Wellness The Good The Bad And The Opportunity: The Good The Bad And The Opportunity s6i3m

WELLNESS THE GOOD THE BAD AND THE OPPORTUNITY

THE OMNIWELL MODEL

RONALD C. STOLL

Copyright © 2012 by RONALD C. STOLL.

Library of Congress Control Number: 2012916960

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Ronald C. Stoll, Vice President of Wellness Team Excellence, Inc. Ph: 941-966-3031; Cell: 727:215-0587; Fax: 866-264-8007 Email: [email protected]; Web: www.teamexcellence.com

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Contents

INTRODUCTION CONNECTING THE DOTS

1. THE EMPLOYMENT RELATIONSHIP

THE MARKS AT THE HEAD OF THE TRAIL

WELLNESS AS A WORKPLACE INITIATIVE

THE OMNIWELL MODEL

BASE ASSUMPTIONS AT THE CORE OF THE OMNIWELL MODEL

THE BASIS OF THE EMPLOYMENT EXPERIENCE IN THE US

THE EMPLOYMENT RELATIONSHIP AND ITS IMPLICATIONS

2. MANAGEMENT THEORIES

THEORIES THAT HAVE IMPACTED EVER-EMERGING MANAGEMENT PRACTICES

THE GENERATIONAL DIFFERENCES OF THOSE WHO HAVE AND WHO WILL TRED THE PATH

IT IS NOW TIME TO FORGE A NEW PATH

3. PERFORMANCE MANAGEMENT

ABILITY MUST BE A CRITICAL WAY POINT GOING DOWN THE PATH TO WELLNESS

PERFORMANCE MANAGEMENT- THE REQUIRED METHOD FOR GETTING EVERYONE ON THE SAME PATH

GETTING IN SHAPE FOR THE TRIP DOWN THE PATH: THE REQUIREMENT OF EDUCATION AND COMMUNICATION

INDIVIDUAL ENERGY AND INTRAPRENEURIAL SPIRIT EMBEDDED IN THE GATE OF EACH SOJOURNER ON THE PATH

THE PSYCHOLOGICAL COMMITMENT TO MOVING THE TROOPS

DOWN THE PATH: THE TEAM COVENANT

THE TEAM COVENANT IS THE COM THAT POINTS THE WAY ALONG THE WELLNESS PATH

4. HOW WE GOT HERE

PROFESSIONAL EMPLOYER ORGANIZATIONS AND THEIR POTENTIAL ROLE IN WELLNESS

THE STATE OF HEALTH INSURANCE AND BENEFITS AT OUR CURRENT LOCATION

THE PATH ALONG WHICH HEALTH INSURANCE HAS COME

THE DEBATE OVER ALTERNATE ROUTES TO PUBLIC AND GROUP HEALTH INSURANCE DESIGNS

MEDICARE AND MEDICAID TAKE THEIR PLACE ALONG THE ROUTE

PHYSICIANS ESTABLISH STAND-ALONE FACILITIES TO DELIVER SERVICES TO THOSE WHO THEIR WAY

THE CONSIDERATION OF VALUE AS IT RELATES TO THE AVAILABLE SERVICES ALONG THE WAY

FOG AHEAD ON THE TRAIL: DISSATISFACTION WITH THE MEDICAL SERVICES INDUSTRY

EMPLOYERS ARE IN THE CRITICAL POSITION TO GUIDE THE WAY TO WELLNESS

THE OBAMA PLAN IS A BEND IN THE PATH

5. THE PATH OF HEALTH CARE COSTS

FACTORS IN THE HEALTH CARE PURCHASING DECISION

THE NEW PATH TO INFORMED HEALTH CARE CONSUMERISM

RESOURCES TO GUIDE THE ALTERNATIVE HEALTH CARE DECISIONS

USING THE MAP IN THE OMNIWELL MODEL

HOW TO AVOID GETTING LOST IN THE UNFAMILIAR TERRAIN OF HEALTH CARE

6. FROM THE EMPLOYEES’ PERSPECTIVE

MITIGATING THE STRESS OF NOT KNOWING WHAT LIES AHEAD

MENTAL DETOURS DISTRACT EMPLOYEES FROM EFFICIENT PERFORMANCE

THE NEW FRONTIER LIES AHEAD

THE REASONS EMPLOYEES MIGHT MAKE WRONG TURNS AND SOME PROVEN COURSE CORRECTION TOOLS

WE CAN’T KEEP RUNNING AROUND THE ROUND-ABOUT IF WE INTEND TO MOVE FORWARD

7. FORGING A NEW PATH

FOCUSING DOWN THE ROAD WHILE MAKING NEAR TERM COURSE ADJUSTMENTS

ALTERNATE VEHICLES TO GET TO THE DESIRED DESTINATION

IF ALL THE FILLING STATIONS ARE CONTROLLED BY THE SAME COMPANY THE BENEFITS OF COMPETITION ARE NONEXISTANT

AUTOMATIC PILOT IS UNACCEPTABLE AND INDIVIDUAL RESPONSIVE BEHAVIOR IS THE REQUIREMENT

8. IMPLICATIONS

WE COULD BE LOOKING AT A WRECK JUST AHEAD

WE HAVE NOT AVERTED THE WRECK

IS IT POSSIBLE THAT LEGISLATION WILL PROVIDE LONG TERM SAFE JOURNEY?

9. CONCLUSION

EVERYONE HAS A ROLE TO PLAY IN THE MAGNIFICENT PATH THAT IS AVAILABLE RIGHT NOW

Appendices.

DISCLAIMER

This publication is not a substitute for the reader’s insurance advisors, ants, lawyers, or any other personal or business advisors. The author and publisher of this book is not rendering insurance, tax, ing, or any other professional services by publishing this book. As each individual situation is unique, questions regarding specific needs should be addressed to the appropriate professional.

The author and publisher makes no representation about the suitability of the information contained herein, and as such, the information is provided “as is,” without warranty of any kind. The author and publisher specifically disclaims any liability, loss, or risk that is incurred as a consequence, directly or indirectly, of the use and/or application of any of the contents of this book.

ABOUT THE AUTHOR

Ronald Stoll is vice president of Wellness of Team Excellence Inc., a Houstonbased organizational development and management consulting firm specializing in performance management, leadership development, culture design, and holistic wellness. Team Excellence has developed an award-winning system of personality and behavioral assessment, employee performance appraisal, strategic organizational assessment, and various other metric and protocols. Behavior change and individual behavior management education and online facilitated drive the system. The wellness practice is the culmination of the firm’s thirty-two years of organization consulting and allencoming enterprise-wide interventions.

Team Excellence clients have included clients from a wide variety of businesses and industries and have included IBM, Xerox, Tenneco, Nabisco, NL Industries, Bechtel, CompleteRx, Merrill Lynch, Bank of America, Kraft Foods, BMC Software, Dynergy, Memorial Hospital System, Aker Kvaerner, Procter & Gamble, Hunt Oil, New Process Steel, Sterling Bank, Catholic Church Extension Society, MD Anderson Cancer Center, and Patriot Bank among many others.

Ron’s career moved from a roll-formed metals sales engineer for a division of a large conglomerate to materials management in the steel fabrication industry. An avid student of organization development and the human capital component of business, Ron left the corporate world to launch a recruiting firm in Elkhart, Indiana, which grew into a practice including organization development, behavioral profiling, outplacement and career transition, human resources consulting, and human resources outsourcing. He developed a proprietary career transition system and built a successful “system in a box” product that was distributed nationally. Ron has also delivered many of these services on-site for clients throughout the United States and in Mexico. He was recognized with the highest state-granted award, the Ancil T. Brown Award, by the National

Association of Personnel Consultants for his leadership in the trade and the trade association.

Upon the sale of his firms, Mr. Stoll became active in the professional employer (PEO) trade and relocated to the Tampa Bay area in Florida, where he held executive management assignments with area PEO firms. He was active in the National Association of Professional Employer Organizations and the Florida Association of Professional Organizations, serving on various committees and on the board of directors of the latter organization.

Most recently, Ron has become very aware of the wellness topic in the publications and the boardrooms of US business. He has come to the realization that the various components are not mutually exclusive but rather very interdependent. His belief is that the dots need to be connected, and that by so doing, America’s brightest days are yet to be seen.

Ron says that he once saw a sign on the wall of a manager’s office that summarizes his philosophy: “There they go! I must rush after them… for I am their leader.” Mr. Stoll is a proponent of liberated and educated employees who accept the role of ability and live by the mantra of mutual trust in the employment relationship.

Mr. Stoll has spoken to trade organizations and civic bodies, company meetings, and employee groups. He was a guest lecturer at the University of Notre Dame Executive MBA program while an Indiana resident and has had numerous articles published in a variety of business periodicals throughout his career. He is a music enthusiast, a boating fancier, and remains an avid reader. Ron and his wife, Judy, reside in a quaint little area near Sarasota by the name of Osprey, Florida.

ACKNOWLEDGMENTS

To my wife, Judy, who has encouraged me, been a critic when a critical view would be enlightening, and has, at all times, been my most ardent fan. It was Judy who heard my comments about the mission of this book and read parts of the manuscript and then gave me the title for the book.

Along the path that my career has taken me, I have had some insights from several mentors whose names come to mind to this very day whenever I employ advice or teachings they shared with me. Jim Pullen tops that list, and for his insights, broadly based understandings, and patterns of thought, I will always cherish. Jim’s friendship has allowed me to continue tapping his vast reserve of business knowledge and analysis.

As the wellness topic caught my attention and review, two persons became very close associates. Randy Hopkins has intellectual capital in a subject that I have studied for my entire career: team functioning and the metrics to capture not just the individual team member’s motivational factors but also those of the organization and a methodology to analyze the potential fit of candidates for employment. This field of tools and methodologies has many practitioners, but none as down-to-earth and adaptable as the Team Excellence process. Randy’s always cool approach to business and to people in business is a model I try to emulate.

Alan Gappinger brings a learned but sensitive perspective to the sharing of knowledge and facilitating of behavior change. Alan has taught me the wisdom in not-for-profit companies in business, and I, being one of those dyed-in-thewool entrepreneurs, was not always a willing student. But alas, Alan has persevered. He has also taught me some alternative marketing methodologies,

which I regard with respect.

As is the case in every career, there are people who have been antagonists. I appreciate them as well for they brought eye-opening perspectives, and while in many cases I did not and do not agree with them, their crossing my path has had value to me through the alternate perspectives they imparted.

I have been fortunate to have had the clients, some for many years, who have had the confidence to work with me, my organizations, and my revered internal staff. Ours has been a relationship of trusted advisor, and that has been a bond that I have guarded intently. Were it not for the clients from Indiana to Florida, my career would not have been the fulfilling and exciting endeavor that it has been and continues to be. I am one of those people whose career helps to define them, and the clients I have had the honor of serving personally or through my firms have given me great satisfaction. These various and diverse clients have given me an insatiable curiosity for business and the processes that make business function.

