release, encouraging both employers and employees to be proactive. It urged employers to develop engineering controls to reduce overall noise output and implement administrative procedures to minimize workers’ noise exposure. Meanwhile, it asked workers to take control of their hearing health by using appropriate ear and noise protectors.

Of course, before either of these things are going to happen, employers and employees alike are going to have to get on the same page and acknowledge that a noise problem exists. Soon-to-be-released research suggests there’s a definite disconnect here between the perceptions of the two.

According to a survey of 1,500 full-time workers and nearly 500 benefits professionals by EPIC Hearing Healthcare ( a hearing-care provider), employees and employers each have a somewhat different take on the situation. Asked how many hours a day they believe their workplace is noisy, more than half (55 percent) of the employee respondents said it is noisy for more than one hour a day and more than one-third (36 percent) said it was noisy for more than three hours a day. In contrast, nearly 80 percent of employers said their workplace is hardly ever noisy.

The EPIC research also found nearly half of the employees felt the level of noise at work was damaging their hearing, even though less than one in four have had their hearing checked in the past two years.

In light of the above data and the impact hearing loss can have on productivity, employers shouldn’t be turning a deaf ear to this issue (excuse the pun). Indeed, they certainly have no shortage of tools available to them, ranging from reducing noise levels in their workplaces and providing employees with better protection to offering “financial support” through insurance products (EPIC’s business) and raising employee awareness.

Being this month is National Employee Wellness Month, I would think it might be as good a time as any for employers to revisit the state of their respective workplaces as far as noise exposure is concerned and the efforts that they’re taking to address the problem.

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The Problem with Free Health Screening

screeningThere was an interesting opinion piece in yesterday’s New York Times by Dartmouth professor H. Gilbert Welch, who argues that the Affordable Care Act’s incentives for free preventive care may actually work against one of the law’s stated goals of helping Americans become healthier.

Welch, a professor of medicine, says the ACA’s requirement that insurance plans include free screenings, such as mammograms, serve as an incentive for Americans to undergo screening yet do nothing to ensure they’ll follow up should those screenings uncover abnormalities that could be signs of disease. In other words, he writes, the law makes a distinction between screening and diagnosis that means people have an incentive to undergo screening while facing a disincentive to pursue additional tests and treatment should the screening uncover any abnormalities:

So the woman at lower risk for cancer — the one with no signs or symptoms of the disease — has an incentive to be tested, while the woman at higher risk — the one with the lump — faces a disincentive.

In many cases, this leads healthcare providers to, essentially, commit fraud by relabeling diagnostic tests as screening tests so patients don’t have to pay for services that can, in many cases, be quite expensive, writes Welch. Additionally, when screening tests are free, patients are less likely to consider the potential downsides of screening — false alarms, over-diagnosis and the “potential for a lot of out-of-pocket costs down the line.”

Welch suggests a fix: Eliminate the “mismatch between screening and diagnosis” by having patients share the cost of screening and diagnosis:

We need people to consider medical care carefully, and that’s what cost sharing is all about. Patients already share costs on what is arguably the most important preventive service, treatment for really high blood pressure, and for procedures as necessary for setting a broken leg. Why would we treat a much closer call — screening — any different?

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Will Employers Stop Offering Health Benefits?

Ezekiel Emanuel (an oncology doctor, professor of ethics at Penn and brother of Chicago mayor Rahm Emanuel) was one of the architects of the Affordable Care Act — which, as we all know, mandates that employers with at least 50 full-time-equivalent employees provide health insurance. So it’s a bit surprising to learn that Emanuel has just written a new book in which he predicts that, as a result of the ACA, most employers in the United States will have stopped offering health benefits to their employees by 2025.

Why will companies stop offering health benefits? Because, Emanuel argues in the book — Reinventing American Health Care: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System (how’s that for a title?) — the online insurance exchanges will provide employers with a viable alternative for doing so. Now, after you’ve picked yourself up off the floor from laughing so hard at the idea of Healthcare.gov being described as a “viable alternative” (although many of its worst bugs appear to have been fixed), note that Emanuel does acknowledge the botched rollout of the federal online exchange and some of the state ones, yet he describes others (such as Connecticut’s state exchange) that are working well. If all of the exchanges are fixed to the point that consumers can obtain health insurance by spending only 30 minutes or so enrolling, he says, then companies will indeed have a viable alternative to the expense and administrative hassles of providing benefits and can instead simply give their employees money to go out and purchase benefits on their own. The ACA’s excise taxes on high-cost health plans scheduled for 2018 are yet another incentive to get out of the health-benefits game, says Emanuel.