INTRODUCTION CONNECTING THE DOTS

Businesses throughout the United States, whether unionized or not, have attempted to provide for the welfare of their workforce. They have been more and more frustrated with rapid inflation of benefits costs and the unending istrative burdens that accompany providing benefits. Employees have come to rely on their employer to provide and/or make available welfare benefits for the workforce. They have seen the costs that are deducted from their paycheck increase year after year. Then, as if to add insult to injury, their discretionary income is increasingly tapped for co-pays and deductibles mandated by those insurance plans that cost more each year. Health care providers complain loudly about the discounted payment rates that Medicare, Medicaid, and insurance companies pay for services rendered. Physicians end up selling their practices to hospitals or large groups, often taking significant cuts in pay, to get some relief from istration (which doctors generally are not educated to do, and which is a behavior not in line with the skills and behaviors of medical practice) and liability. Insurance companies are profit-driven and thrive on istrative trivia. Theirs is a complex world of underwriting medical risks by group and by specific medical plan risk exposure. In their world, a modest change in office co-pay or prescription co-pay or out-of-pocket maximum can have noticeable impact on s charged to the employer. Theirs is also a world of extensive legislative compliance and complex state and federal filing requirements. Insurance companies build networks of providers that stifle competition among health care providers and put insurance companies in a conflict-of-interest position when it comes to providing information to doctors or other medical providers and at the same time using the information to advise insured on medical diagnosis or treatment regimens. Health care costs the United States an unacceptable amount of the gross domestic product annually. The federal government with its full-time lawmakers

takes the opportunity under each istration to fiddle with health care and benefits because it is a popular topic. Currently, major legal restructuring is taking place, but the opportunities that result are very appealing. Along the path that we have traveled, there has been an abundant supply of management theories and practitioners who have influenced how we do business, how we relate to employees, procedures, and customers.

These dots can be connected. As a matter of fact, these dots should be connected. These are not mutually exclusive situations that we confront as a nation. These are interdependent matters that affect employers and their profitability, employees and their welfare, the quality and delivery of health care, the health care profession, and every insurance plan available from the myriad of insurance carriers serving the market. Properly done, there are no losers in the opportunity that, today, is available to each and every one of the stakeholders mentioned above.

This book is a stroll through history to see what got us where we are; it is a snapshot of the opportunity that is available to be explored and capitalized upon, and it is a schematic for re-engineering the employment experience. It is intended to be a recipe for genuine trust and ability in the workplace. The book, in the final analysis, is to convey a message that is short on words but long in implications: “This we can do.” If you are up to it, I invite your participation.

1

THE EMPLOYMENT RELATIONSHIP

The times, they are a-changin’. Then again, maybe not. Wellness is the current flavor of the month. It is the topic that gets a lot of play and attention in management meetings, the press, and in many of the popular seminars and trade conferences. It can be the grandest opportunity for America’s return to economic dominance and the redefining of the employment relationship, or it can be a flash on the horizon like a Fourth of July fireworks show, with all its brief grandeur but no sustainability. We will begin our evaluation of wellness as it impacts American employers, employees, the employment experience itself, and the delivery of medical services with a look at where the employment relationship comes from. A poem, author unknown, sets the stage:

One day through the primeval wood

A calf walked home as good calves should

But made a trail all bent askew,

A crooked trail as all calves do.

Since then hundreds of years have fled,

And I infer the calf is probably dead

But still he left behind this trail

And thereby hangs my moral tale.

The trail was taken up next day

By a lone dog that ed that way;

And then a wise bellwether sheep

Pursued the trail o’er vale and steep

And drew the flock behind him too,

As good bellwethers always do.

And from that day o’er hill and glade

Through these old woods a trail was made.

And then many men wound in and out

And dodged and turned and bent about,

And they uttered words of righteous wrath

Because ’twas such a crooked path;

But still they followed… now do not laugh,

The first migrations of that calf.

The forest path became a lane.

That bent and turned and then turned again.

Then the crooked lane became a road

Where many a poor horse with his load

Toiled on beneath the boiling sun

And traveled some three miles in the length of one!

And thus a century and a half

They trod the footsteps of that calf.

The years ed on in swiftness fleet;

And the road became a village street.

And this before men were aware,

A city’s crowded thoroughfare.

And soon the central street was this

Of a great renowned metropolis.

And men for two centuries and a half

Have tred in the footsteps of that calf.

Some hundred thousand men were led

By that calf now three centuries dead.

For men are prone to go it blind

Along the calf paths of the mind

And work away from sun to sun

To do what other men have done;

They follow in the beaten track,

Out and in and forth and back,

And still along their course pursue

To keep the path that others do.

They keep the path a sacred groove

Along which all their lives they move,

But how the wise old wood gods laugh

Who saw that first primeval calf.

THE MARKS AT THE HEAD OF THE TRAIL

American commerce stands today at a T intersection in the path leading to the future. Which path to take must be a carefully considered choice. American employers and their employees stand at the intersection. Health care delivery and the medical insurance industry stand at the very same intersection. It is because all these interrelated American institutions stand at the same intersection that we have a very rare opportunity.

Many management theories have come and gone as business has pursued its path through the years since the Industrial Revolution. Many of those theories, each with its well-publicized name or acronym, each with national awe and acclaim surrounding the name of the theorist, have been pure genius; but for some reason, they have not been sustainable. The opportunity that commerce and the country face, should the new path be selected, is called wellness. Wellness is the most all-encoming, broadly based business initiative in history. It has the potential of being a game-changing business model impacting the US economy, reversing the health cost drain on this nation’s gross domestic product, repairing medical delivery systems and costs, improving the bottom line of companies, solidifying the financial destiny of individuals (employees), and returning uncontrollable fixed costs (employer-paid medical s) to bottom line as controllable profits for employers who now face ever-increasing health costs.

The United States has the highest per capita costs for health care in the world and the highest percentage of health care costs impacting gross domestic product as compared to other industrialized countries, yet it ranks in the bottom quartile for life expectancy and infant mortality. These two bits of information do not balance in my mind.

The spirit that has made America great, made it wealthy, made it a benefactor to the world and the champion of freedom, democracy, and free trade can be awakened to reap the full scope of benefits that all come with comprehensive wellness. America has redefined itself in the face of danger and opportunity in the past, and it can again. In fact, it must again. “We the people” have our greatest days ahead, and our children and grandchildren should not have to expect to settle for a diminished standard of living. We dare not let the opportunity that today presents itself to get carved up into little pieces as has been our history. We must take the opportunity for a whole-enterprise intervention. Wellness is not, nor should it become, simply a workout room for employees at the end of the cafeteria or an annual health screening or a regimen of diet supplements. Workplace wellness is a term that generally describes health promotion activities and organizational policies and initiatives intended to health behavior in the workplace. The key concept is behavior. The hope is that employed persons will increase control over and improve their own health. Because employees are one-off in the design of health care insurance plans and the attendant costs as employers negotiate health care coverage plans and s, the best and strongest approach to true whole wellness is through the employer-employee relationship and a path leading to true highly informed, consumer-driven, quality-vetted health care. That will require behavior change on multiple levels.

WELLNESS AS A WORKPLACE INITIATIVE

Workplace wellness usually includes organizational policies designed to facilitate employee health including such well-meaning practices as flex time for exercise, on-site cafeterias and eating areas, availability of healthy food options in vending machines, and incentives of various descriptions for participation. This is a short-term and shortsighted strategy, and it is not sustainable. We will wander over the same old time-worn paths if the ultimate wellness concept does not include behavior change education, cost control of insurance s, value-based health care, and highly informed, consumer-driven, and competition-based health care services. Using the employment relationship is the most comprehensive way to bring meaningful change to the total matter of wellness.

The typical stated goal of wellness in the workplace is to improve employee health. Obesity, smoking, stress, and physical activity are the predominant indicators employers use. However, many US employers have turned to wellness programs to help mitigate the impact of enormous health insurance s. Employers have negotiated plan coverage parameters, then required employees to participate in underwriting the fixed insurance cost, increasing deductable and out-of-pocket contributions. It is a self-defeating spiral. Cost shifting, in and of itself, creates for employees barriers to participation and increases their level of stress and tension. That stress and tension unavoidably get expressed in many usually negative ways in the workplace.

It is not difficult to find some wellness programs being implemented throughout the country in both large and small companies as part of the employment relationship. Programs are not sustainable. Programs have a start and a finish. And indeed, most employers have yet to embrace a comprehensive wellness strategy and culture. The good news is that a groundswell of momentum in the introduction of various worksite wellness promotions is under way. The

discouraging news is that participation rates by employees severely limits the potential upside benefits. Studies have documented the challenges to success as wellness plans are launched such as management and ability, the different types of activities that are appetizing to men versus women, and the acceptance and participation rates of white-collar workers as opposed to bluecollar workers. Legal and ethical issues present formidable barriers that cause some of the weak-at-heart employers to shy away from wellness strategies.

Health Insurance Portability and ability Act (HIPAA), the federal law that governs the personal information and use thereof by an employer and the reason you sign a legalese document concerning the use, storing of, retrieval of, and sharing of information every time you visit your physician or, for that matter, your dentist, is one example. That creates a challenge to the whole concept of wellness when messaging to employees must maintain confidentiality while motivating or persuading employees to change very specific and targeted behaviors. Cultural sensitivity and accommodations to economic position of employees also increase the difficulty to launch good and stable wellness strategies, but none of these barriers are insurmountable.

Wellness needs to take the new path. It must embrace the whole of the organization. It must redefine the employment experience for the employer and the employee. It must have a mechanism to create trust and ability in the employment relationship. It must address the hard costs and legal requirements of employment. It must have strategies to manage health care costs, employer profitability and ROI, and employee well-being. It must reduce the health care cost ratio as it impacts the gross domestic product of the United States of America.

THE OMNIWELL MODEL

The OmniWell Model sees wellness as a three-legged stool:

Career wellness (interpersonal or relational wellness in the workplace and away)

Financial wellness (corporate and personal)

Physical wellness (health)

OmniWell, in its model design, then sees the three legs as interdependent and holds that trust and ability must be the trademarks of any employment relationship. The philosophy is built on a psychological covenant as will be explained throughout the book. The unique and powerful concept of the OmniWell Model is that the Team Covenant establishes the ability element, and the first educational component of the model engages employees and establishes a solid credibility for the employee-employer experience.

It introduces the role and the ability of the employee in their medicalpreventative and consumerism behaviors. Personal financial wellness education follows and includes a curriculum of topics and personalized inventories and worksheets for personal financial goals and management but also clearly addresses the impact of personal medical decisions on ultimate financial wellness. The next component the model delivers is the physical wellness understanding. Every step on the path is intended to bring about appropriate understandings and resultant behaviors. Knowledge-absent behavior will not

accomplish the results the OmniWell Model is designed to deliver. Through ongoing metrics, follow-up, and communications, OmniWell encourages the behavior changes that will benefit the employee and deliver significant positive impact to the employer.

BASE ASSUMPTIONS AT THE CORE OF THE OMNIWELL MODEL

Three concepts lie at the foundation of this book. The first is that no company was ever started for the purpose of being an employer (professional employer organizations exempted and discussed later). Employees are a given, for better or for worse, in the operation of functioning enterprises. As the enterprise grows, the strategy of talent acquisition and deployment as well as the allocations and priorities of available resources must be adjusted to provide the required talent in sufficient amount and time lines to the initiatives of the organization. Identifying and proactively providing for the changing talent needs and the associated resource allocations as a company moves from entrepreneurship to maturity are a key (perhaps the key) strategic component of the human resources function in a company today. Having established the first concept, the second concept is a basic but true premise. Only two potential problems face any company. Every company, by conscious choice or by default, selects the one problem that it decides to address. Those alternative choices are either growth or liquidation. There is no middle ground. Growth is not an accident but rather a carefully honed set of processes that embraces the business cycle and the predictable maturation of a company or the systematic fall and demise of a company. The third concept is very simple: companies do not save their way to growth and profitability. Successful companies are astute in their maximization of their returns on investments. They are in control of how they use their financial resources to growth.

In a later chapter, we will look at changing large-cost items to ROI opportunities. For now, here is a teaser. Why are training costs expensed? Training (a term I do not choose to sanction by the way) has a shelf life. It should be a depreciating line item providing for perpetual maintenance, updating, and renewal. More on that later as we dig into the real meaning of wellness. And to the term training, training is what you do with a dog, and like Pavlov discovered, the response is rote and a predictable reaction. There is no thought, no evaluating options, no awareness of the downside and its effect. Education is what I and our organizations provide so that thinking human beings can take personal

responsibility with ability for their behavior and the resulting outcomes. And that topic will be discussed further as well with an emphasis on ability. The OmniWell Model stands on the premise that health care is not a right or an entitlement; however, wellness is an organizational imperative and an individual responsibility. There is mutual ability implied in that premise.

The now-retired vice president of istration and a mentor and friend of long standing, James I. Pullen, who retired from NIBCO, a large manufacturer of valves and plumbing fittings headquartered in Elkhart, Indiana, said this: “Take the employees out of any company and all you have left is a statue; that statue there to be robed every day anew in a coat of white… by the pigeons.” Employees are certainly one of the capital needs of any company. They should be ed for in the profit and loss documents thusly. Through the years, the employment scene has had sideshows that attract attention, make their mark (good or bad), and fade into oblivion. We will focus on some of those business tactics throughout this book with the supposition that wholeness, the mutual alignment of values, abilities, rewards, trust and ethic, has not generally fully materialized in the workplace in spite of many award-winning, genius concepts, theories, and practices. Let’s look at how we got where we are.

THE BASIS OF THE EMPLOYMENT EXPERIENCE IN THE US

The employment relationship, as we know it today, is founded on the ancient laws of England and reflects the customs of society as enforced by the judgments of the courts. The traditional law of England, based on customs and usage, were developed over one thousand years before the founding of the United States. By the fourteenth century, legal decisions and commentaries began providing custom and precedent. The common law became the basic law of most states (Louisiana excepted, which bases its law on the Napoleonic Code) due to the Commentaries on the Laws of England completed by Sir William Blackstone in 1769. The general body of statutes and case law governing England and later the American colonies prior to the American Revolution are, today, the basis of employment common law. In fact, in some states, the principles of common law are so basic that they are applied without reference to statute. Common-law courts base their decisions on prior judicial findings and orders rather than on legislative enactments. Because common-law decisions deal with everyday matters as they occur, judges, on occasion, must look outside of the decisions chronicled in court reports to render decisions based on arguments reflecting the ever-changing societal norms, inventions, and discoveries.

The nature of the employment relationship surprisingly has never been clearly defined. Little attention has been devoted to the exploration of the interactive employment components, including sociological, psychological, economic, and legal dimensions. Various professional and academic initiatives have directed their analytical focus to the concept of employment, but no definition has emerged as the universal and essential identifying factors of the concept. Spooner and Haider in the International Journal of Employment Studies article (October 1, 2006) cite two reasons for this phenomenon. The first is that researchers tend to approach the topic of employment from their own disciplinary base (sociologists, psychologists, economists, historians, anthropologists, lawyers, scientists, engineers, or human resources practitioners for example), and the focus has been from each of the researchers’ own vantage

points rather than the totality of the concept of employment. The second in this research white paper is that the concept of employment may be too grand to define or understand. The employment relationship even extends to define in society those who are not in such a relationship! And we have jargon, memorialized as legitimate in dictionaries, to customize these relationships, such as unemployed and underemployed.

The concept takes on even larger dimension when the effects of employment are factored into the economic health of the United States. Wall Street is in tune with and reacts to employment trends. Not just the United States but the world economy hinges on employment and the effects of employment on everything from volume produced and quality, services and customer relations, to productivity and efficiency, R&D and delivery. I am convinced that the United States can assume a worldwide sustainable economic leadership role if commerce fully adopts the concepts of wellness and embraces wholeness of the concept beginning with the employment relationship. No current or emerging economic leaders on the world stage are in the unique position of the United States to capitalize on the positive opportunities now possible to refine the business model and then to profit significantly in the very near term.

Profound changes are impacting the way work is organized and the very nature of the employment relationship. Traditional full-time ongoing employment is being impacted by short-term contract- or project-based work relationships, telecommuting, and other outsourcing models. The typical work organizations that have been the way we have done business are being challenged, and with those challenges come the requirement to protect the rights and benefits of those engaged in work and to simultaneously insure the employer of the output necessary to sustain and grow the business. Getting these employment arrangements defined and developed is of tremendous contemporary importance. In spite of significant national unemployment, talent shortages are being seen in high-tech industries and the talent drought will expand to other professions increasingly over the next three to five years, putting more pressure on the employment model and alternatives to traditional employment. Both organizational and individual wellness will require systems, processes, and management acumen that contemplate and accommodate wholeness.

The needs of the organization and the needs of the individual employee are interrelated and interdependent. Mutual exclusivity is not an option in the future at whose threshold we now stand. The employment relationship, which now is emerging, can be the most productive, mutually satisfying, and economically rewarding period in the economic history of the United States. The keys are wellness and wholeness. Wellness is not simply a medical routine, and wholeness is not a soft approach to management. ability and integrity are the hallmarks that will be necessary. Performance management, legal mandates, budgets, quality, marketing—all the requirements that are commonplace today will change but not vanish. The management role will be no less complex or important. To the contrary, wellness in the management world of wholeness is a new world with new focus, new ability, and new risks and rewards. What is required is behavior change at all levels of organizational structure and individual employee behavioral ability.

The Fair Labor Standards Act stands as the legal framework to define the employment relationship in the United States. It is here that the provisions and standards concerning record keeping, minimum wages, overtime pay, child labor, and similar employment legalities are chronicled. The act addresses itself to interstate commerce and certain other enterprises. istered by the US Department of Labor’s Wage and Hour Division, an employer-employee relationship must exist. Employment relationship requires an employer, an employee, and the act or condition of employment. So at the heart of the concept is the notion that the law defines as “master and servant,” which conveys a very specific element of control by the master (employer). Bosses and workers coexist for mutual benefit, and each functions within a given and agreed set of constraints. There is little room in the master-servant concept for trust and ability.

The act is broader than just the traditional common-law relationship of master and servant. The difference is that the term employ as defined in the act includes “to suffer or to permit to work.” The courts of the land have held that “to permit” requires a more positive action than “to suffer.” Both imply much less

positive action than required by the common law that was inherited from England. Mere knowledge by an employer of work done for him by another is sufficient to create the employment relationship under the act.

The Supreme Court has said that there is “no definition that solves all the problems” as to the limitations of the employer-employee relationship, and it has said that determination of the relationship cannot be based on “isolated factors” or upon a single characteristic or “technical concepts,” but depends “upon the circumstances of the whole activity” including the “underlying economic reality.” What that means is that, in general, an employee is one who “follows the usual path of an employee” and is dependent on the business that he serves. Qualifying factors include the extent to which the services being provided are an integral part of the employer’s business, the permanency of the relationship, the scope of the employee (or contractor’s) investment in facilities and equipment, the amount of control exerted by the principal (employer), the opportunity for profit or loss by the employee, and the amount of initiative, judgment, or foresight is required for success of a claimed independent enterprise. An employer refers to any person or organization acting directly or indirectly in the interest of any employer in relation to an employee. That is a very broad statement.

Other legal requirements such as ERISA, DOL, worker compensation, OSHA, WARN, HIPAA, etc., impact the employment picture and several of these will be considered later in this book. For now, we will consider the conditions between the employer and the employee.

THE EMPLOYMENT RELATIONSHIP AND ITS IMPLICATIONS

The one concept that is clear is that a relationship exists. Relationship in any setting is built on trust and ability. An employment relationship built on these underpinnings will embrace the new employment trends as easily as the old common-law concepts. It is important to acknowledge that the relationship can be fragile. The 9th Annual MetLife Study of Employee Benefits Trends (January 2011) indicated that “erosion of Employee Loyalty may mean (employee) retention is at risk.” Turnover rates are expected to increase dramatically as one in three employees now report a desire to change employers, and less than a third of the employees surveyed felt their employer had a strong sense of loyalty toward them. Many surveys available in the public domain substantiate these findings.

Other studies document that over 36 percent of the employers surveyed reported that cost shifting is one of their very important strategies. Large auto companies have been known to cost shift. They say to their suppliers in effect, “If you want to continue doing business in the volume you have enjoyed in the past, we must have a specific cost reduction for the next model year.” And they have repeated that tactic year after year. Can an employee bear cost shifting year after year? Here is the more important question: Can the employment relationship bear ongoing cost shifting? And if not, what is the effect on the employer? The employer who did not start out intending to be an employer but who had a product and a methodology, needed employees to grow lest the other business problem—liquidation—becomes a reality.