Private exchanges, which are essentially a defined-contribution approach to health benefits, have certainly sparked a lot of interest among employers lately. As many as 33 percent of respondents said private health exchanges would be their preferred approach to managing health care in the next three to five years, up from 5 percent now, according to Aon Hewitt’s Health Care Survey of more than 1,230 employers covering in excess of 10 million employees (Aon happens to be one of the vendors that offers a private exchange; others include Towers Watson, Buck Consultants and many smaller vendors). Brian Poger, CEO of consulting firm Benefitter, said at the just-concluded Health & Benefits Leadership Conference in Las Vegas that for many employees — especially low-wage workers with families — the health coverage available on public exchanges might be a better deal than that provided by their employers, considering that many have cut back or eliminated coverage for spouses and families.

Jettisoning traditional health benefits has yet to become a major trend among U.S. employers: Accenture estimated that 1 million employees enrolled in private exchanges last year, a tiny percentage of the nation’s workforce (although it also estimated that number could grow to 40 million by 2018). There is also the risk that employees on private exchanges will “buy down” — that is, purchase less-costly plans that may ultimately leave them with less coverage and worse health outcomes than traditional health plans, which tend to have “marginal” price differences, Mike Thompson, healthcare practice leader at PwC, told me last year. Companies that switch to private exchanges may also risk breaking the linkage between benefits and wellness, he said.

The expression “paradigm shift” is an overused cliché, but it’s clear we’re in one now when it comes to health benefits. Rest assured we’ll continue to cover this area closely.

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Innovation Central

One of the most dynamic sessions at this year’s Health & Benefits Leadership Conference was the “Ideas and Innovators” session, in which experts from a variety of fields give five-minute presentations summarizing their thoughts on what HR leaders should do differently with regard to benefits.

Here’s a sampling of what some of them had to say: Lindsey Pollak, a millennial workplace expert and spokeswoman for The Hartford insurance company, called on companies to encourage mentoring between baby boomers and millennials. “Ninety percent of the millennials we surveyed said they appreciated guidance from boomers,” she said. “Millennials are digital natives, so they can mentor boomers in the use of technology.”

Millennials want the ability to customize their benefits, she said: “Millennials weren’t given teddy bears as kids; they were taken to Build-a-Bear workshops — they’re used to having things tailored for them.”

The same Hartford survey found that 70 percent of millennials consider themselves leaders, whether in their families, workplaces and communities. Companies can harness this leadership spirit for health and wellness, said Pollak — yet must keep in mind that millennials have also proven to be slow to sign up for benefits such as disability insurance. “Millennials aren’t taking advantage of these benefits — you must reach them on this.”

Brian Poger, founder and CEO of consulting firm Benefitter, urged employers to consider getting out of the business of providing health benefits (perhaps an odd thing to hear at a conference devoted to employee benefits). “Most employee raises are being absorbed by rising healthcare costs,” he said. “Why not offer cash instead of health benefits?”

Poger cited a McKinsey survey that found 85 percent of employees would stay with their employer even if they stopped offering health benefits. Many employers are charging signficantly higher premiums for spousal and family coverage or dropping it altogether, he said, which can be a major hardship for families earning the U.S. median household income of $51,000 a year. “Giving employees cash to purchase a family policy on the exchanges may be a better deal for them,” he said.

Lexie Dendrinelis, health promotion and wellness leader at manufacturing firm Barry-Wehmiller Cos., discussed how her company has made leadership and culture — rather than exercise and eating well — the centerpiece of health and wellness. “People can’t focus on their personal health if they’re stressed out about an unsafe workplace,” she said. “Building trustworthy leaders and cultures is the best intervention.”

At Barry-Wehmiller, the company has committed to building a “caring culture” where “we are committed to sending our friends home safe, well and fulfilled.” The company uses incentives and rewards to highlight positive behaviors and takes a “holistic approach” to caring for its employees and families, said Dendrinelis. “We are looking at creating a thriving culture that will bring down healthcare costs.”

 

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