The past three decades have witnessed what was touted as change. Real change was often illusive and often not sustainable. Feel-good concepts were rooted in words and semantics. Company jargon has moved from personnel departments to human resources departments, and many variations in the HR concept have been witnessed, but real strategic initiatives are seen by few organizations. The

change, in my opinion, was an attempt by human resources practitioners to bring a strategic focus to the function—much the same as changing purchasing agents to materials managers. Managers have, in many instances, then been retooled as leaders. Employees have become team . In one far-reaching example, the receptionist has been rebranded as the services concierge! What has changed? If only words and labels change, there is no real change. The only way to implement change is to bring behavior into alignment with the strategic objective of the change. Absent behavior change that horse won’t race, that dog won’t hunt, and that strategy will not make a difference. A pig in lipstick is still a pig. The “here they come again” attitude permeates the workforce as the lightly veiled management-of-the-month theories that are cast on the employees. Today’s employees expect more from the employment experience. Because they do, the path is clear, it is a straight-away route leading to the new employment relationship.

My colleague, the president of Team Excellence Inc., Randy Hopkins, in his book, Team Covenant, says, “In today’s world, success requires companies to become leaner and more competitive. The days of holding on to market share are gone.” Companies will (either) grow or die. This demands more flexibility, productivity, and ability from both employees and employers. Results are the only thing that matter. Blame games and perfunctory adherence to outdated and/or unproductive policies and procedures are worse than a waste of time and energy; they generate futility in the workplace. Randy makes the clear distinction between futility and apathy in his book by defining apathy as an “I don’t care attitude,” and futility as suggesting the employee does care—and may care very deeply—but no matter hard a person tries, he or she is powerless to affect outcomes. Attitudes are habits of thought. As such, they can be changed but often not easily. Changing behaviors is the only way to bring about sustainable strategic change.

Adult behavior modification is the process of changing habitual responses, either mental or physical responses, to events, concepts, or other stimulus. In the master-servant relationship, little has been done to influence behavior. The bossemployee structure is clear, and no acknowledgment is paid to relationship. You have heard the definition of insanity: “Doing the same things the same ways and

expecting change.” Teaching someone how to do something, think about something, respond to something, and not equipping the person with the broader reasoning and then charging the person with ability takes us back to Pavlov’s dog. The concept of empowerment had its day in the limelight. To empower suggests giving a narrow set of instructions and options and saying, “You may function within these guidelines and in this manner on my behalf.” The better concept is to liberate. If educated employees at any level of the organization are in fact liberated and able for their decisions and actions, and if a valid performance management system is not only in place but also fairly and consistently practiced and a genuine trust relationship is nurtured, the master-servant model will yield to a healthier new model that will open the door wide to wholeness.

Referring again to Team Covenant, Mr. Hopkins makes the point that this is not “touchy-feely” management. He goes on to identify some specific performance management steps that will help the change occur:

Reduce the cost of achieving successful performance Do a better job of defining required results Adjust to the new employee expectations and career/life goals Engage and gain commitment from teams of people Provide equal opportunity without identical treatment Become a continuous learning institution Dedicate management time and resources to make all of this happen

These are easily understood and difficult to implement concepts, but these are the strategic initiatives that clear the path to wholeness and wellness in the employment experience for both employees and employers.

2

MANAGEMENT THEORIES

In contrast to the common law, which has endured the ages, stands the parade of changing management theories that have impacted the workplace. These are the footprints along the path left by earlier employers and employees ing this way. These earlier thought leaders researched, developed, and introduced management designs, skills, and approaches that have been documented, authenticated, and scrutinized over the decades dating back to the 1800s. These management theories have been tested and studied by scholars in an attempt to explain such things as economic impact, quality, efficiency, employee productivity, etc. A look at the significant players and their contributions will set the stage for the various influences that have been prevalent in American management theories and practices. Reviewing these theories will often reveal a one-sided benefit favoring the employer. Missing is an acknowledgment of the value and benefit of mutual trust and ability.

THEORIES THAT HAVE IMPACTED EVER-EMERGING MANAGEMENT PRACTICES

Fredrick Winslow Taylor (1856–1915) assumed that labor is not the root cause of most problems in business and that it is only management that can provide the solutions for the problems that arise in business. For his work, Taylor is recognized as the Father of Scientific Management.

Taylor’s theory contemplated the contribution of labor and management in securing what he called “the common benefit,” a classification based on how to increase production efficiency, lower costs, raise profits, and increase the compensation to workers through increased productivity. The theory’s basic premise is that scientific management involves setting up knowledge and compatibility through group accomplishment, participation, and achieving the highest level of production output.

The United States was heralded as utilizing highly prized scientific and technical expertise at the turn of the century. Specificity in measurements, specifications, and results were highly esteemed. By developing a theory that espoused careful specification and measurement of all organizational tasks at a time when production lines were the manufacturing mainstay, the scientific management theory had perfect timing on the management scene.

Walter A. Shewhart (1891–1967) was an American physicist, engineer, and statistician often regarded as the Father of Statistical Quality Control. His work at Bell Telephone, where he spent his entire career, led him to the important realization of the requirement of reducing variations in manufacturing processes and to the understanding that continual process adjustments in reaction to nonconformance actually increased variation and reduced quality. He grasped

the reality that processes never produce a normal distribution curve (bell curve). His approach was to develop what is known today as a schematic control chart, a methodology adopted in 1933 by the American Society for Testing and Materials and strongly advocated during World War II as a tool to improve production processes and quality. His statistical-based theories piqued the interest of another management theorist.

W. Edwards Deming (1900–1993) was an American statistician whose initial contribution was in Japan, where he had more impact on manufacturing and business management than any other individual of non-Japanese heritage. His philosophy is best illustrated through an example. Ford Motor Company was manufacturing automobiles that used transmissions produced in both the United States and Japan. Customers for the Ford automobile began to specify and ask for cars with the Japanese-manufactured transmissions. Interestingly, they were willing to wait for a car equipped with the Japanese transmission rather than buy a car off the lot immediately equipped with the US-made transmission. The engineers at Ford were puzzled. Both sources produced to the same specifications and within the same manufacturing tolerances. Investigation revealed that the Japanese transmissions were not only within tolerance but also that each transmission component was identical to every other sample of the part in question. Ford could not understand how this could be done until they consulted Deming. Deming’s statistical process control methods were the key to understanding the phenomenon. He developed sampling techniques and statistical process control techniques that were applied widely in the United States during World War II but, like so many other techniques, could not be sustained, and they faded into disuse a few years later in the face of huge overseas demand for American mass-produced products. There is a lesson there that applies to other management theories and their sustainability.

Behavioral management theory gained traction in management practices when Mary Parker Follett (1868–1933), the first psychologist to apply psychology to business, espoused the benefits of teaching social services principles in business settings. She onished overmanaging employees, a process she called “bossism” or micromanagement. Many authors see Follett as the Mother of Scientific Management. It was Follett who pioneered the understanding of lateral

processes within hierarchical organizations, which led directly to the matrix model of organization—a model that was first adopted by DuPont in the 1920s. Follett developed the idea of “authority of expertise,” which helped lead to the later exploration by management gurus of the concept of authority in the workplace and the employment experience.

Human relations management theories and, in fact, the human relations movement can be tracked back to the early 1930s. Unions and government regulations began to react to the dehumanizing effects of these theories. More attention began to be paid to individuals and their unique capabilities in the organization. Slowly since the inception of these theories, organizations have worked to align the needs of workers and employers. On-and-off human relations concerns and theories have come to the surface, but other theories have diverted attention, come to the surface, gotten consideration, and faded into the background. Many of the intervening theories had great value but not sustainability in the face of other piecemeal theories. The term piecemeal is used advisably in view of the purpose of this book.

Douglas McGregor (1906–1964) suggested what has become the very wellknown concept of theories X and Y. McGregor illustrated management theory from the vantage of a manger dealing with the hypothesis that people do not like to work. Workers must be directed, coerced, and tightly controlled, guided, and forced to get any work from them. He went so far as to say that theory X people, at their core, avoid responsibilities and thus have very little ambition in life. Theory Y, on the other hand, presumes that people take the prospect of work as a natural part of their lives; consequently, their jobs motivate them to perform well particularly if rewards are given.

McGregor was very discouraged at the inability to sustain the theory Y style of management due to the reduction of the theory to a monolithic set of principles and the overgeneralization of the concepts. McGregor had intended that his book presenting the theories (The Human Side of Management) would lead managers to investigate the two opposing sets of beliefs, invent others, test the underlying

assumptions, and develop further management theory and basis of skills. Other new theories emerged and took the spotlight on the stage of management vogue.

Theory Y is the practical application of an American professor of psychology’s work. Abraham Maslow’s (1908–1970) humanistic school of management theories stressed the importance of focusing on the positive qualities in people (employees) as opposed to treating them as what he called “a bag of symptoms.” The basis of Maslow’s belief was that every person has a strong desire to realize his or her full potential, a state Maslow termed self-actualization. Maslow broke the mold in the study of human behavior by studying mentally healthy individuals, self-actualizing people rather than those with serious psychological issues. Here is what Maslow said in summary of self-actualizing people in of the qualities they exhibit:

Truth: honesty, beauty, unadulterated completeness (whole wellness if you please) Goodness: rightness, benevolence, honesty Beauty: aliveness, simplicity, wholeness, perfection, completeness Wholeness: unity, integration, oneness tendencies, interconnectedness Dichotomy-transcendence: resolution, integration, acceptance Aliveness: spontaneity, self-regulation, full functioning Unique: individuality, novelty Perfection: nothing lacking, everything in its right place, justice Necessity: inevitability Completion: justice, fulfillment Justice: fairness, nonpartiality

Order: lawfulness, rightness Simplicity: essential skeletal bluntness Richness: differentiation, complexity, totality Effortlessness: ease, lack of strain, striving Playfulness: fun, joy, amusement Self-sufficiency: autonomy, independence, self-determining (and, if you please, ability)

The result of Maslow’s thinking, hypothesizing, and studying was the visual aid he developed to explain his theory, which he called the hierarchy of needs: the pyramid with five divisions, which he labeled from the bottom.

Basic or physiological needs (food, water, sex) Safety, security, order (shelter and safety) Love and belonging (sharing self with others, i.e., family and friends) Esteem (respect of and by others, confidence, achievement) Self-actualization (problem solving, lack of prejudice, creativity, spontaneity)

The basic thought is that a worker’s condition affects the quantity and quality of work output. The application in the workplace ranged from lip service only to full engagement, yet the sustainability of the theory in its most true application today is a point of reference rather than a management practice in many cases. The Team Covenant through which Team Excellence creates a psychological contract with the entire employment body of an organization and establishes the very firm and sustainable foundation of wholeness, wellness, and ability universally within an organization is built on this concept.

Joseph Juran (1904–2008) was an evangelist for quality and quality management. When he started his career, the ideas of Fredrick Winslow Taylor were dominant in the thinking of management. Juran happened upon the work of Vilfredo Pareto and the 80/20 principle (80 percent of the problems are brought about by 20 percent of the causes: what has been called the vital few and the trivial many until Juran coined a term he preferred, which was the vital few and the useful many meaning that 80 percent of the causes should not be totally ignored). Juran was one of the first to think in of the cost of poor quality.

Kaoru Ishikawa (1915–1989) pushed the envelope another step forward. His ion was to change the way people think about work. He was a believer that customer service—far beyond receipt of the product—was the pedigree of total quality control. He held customer satisfaction to be the ultimate source of decision making and that standards resembled quality improvement programs: they should be constantly evaluated and changed. With his development of the fishbone diagram, he made his mark on quality management. Indeed, a stroke of genius in the mind mapping of a group of people. The diagram is, today, considered one of the basic tools of quality control, and the tool became a key component in the quality circle time in vogue. Deming used the diagram to teach quality control in Japan as early as World War II. And Ishikawa borrowed Deming’s plan-do-check-act model, added two steps (determine methods of reaching goals and engage in education and training), and used that in his teaching.

Genichi Taguchi (1924–2012) developed statistical methodologies to improve the quality of manufactured goods and later applied his statistical evaluation process to engineering, biotechnology, and advertising. His claim to fame is his use of loss functions. Taguchi recognized that in most industrial production, there is a need to produce an outcome that is precisely located: it is on target (precise placement of a precise diameter hole in a blank sheet of steel for example). His position was that excessive variation was the root cause of poorly manufactured quality. He therefore argued that quality engineering should start with a clear understanding of quality costs and that manufacturers should

broaden their views to consider the costs to society. The short-term loss of nonconformance is minimal compared to some loss to the customer, early wearing out of the product, cost of rework and scrap, difficulties in interfacing with other parts in an assembly, etc. Particularly interesting is the concept that often losses are ignored by manufacturers who are typically, in Taguchi’s estimation, more concerned with their private costs than with social costs. Taguchi referred to the phenomenon as tragedy of the commons. We refer to it as the second option of problems companies face: liquidation.

Quality circles had a time of popularity and were strongest in the 1970s. Under the leadership of a trained facilitator, the volunteer groups use prescribed tools to analyze problems within the group’s area of involvement in the process. Mature quality circles were envisioned to be self-managing and to have the sanction of management. do not benefit from the results of their evaluation and ultimate implementation of their resolutions. Typically, quality circles were to remain intact from project to project. As companies experimented with the quality circle process, the effectiveness of the concept began to diminish. In the early 1990s, the sudden decline of quality circle hip was the tolling bell of the final and irreversible stage of the quality circle demise. I was very active nationally in the training and implementation of quality circles. I saw the excitement of employees presenting and ing their findings and recommendations. I saw proud management teams become exhilarated with what they saw as involved and dedicated employees. But the once-revered quality circle model of the employee involvement initiative is generally a hasbeen in the ongoing parade of management theories.

Other theories have seen their moment of greatness in history. Contingency management theory was developed in the late 1960s with the claim that there is no “best” way to organize a company or to manage a company, but rather the optimum course of action is contingent or dependent upon internal and external situations. Contingency theory suggests that the previous management theories discussed above failed because they neglected the management style and organizational structure unique to the situation and did not contemplate the contingency factors.

System management theory started to appear in the late 1950s and rose to its most prominent position in the late 1960s. The theory deals with a system as a group of inputs regarding the required operations in achieving overall objectives and that systems function according to a preestablished design. Every system is defined as self-contained by an input, a process, and an output. Managers are tasked with looking at the systems and their ability and to establish and to then achieve the purpose and goals of the company.

Social management theory considers the system of management as a system of cultural relationship. Managers accommodate the various small groups as a complete social system. This cohabitation view emphasizes patterns of interaction between the participants instead of hierarchy, authority, and power; the manager solves various limitations posed by the workers’ social and cultural differences by coaching them to promote a closer and more open relationship. Can you possibly operate a company this way? Yet this concept had followers.

Quantitative management theory lives and dies by mathematical models and measurable data with an emphasis on the creation of a working model that includes the inherent assumptions, purposes, and overall necessity. The quantitative explanations of the condition of assumptions, purposes, and problems become the basis for the rendering of all decisions. Data certification, probability, simulation, and linear programming are part of the process. Again the question: Can you actually, really operate a company this way?

Six Sigma is a business strategy dating to 1986 and first utilized by Motorola. Jack Welch later made it a focus of the business strategy at General Electric. Six Sigma seeks to improve the quality of process outputs by identifying and eliminating the root causes of defects and minimizing the variability in the business and manufacturing processes. Many of the quality management methods discussed above are, in some fashion, used in the Six Sigma methodology. The methodology also demands and creates an infrastructure of people within the organization, known as black belts, green belts, etc., who are

charged with carrying out projects within an organization following a defined sequence of steps. The process imposes quantified financial targets in of reduced cost or increased profit. Six Sigma means that 99.99966 percent of the produced goods will be free of defects, said another way, 3.4 defects per million.

The genius of some of the management theories discussed above is acknowledged as Six Sigma utilizes many of those specific concepts. Without exception, the concepts require the commitment and proactive of the organization’s executive leadership. Six Sigma is a complex system and while it is claimed to be the “silver bullet” in textbooks and Internet sites, some claim that there does not seem to be trustworthy evidence for this recognition. The system is most often found in large organizations, and it becomes a department of its own. In recent years, some organizations have added lean manufacturing concepts to Six Sigma, resulting in Lean Six Sigma, which adds process flow and issues related to waste to the methodology.

THE GENERATIONAL DIFFERENCES OF THOSE WHO HAVE AND WHO WILL TRED THE PATH

This discussion would not be complete without a look at the generation issue in today’s workforce. Thought turns quickly to the X, Y, and Z labels. The popular thought is that this is a new phenomenon. Is it? Generational differences and trends are popular topics now and have been for the past several years. But generational differences have impacted the workplace for many generations. Consider the following generations and the descriptions of the people and the effect on commerce.

The lost generation describes those who fought in World War I. They were born between 1883 and 1900.

The years 1932 and 1933 were the depths of the Great Depression when GNP fell a record 13.4 percent and unemployment hovered around 23.6 percent. Industrial stocks lost 80 percent of their value between 1930 and 1932. The tax rate increased from 24 percent to 63 percent in 1932. The top tax rate increased to 79 percent in 1936. World War II started with the invasion of Poland by Hitler.

The greatest generation (named by journalist Tom Brokaw) is the generation that includes the veterans who fought in World War II.

Federal spending grew to three times larger than total taxes collected. Organized labor declined from 500,000 on 1920 to 75,000 in 1928. In the 1920s, 1,200 mergers swallowed up 6,000 independent companies. In 1929, the richest 1 percent owned 40 percent of the nation’s wealth. Individual productivity rose an astonishing 43 percent during the 1920s.

The silent generation born in 1925 through 1945 is the generation that includes those who were too young to the service during World War II.

They were generally recognized as the children of the Great Depression. Economy had great impact on this generation during their formative years. National debt was 123 percent the total GDP. Top tax rate hit 91 percent in 1945 and remained above 88 percent until 1963. Between 1945 and 1963, America experienced the greatest economic boom it had ever known until that time.

The baby boom generation is the post–World War II generation, born between 1946 and 1964, a time that was marked by an increased birth rate and general prosperity.

Traditional values were rejected or, at the minimum, redefined. Boomers were widely associated with privilege and affluence. Boomers thought of themselves as a “special” generation, very different than any

generation before them.

Generation X is generally thought to be the persons born between 1965 and 1982.

Forty-four to fifty million persons are counted in this demographic group. More diverse and better educated than any prior generation as over 60 percent attended college. There was a shift in the economy from manufacturing to services. The generation was independent, resourceful, and self-sufficient. The generation disliked micromanagement, preferring a hands-off management philosophy. They displayed casual disdain for authority and structured work hours. Technology was woven into the tapestry of their lives. They were less committed to one job and more willing to change jobs to get ahead than any other generation.

Generation Y is the generation generally born between 1982 and 1989.

There was an increased use and familiarity with communications, social media, and digital technologies. They were generally more liberal in their approach to politics and economics. The generation was strongly impacted by high level of unemployment especially among young people with 37 percent underemployed or unemployed

Thirty-six percent relied on parents for some financial . The average person has three credit cards and 20 percent carry a balance over $10,000. Sixty percent of workers ages twenty to twenty-nine have cashed out their 401(k). Seventy-five percent have created a profile on a social networking site. Forty percent have tattoos, and many have two to five tattoos.

Generation Z is the 1990 decade of births.

The generation s for 18 percent of the world’s population. The generation generally lacks interpersonal skills. They are not good listeners and have unpolished verbal communication skills. The use of the World Wide Web is for communication and keeping in touch. They will be a largely telecommute generation where possible and will stretch the bounds on what qualifies for telecommute-suitable jobs. They are accustomed to virtually instant action and satisfaction due to Internet technology, actually carrying the Internet access in their pockets at all times.

Generation AO, the always-on generation, have or will have birth dates between 2000 and 2020, whose lives have or will be influenced by connectivity and easy access to the world’s people and the world’s knowledge via the Internet. The generation is projected to be nimble, quick-acting, voracious multitaskers who rely on the Internet as their external brain. It is suggested that they will exhibit a thirst for instant gratification and quick fixes, a loss of patience, and a lack of deep-thinking ability. (Pew Research Center Internet & American Life Project,

Janna Quitney Anderson and Lee Rainie)

IT IS NOW TIME TO FORGE A NEW PATH

The concept of wellness as a management theory cannot be allowed to repeat the history outlined above. Missing in the theories along the management path is a clear recognition of the concepts of trust and ability. Wellness must be taken in the whole; it must be both universal and synergistic. Wellness is not a cost. It is a measurable investment-yielding opportunity for significant, measurable, and sustainable return on investment if planned, implemented, and ed correctly. It is a long-term strategy. It is a complex undertaking with many moving parts. It requires the full commitment of the executive team as well as every other member of the organization’s team. Those commitments permeate the organization and cannot succeed if ability and trust are not at the very foundation of the enterprise. Wellness, as outlined in this book, will return the United States to a position of economic dominance, build the workforce of the future, create ability and trust in the employment experience, and embrace the societal mores of the time. It is through the employment relationship and the employment experience that these changes must occur. It is through the employment relationship that the audience for education exists. ERISA more and more holds employers able for educating employees on topics, such as retirement preparedness, and it is through this experience that the mutually beneficial synergistic changes discussed in this book will evolve if employers see and take their role seriously.

3

PERFORMANCE MANAGEMENT

Given the many changes in the employment arena that are taking place and that are in the forecast for the future, it is important to address performance management. The supervision, ultimate control, and responsibility for managing a business will not go away anytime soon. The processes and methods will change. Management will have the responsibility of managing. I am aware of the catchy little phrases like “statistics don’t manage quality, people do” and “people do not want to be managed, they want to be led.” There is truth in both of those (and many other) feel-good concepts. Think about these words, and another side of the issue comes into focus. Statements like these are begging for recognition: recognition of the people. Dig a little deeper into statements like these, and I think we can see another plea: ability. I am not sure people want to be led or managed as much as they want trust and ability. Employees reject micromanagement, but they have regard for management that is results oriented and embraces the realities of today’s society. Wellness, as we will see, requires ability and performance management as one level of behavioral intervention required from the employer in achieving ability.

ABILITY MUST BE A CRITICAL WAY POINT GOING DOWN THE PATH TO WELLNESS

A review of all the theories discussed in the last chapter brings a point to the forefront. Is ability not, on some level, absolutely required in these theories? But that concept is not a central focus. Even the several generational divisions of people have, at some level, at least the concept of ability at the core. Can people not be able and behave or deliver that ability differently? Among the management flavors of the month, for some period of time, the popular concept was empowerment. We were challenged to empower employees. Empower is to give authority to do something within the confines of the standard operating procedure. I do not want to play semantically based games, but why would we do that? Why would we not set people free to perform and achieve, provided that the result is within the required standards? And the other word that gives me pause is challenge. Management challenges people to achieve, grow, produce, etc. I think the better term and practice is to stimulate. That is to say that management has the high objective of creating an atmosphere and culture in which people can be motivated (always a self-driven concept, I cannot motivate you nor can you motivate me), liberated, and stimulated. In the workplace, to empower is to license or sanction, and to liberate is to emancipate; to challenge is to call on another to do something bold, and to stimulate is to invigorate, excite, and vitalize.

Team Excellence Inc. is a Houston, Texas-based company that, over the last three decades, has specialized its practice in performance management and leadership development. The firm counts some of the largest companies in the country as well as entrepreneurial start-up companies among its historic clients. The company has received prestigious awards from the Society of Human Resources Management (SHRM). Borrowing from Randy Hopkins again: “My perspective has always been ‘Nothing is more critical to the success of any business than the thinking and behavior of human beings.’” He continues that the management role is not “touchy-feely.” Indeed, the of the team

(aka employees, aka servants) must be able, and a closed loop of ongoing, honest communication is required. While no company ever launched for the purpose of being an employer (PEOs exempted), companies cannot exist without the input of human capital and human talent. To achieve the goal of wellness and ability and to reap the return on investment, several performance management ingredients are required. Given the history of employment and the wringer that management has put people through with the various fleeting management practices, employees must be revitalized before true mutual ability can be recognized in American commerce. Performance management must embrace both behavior and result. Employees are able for their behavior. Employees get hired for their skills and fired for their behaviors. Behavior can and should be understood prior to the hiring event. I very strongly the use of behavioral metrics both prior to and regularly during any employment relationship. The Team Excellence system is a very good system that bridges from the graphic summary of behavior to the understanding of the interpretation and use of the data by both the employer and the employee. Performance is the input, and corresponding result, the output. The system can be reviewed online at www.teamexcellence.com.

The objective of performance management should be to get all employees to reconcile personal goals with organizational goals. That statement is intended to include wellness missions and goals—both personal and organizational. The OmniWell Model design includes career wellness, financial wellness, and physical wellness and has the purpose of building the foundation on which behavior change is realized. I suggest that performance is actual results or ability versus desired results. A performance or ability problem is any gap between desired and actual results. Employees must have vested in them, and they must accept the mantle of ability. Performance management must look forward as well as review past performance. All too many performance reviews focus only on past behavior and, all too often, just the immediate past.

ability requires the ingredient of discipline. That term in this context is not associated with punishment. It is, instead, expressing the need for orderly conduct of behavior. Behavior is a science onto itself, but for our immediate

purpose, think of behavior as a collection of actions that are definable, repeatable, predictable, and measurable. Behavior is a continuously emerging set of actions, which are learned and are the way people conduct themselves in response to situations, understandings, or emotions. This reinforces the understanding that motivation is internal. But it also reinforces that each and every healthy individual has control (discipline) over their actions. The performance management system, therefore, holds people able for their actions. A critical ingredient, clearly, in transforming an organization to the realization of universal wellness is if the performance management system looks forward as well as reviews past performance but focuses intently on the individual’s behavior in the job and the performance results.

PERFORMANCE MANAGEMENT- THE REQUIRED METHOD FOR GETTING EVERYONE ON THE SAME PATH

The vocabulary of performance management needs to be in alignment with the wellness initiative. The Team Covenant and the accompanying metrics accomplish this requirement in the OmniWell Model. Many performance evaluation systems have the educational grading system of A, B, C, etc. Others use a numerical 1 to 10 metric. Many other systems are used, but the ultimate performance is when the supervisor and the employee agree on behavioral expectations and the measurable basis for those behaviors. What this means is that an employee either performs as expected or above or below the expected standard. Nothing else is important. Meeting the expected is as good as it gets. The supervisor knows each individual employee’s capabilities (which will change without exception either for the better or for the worse but will not be stagnant). In this context, equal opportunity, as Randy Hopkins says, is not intended to mean identical treatment. Once the individualized expectations and required behaviors are understood, the management role is that of liberating and stimulating. Stimulating can include many things: education, new experiences, shared goals, etc., being among those.

For all this to work, a shared vocabulary is required. I think the best example of a disciplined and well organization or team is a concert band or symphonic orchestra. The band, for example, has sections (trombone, clarinet, percussion), which are like departments in a company. Each has an important role to play. Each has multiple contributors. One voice off-key or off beat damages the output. Within the sections, there can be subsections: alto sax, baritone sax, tenor sax, etc., and then further subsets such as first, second, and third parts. There can be soloists but only when built into the framework of the whole. There are job descriptions, which are the sheet music each musician reads and interprets. Everyone in the organization is held to the same standards. There is a shared language. Every member of the orchestra knows that ff, for example, means “a degree of loudness” and that p means “quiet.” There are degrees of these and a whole other set of that define things like tempo, emphasis, etc. The

manager (CEO or conductor) holds everyone able for their own contribution. Section leaders (first chair or supervisors) are responsible for leading their individual section. Individual ability and discipline are critical to every band or orchestra. On and on it goes, but the language of musicians is understood throughout the organization. It is a unique language. The most able and well-run organizations have a language—a communication system that is understood throughout the organization.

GETTING IN SHAPE FOR THE TRIP DOWN THE PATH: THE REQUIREMENT OF EDUCATION AND COMMUNICATION

Important to the disciplined wellness element is the development of the individual. I have a strong bias. I remind you of the thought that people should not be trained. They should be educated. Training is what you do with a dog to get a rote learned behavior with no evaluation of alternatives or understanding of reasons. Educating requires exposing an individual to information for their own understanding and application. Education is then expressed in this context in their behavior. Education in this fast-moving era of business change must be constantly updated and renewed if a company is to grow, and it, therefore, should be a depreciable expense. Musicians are not trained, they are educated. The result of individual initiatives (interpretation in the of music) is to the betterment of the whole, provided that the interpretation fits the immediate standards. In this context, the emerging divergent workforce can be a virtuoso performance for generations to come. Or it can be what some call rap (only one letter is missing) in the contemporary music scene.

Benchmarking communication is the one metric that most often gets critical review by team —at all subsections of the organization. The Team Excellence behavioral management system is unique in the crowded market place of behavioral metrics. The Team Excellence personal strengths inventory distinguishes itself by using everyday language to capture, analyze, and discuss behaviors. Moreover, the system is based on, built on, a positive vantage point for the behaviors measured and built on the team covenant. Wellness requires such a system. Further, the Team Excellence methodology closes the communication loop with a management process that is built on the same language and understandings as the individual personal strengths inventory and the team covenant. In the midst of all this is a performance management system that is consistent with the whole organization universal wellness structure. So broad and consistent is this system that it encomes the hiring process. Clients can get a personal strengths inventory on every candidate applying for every open position in the company and the barrier of cost is

eliminated in the unique OmniWell Model. Wellness is behavior based, and analyzing candidates’ behaviors on the inbound side is critical.

We notice that people get hired for their skills and fired for their behavior whether the skill need continues to be required or not. Every candidate should have behavioral metrics established and considered along with all other hiring data. Interviewing is a critical skill, but one that is generally not ed with educating the employees who are responsible for this important task. Of the three common tools for vetting candidates for employment (behavior metrics, interview, and reference checks), I know professionals for whom I have a lot of respect, saying that if needed to select only two of the three tools, they would take the behavioral metrics and reference check to make their hiring decisions. Does that surprise you?

Skilled interviewers will use the metrics to probe into the candidate’s past and future behavioral responses to actual events or to scenarios of possible situations. Skilled interviewers will then confirm the behavioral metrics with appropriate probing questions. A snapshot of the candidate in the workplace emerges. The behavioral metric then becomes the foundation for ongoing performance review and is consistent (equal) throughout the organization without being identical. A web-delivered dashboard of interpretations and applications of the behavioral metrics interpretation is available to anyone who completes the evaluation and is of particular meaning to team who perform within the employment relationship.

Clear standards are required if individual ability is ever to work. Management must accept the ability for establishing and articulating clear standards. The well-functioning team will interpret the standards and establish their own personal behavioral standards in of the greater mission. Benchmarks relating to quality, productivity, ultimate output will guide the organization. A part of the Team Excellence philosophy is that equal opportunity must be offered to every team member in every matter of the business, but again, equal does not mean identical. Clear, ultimate standards may

be reached in multiple ways, and team must have the equal opportunity to achieve those standards. Standards must also be assigned to wellness and to create ability for employee engagement. The peer forces in the properly built wellness initiative provide positive internal acceptance and .

The frequency and quality of internal is a key requirement in the behavioral management system, and it embraces the emerging work environment. Certain kinds of information that individual organizations provide may need to be eliminated (depending of course on the ultimate outputs of the organization). Management must follow up on each unanticipated outcome and communicate, in clear , the findings of those follow-up processes with all involved team . Meetings to communicate, educate, and inform will be required, but those meetings may be through virtual media. Other meetings the company holds may not need to be held any longer. But the ongoing review of performance will be required. More and more peer review and peers holding peers able will become the norm. Counterproductive individual and/or group behavior of team will not be tolerated by the balance of the team. The development of new norms must be encouraged throughout the organization. Behavioral on the performance of the individual team ’ abilities must be swift and ongoing.

INDIVIDUAL ENERGY AND INTRAPRENEURIAL SPIRIT EMBEDDED IN THE GATE OF EACH SOJOURNER ON THE PATH

Another reality of the emerging workplace is “how far can we go?” It is the “how far can we stretch the norm and still be sanctioned behaviorally” phenomenon. To the extent that ability is the decisive factor, and appropriate behavior, the expectation, stretch is a healthy ingredient in this wellness recipe. Companies draft a mission (purpose), a vision, and value statements in the boardroom and publish those lofty articulations to the public, suppliers, and all the team alike. With the public and the suppliers, the company is soliciting if not praise, then at least acceptance. With the team , the company is often expecting compliance. What is needed in a wholly well company is not compliance but rather universally shared ambition. This shared ambition and shared vision leads to ability and an intrapreneurial spirit. Job descriptions are often more focused on compliance than on describing the job and the necessary outputs and holding the employee able for the necessary behavior to accomplish the required inputs. A bigpicture view is required by all team if holistic, synergistic wellness is to be achieved.

THE PSYCHOLOGICAL COMMITMENT TO MOVING THE TROOPS DOWN THE PATH: THE TEAM COVENANT

The OmniWell Model of wellness is built on a very unique and powerful team covenant. Using the Team Excellence framework, team hold each other able for behavior. That ability embraces not just performance wellness as it relates to output but also to the general physical wellness of the team and the correct use of consumer-driven health care. A shared identity emerges, and team within the team get ionate about the identity of the team. The shared identity also leads to a stronger and tighter integration across all the departments and all the functions necessary for the company’s desired output. As a result, individuals not only have the shared vision but also a very clear picture and understanding of how his or her own behaviors in task accomplishment contribute to the overall wellness of the company. Just as important, team have an understanding of the shared risks, which, in a wellness-focused company, could lead to uncontrolled and increasing health care costs. Employees become not just aware but sensitized to those risks and to the effect on each employee if those risks are not managed by the individual team . The recognition by employees of the personal meaning of business decisions and initiatives to a large extent influences the acceptance of the various abilities by the individual team .

It should come as no surprise then that the natural outcome is mutual trust. From the very beginning of a wellness initiative, trust must be encouraged, demonstrated, and nurtured by management. Given clear standards, clear performance expectations, a covenant to accept ability, and a system that is consistent with all the performance metrics, a sense of fairness and trust emerges. Teamwork and communication within and across departments, systems, and individuals is easier. Individuals become willing to accept ability rather than deflect ability through finger-pointing. Wellness is a matter of trust and ability expressed in the behavior of the team . Epstein and Birchard in their book, Counting What Counts (Perseus Books), take the position that “when the able organization

frames top-level thinking in of the stakeholder view, and the labels on the company’s measurement categories match, one for one, the critical categories of behavior, relationships the firm depends on for strategic execution are realized. This ensures that the company makes no mistake about its number one job: building strong relationships with the people who, in a grand collaborative effort, run the processes that create value for the enterprise.” The recurring theme is relationship and trust. The trust bond will extend in time beyond the walls of the company. Customers will give a lasting advantage to a company when it ceases to relate to customers through buying transactions and provides, instead, a loyal, long-lasting relationship guided by ability and trust.

The ability and willingness of team to accept ability are rooted in the establishment of a trust relationship with the employer. As ability is accepted by team and trust is evident, a spirit of cooperation and collaboration is seen. Beyond ability and trust, wellness also requires other kinds of behaviors from people and these behaviors are part of the team covenant. Openness to learning is required as the team member is exposed to skills development for the employers’ advantage, but also personal skills in the financial and consumer-driven health care markets are taught and reinforced for the employees’ benefit. Team must have the courage of selfconfidence, the reasons and willingness to commit, and the ability to muster the behaviors necessary to capitalize on the new wellness paradigm. Each employee has a psychological contract with the employer to take responsibility for his or her “best in class” behavior and engages in the continuous process of learning that is necessary to the whole wellness model. In exchange, the company undertakes to ensure not the dependence of employment security but the freedom of each individual’s employability. This is delivered by the employer through opportunities for continuous career skills and life skills education. The team member is given control of their financial destiny and their job flexibility within the company.

The change that is taking place here is that team are a responsibility and a resource to which value is added. Team are not seen as a corporate asset from which to appropriate value. In the new relationship, we see a rejection of paternalism, even an arrogance that underlies lifelong employment

relationships. Only the market can guarantee employment. This new moral contract does consider that employers have a moral responsibility to help team be the best they can be in what they choose to do. Again, to Randy Hopkins, “People are given permission to be who they are.”

Team also, and rightly so, have demands in this moral contract. They must have the courage and confidence to abandon the stability of lifelong employment and fully embrace the requirements of lifelong, continuous learning and personal development. Team must accept that the security that comes from their individual able behaviors rests on their shoulders so that ultimately, both more durable and satisfying career wellness will be realized as opposed to the now-outdated paternalistic management style.

THE TEAM COVENANT IS THE COM THAT POINTS THE WAY ALONG THE WELLNESS PATH

Let’s be clear on what this covenant, this psychological contract, isn’t. It is not a catchy, unsustainable phrase or concept. It must be the kind of proven commitment built on mutual trust and ability that champions credibility and makes the hard-edged demands for a wholly well organization acceptable. Neither is it an altruistic agreement to educate and develop people at company expense so they can find better jobs elsewhere. We established very early in this book that employment, while not an easily defined term, is, at least, a relationship. Relationship is a two-way street. Relationship becomes more than an abstract term when behavior is brought to the relationship by the parties thereto, which contributes to achieving the shared vision. Finally, the team covenant, the psychological contract mentioned earlier, is not some program that can be installed. This is a totally different philosophy. The OmniWell Model’s strategy builds a new employer-team member relationship that bonds people to the company and to each other in the ability and trust relationship. It is a very highly moral covenant. It requires performance, performance standards, and management. As you will see, ability and performance, behavior and attitudes, are engrained in the total concept of wellness. Employees, employers, and even medical providers will be the benefactors of the wellness objective.

So the typical benefits of performance management looks like this:

Direct financial gain

Organizational growth Reduced costs—more efficiency, etc.

Stop time-wasting activities Align the organization with overall strategic plans Decreased time in getting operations functional through improved communication

With a solid wellness initiative, we can include the following:

Organization vitality through better employee understanding and control Reduced costs of health insurance Higher quality health care providing long-term cost control strategies

Motivated workforce

Optimized incentive plans Improved employee engagement Transparency in goals achievement Confidence in the bonus system Employee development

With a solid wellness initiative, we can include the following:

Employee stress level diminished Employees understand and appreciate the benefits offered Employees in charge of their own financial destiny Employees absenteeism is markedly reduced Employee presenteeism is mitigated as stress is reduced

Improved management control

Flexible, responsive to management needs Understands process and information relationships Process documentation and standards Process compliance Communication and documentation protocol

With a solid wellness initiative, we can include the following:

Engaged employees Focused employees Dedicated employees Well employees who are able for their performance and the results both in the job and in regards to the wellness initiative of the company

Trust

The specific wellness ingredients will be discussed as we move forward. The point here is that performance management, ability, and mutual trust are inseparable. This is not an impossible-to-achieve objective. Some companies have achieved this organizational format. Interestingly, the companies with which I am aware and who have achieved this model are also on the leading edge of their market penetration and leadership. It is no accident. It is not a coincidence. These employers have become sought-after employers by employment candidates—whether or not that individual is currently employed. These companies have an environment, a culture, that embraces team in the real sense of the word and not in lip service, management-speak, feel-good clichés. Wellness means that everyone in the organization embraces the goals and concepts of holistic wellness.

4

HOW WE GOT HERE

Health care in the United States, including the delivery processes, payment practices, and all the ancillary systems that health care, have not suffered from being ignored. As a matter of fact, health care has been under the public microscope for the past two decades. Presidents Clinton, Bush (41 and 43), and Obama have all addressed health care issues and have manipulated the formulas for health care payment via adjusting Medicare and Medicaid benefits payments (which become the gold standard for health care reimbursement). Insurance companies have introduced new services and discussed and defended the costs involved in delivering health care. The trouble is that the ultimate consumer, the nation’s employees, is one step removed from the important decisions that impact health care plan design and cost. Employers, who are put into the position of securing and contributing to the cost of health care, make their decisions on commodity care plan designs with a predetermined range of cost, depending on ultimate underwriting evaluation. In many cases, the insurance company can provide a price, which is used in the open enrollment but which, after the enrollment in some cases, can be increased or (rarely) decreased up to 15 percent. Buying commodity plan health insurance based on price, which often happens as the employer fits the cost structure into the budget and strategic plans for the coming plan year, is like electing to give a complex brain surgery procedure to the lowest bidder and making selection on that one bit of information only.

PROFESSIONAL EMPLOYER ORGANIZATIONS AND THEIR POTENTIAL ROLE IN WELLNESS

Companies using the services of professional employer organizations (PEOs) put the employee two steps removed from the decision making or at least influencing position. There are, in the world of PEOs, some very good players. They have a true proactive human resources component, and they have a relationship that is genuinely one of trusted advisor to their clients. Many, on the other hand, have lost sight of the delivery of the PEO value proposition (despite the fact that that value proposition may have been articulated in the client procurement process). Many PEOs are moving away from accepting the role and liability of an employer and ing the liabilities to the site employer. If the PEO is taking this tact to avoid liability but not becoming involved in the trusted advisor role, they have lost their value proposition and are nothing more than an expensive payroll bureau. If they have the maturity to be contemporary in their services portfolio and they accept liability for mitigating client liability, they are worth their fees many times. Wellness is typically difficult for a PEO to deliver given that the PEO is an istrative employer. Often, the PEO makes available the health insurance plans. It is that separation between employee and the insurance provider that makes a difficult situation. Employers can use PEOs and provide their own insurance. On the other hand, PEOs can step up to the plate and deliver wellness curriculum. If, in fact, the PEO has the trusted advisor relationship and the expertise, they can coach management as well as employees.

There are some very good PEO operations in the United States. One of the most promising developments in the PEO model is in North Carolina. A revered leader in the PEO market is building a PEO in which the noncompeting clients are owners in a co-op which delivers the PEO services. This visionary then makes wellness a cornerstone of the services and plans to have a bus-like vehicle that will travel between the co-op clients to deliver wellness services. It is a stroke of genius.

THE STATE OF HEALTH INSURANCE AND BENEFITS AT OUR CURRENT LOCATION

Back to the discussion of buying the various styles of commodity health plans. We have followed that path through the primeval wood yet again. We need change. But first, let us look at how we got to where we are.

Health insurance generally comes in two flavors. Fully insured plans are secured by a contract between an insurance provider and an individual or the sponsor of an individual or group of individuals as, for example, an employer. Insurance plans that are self-funded on the other hand, are referred to as an ERISA (Employee Retirement Income Security Act) plan. As such, they are not insured by an insurance company, but many times, they may be istered by an insurance company and often a major recognized name in the health insurance industry. It is not unusual that the name of that istrative organization gets attached to the plan, and by the istrative relationship, that party is construed as the insurer of the plan. In most cases, the self-insured plans have reinsurance policies to insulate the self-insured plan from excessive cost, which may occur from catastrophic losses in a given plan year. ERISA plans are not subject to state law, but rather they are governed under the ERISA federal law under the jurisdiction of the Department of Labor. Recent economic declines and the appetite for large-scale health reform has caused congress to pay considerable attention to regulating pension plans, health plans, and other employee benefit plans. The ERISA legislation of 1974 carries the principle burden of emerging legislation and provides a comprehensive federal scheme for the regulation of employee pensions and benefit plans. The act provides protections including reporting and disclosure, participation, vesting, and benefit accrual, as well as plan funding. ERISA is a strong voice in the regulation of employee benefits.

The 2012 effective date of sweeping legislation by ERISA to make 401(k) fees

transparent caused one midsized specialty provider in the HR outsourcing segment, with whom I am familiar, to avoid any involvement with any service that might expose how fees are earned. They shrank into their shell when they had to reveal to employees just exactly how much and from what avenue they earned their fees—at the employees’ expense in some cases. But true consumerism in the benefits arena requires such disclosure, and consumers will take time to understand and interpret that information only if and when they are equipped with education to that analysis. The same can be said of all benefits, not simply 401(k) plans. Whom does an employee trust for advice if not the 401(k) advisor, and how does an employee interpret the information regarding their financial future? With the bulk of retirement plans today being the self-invested kind, education and understanding become the resources that are required rather than prepackaged, “one size fits all” portfolios. The intention is not to make employees into day traders but rather to give them the foundation for managing their affairs and being more in control of their financial destiny. Education is a key component of the OmniWell Model. Nonsolicitous resources surround the entire curriculum.

Further to the impact of ERISA, the act contains various standards that a benefit plan must meet in order to receive favorable tax benefit for the employee benefits and also the accepted regimen for termination of benefits. Plan fiduciaries and plan s are charged with duty and liability for proper plan management and istration. Against the backdrop of regulatory authority, let’s look at the genesis of health care insurance and the path it has taken.

THE PATH ALONG WHICH HEALTH INSURANCE HAS COME

Accident insurance, surprisingly, predates health insurance by seven decades. Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. Founded in 1850, the firm offered insurance protection against injuries arising from railroad and steamship accidents. Within sixteen years, sixty organizations had similar products available, and the industry rapidly consolidated. The first employer-sponsored group disability policy was issued in 1911, and the plan’s primary design was to replace wages lost to any inability to work, not the cost of medical expenses. Prior to the development of health insurance, patients were expected to pay all the cost of medical insurance from their own resources in what we know as a fee-for-services model. The evolution of health care insurance is a fascinating study. A brief summary will set the stage for where we find ourselves on the path today.

In the 1880s, the immigration traffic from Spain to the United States by way of Havana was full of job seekers. In Havana, there were many organizations representing the various cultural regions of Spain. The purpose of these organizations was to provide a little taste of home and a form of health care assistance. Social activities, education, recreational opportunities, and health care assistance were the member benefits provided by the Centro Asturiano de La Habana. The United States in due time had restricted immigration from Europe but not from Cuba. The Tampa, Florida cigar industry was thriving, so the path into the United States was through Cuba. The first president of the Havana Club came to the United States and was drafted as the chairman of a committee formed for the purpose of rectifying the absence of health care assistance for the many immigrant cigar workers. A club already existed in Tampa, the El Centro Español de Tampa, and the club had made an unsuccessful attempt to create a health care system in the face of strong opposition from the Latin Medical Association, a group formed by the cigar manufacturers, local doctors, and area pharmacists. In early 1902, a local physician, Dr. G. H. Altree volunteered to be the medical director of the Tampa club, and he offered the use

of his clinic and sanitarium to Centro needing medical attention. A year later, the practice was so large that hotel space was leased to accommodate the growing medical needs. By 1905, a dedicated facility with fifty-four beds was established, and in 1927, a second hospital facility was established. Inevitably, by 1956, the Centro Asturiano Hospital Inc. was chartered, and all the Tampa facilities were transferred to the new corporation, allowing the facilities to qualify for federal funds and grants from private corporations.

A comprehensive prepaid health services plan with twenty-nine offices throughout the Los Angeles area was formed by two physicians, Dr. Donald E. Ross and Dr. H. Clifford Loos, in 1929. The base concept of the plan was that health care could be improved by combining prepayment of services and eliminating financial barriers constricting patients from getting care through the sharing among the twenty-nine offices of medical records and the resulting ease of consultation. Two thousand employees of Los Angeles County and the Department of Water and Power and their families personally paid a monthly amount for participation. Prenatal care, well-baby visits, and immunizations were included in the standard benefit package with small or very low copayments. The focus of the practice was on improving the quality of medical care rather than financial success. This model was the first health maintenance organization (HMO) in the United States despite the fact that that nomenclature was not coined until the 1970s. Many primarily governmental employers ed the plan over the next fifty years, and the company was eventually sold to the Insurance Company of North America.

Dallas, Texas, in 1929 was also the location of the first actual health insurance plan in the United States. For $6 annually, Baylor University offered each of 1,500 schoolteachers up to twenty-one days of hospital care. In that time, all hospital costs were about the same. The effect was that Baylor’s revenue stream became very predictable. The model attracted the attention of Blue Cross in Sacramento, California, who introduced their health plan coverage in 1932. The plan covered only hospital care, and that led to patients being treated at the hospital whenever possible. Is this beginning to sound familiar? Does it resonate?

Note that insurance was positioned to pay for the catastrophic events, those that required or could be treated in the hospital. No co-pay. No out-of-pocket max. No office visits or prescriptions were included.

THE DEBATE OVER ALTERNATE ROUTES TO PUBLIC AND GROUP HEALTH INSURANCE DESIGNS

In the 1930s, the istration of the Theodore Roosevelt presidency investigated the possibilities of creating a national health insurance system while it was deg and creating the Social Security system. The effort was abandoned because the American Medical Association fiercely opposed it, and moreover, the AMA opposed all forms of health insurance at that time. Let’s go further down this path.

With the advent of World War II, companies competed for manpower and talent. Visionary companies started to compete for their needed personnel, using employee benefits. The concept of employer-paid health insurance plans spread. Inevitably, the IRS thought it prudent to investigate the effect of employer-paid insurance plans. In 1943, the IRS took the position that employer-provided health benefits plans would be income tax exempt for the employee and tax deductible for employers, provided that the tax treatment would not extend to individually purchased employee health insurance. The IRS should make the same determination about employee education and allow it to be a depreciating and renewable expense. The plan regarding benefits took root quickly in the United States commerce system, and by the mid-1950s, health care insurance had become a right, an entitlement, and a firm expectation of the workforce. In reality, health insurance is not a right or an entitlement, but wellness is an organization’s imperative and an individual’s obligation.

President Harry S. Truman proposed a system of public health insurance in November 1945. He envisioned a national system that would be open to all Americans on an optional basis. Participants would pay a monthly fee into the plan, and the plan, in exchange, would provide for having the costs of any and all medical expenses arising from a time of need being covered. The costs of services provided by any doctor would also be covered in this grand plan. But

that is not all! Truman also included a provision in which the insurance plan would give a cash balance to the policy holder to replace wages lost due to illness or injury. Need I say that the plan was popular with the public? But fierce opposition by the Chamber of Commerce, the American Hospital Association, and the American Medical Association (which denounced the plan as “socialism”) was a viable counterforce. The national insurance system lost political momentum (temporarily) and ultimately failed.

Foreseeing a long and costly political battle and seeing an opportunity ripe for the picking, labor unions chose to campaign for employer-sponsored health insurance coverage, which they saw as a less desirable but more easily obtained goal.

On the way down the path to the near universal health care coverage, Congress, in all its wisdom, ed the Hill-Burton Act in 1946. The legislation-made mandate that any hospital receiving any federal funds was obliged to offer free hospital service for any uninsured persons unable to pay for health care. So for nearly seventy years on this particular matter, we have kept the path a sacred groove. In fact, health care insurance should not be a right or an entitlement. Instead we need a system that holds wellness to be an organizational imperative and an individual employee obligation.

By the early 1960s, physicians were paid “usual, customary, and reasonable charges” by insurance companies and Medicare. In the beginning, this worked acceptably for everyone despite the elimination of competition within the physicians’ world of practice. The very natural effect was that patients viewed lower prices by a physician as a metric to measure quality of medical service provided by that physician. The very natural result was that health care costs would increase, resulting in health insurance becoming unaffordable or simply unavailable to many persons. Predictably, interest persisted in creating public health insurance for those unable to access the private marketplace.

MEDICARE AND MEDICAID TAKE THEIR PLACE ALONG THE ROUTE

The 1960 Kerr-Mills Act provided matching funds to states assisting patients with satisfying bills for medical services. At about the same time, Congress rejected a plan to subsidize private coverage for people with Social Security as unworkable. President Lyndon Johnson signed into law the Medicare and Medicaid legislation to remove from the roles of the uninsured the elderly and indigent.

The 1960s and ’70s were a period of great advancement in medical technology. The technology was unprecedented and greeted with disbelief and awe by the patient community. This allowed for price escalation without bound. Patients were oblivious at that time to the increases because there was no basis of comparison for these futuristic, promising treatments. Highly skilled and innovative physicians established themselves in specialty practices using the newest technology. Instead of having the typical effect of lowering cost as new competing technologies were introduced, and because the consumer was one step removed from the purchasing decisions, there was no market-driven competitive cost adjustment.

Persistent lack of insurance among working Americans continued to create pressure for a comprehensive national health insurance system. In the early 1970s, there was a fierce debate between two alternative models of universal coverage. Senator Ted Kennedy proposed a universal single-payer system while President Nixon countered with his own proposal based on mandates and incentives for broadly based health insurance availability. The path still winds over thoroughly trod terrain!

The 1980s saw some cost push back, and the medical profession moved to a more piecemeal delivery system. Physicians, not typically outstanding business persons, came to realize an obvious option. They could spend less time with each patient, whether in the office or in a hospital. They could also perform and charge for more procedures if those procedures could be supplied in the physicians’ offices. That would allow for more patients and for higher cost procedures. The friendly family doctor was fast becoming a machine cranking out diagnosis and specialty procedures in a mass production process. In addition, the 1980s saw Medicare implement a physician-reimbursement system based on predetermined fixed fees for specific patient diagnosis. Insurers caught on and adopted the Medicare rates as the standard reimbursement rates for specific diagnosis. The result was that payments from an insurance company, including the bundled costs of allied services, were not much higher for a very serious diagnosis (i.e., stroke) than for a less critical diagnosis for the same condition. There was no consideration given in the process to value. Recidivism rates, mortality, infections, pneumonia, etc., during treatment were not considered. Quality was a nonissue!

PHYSICIANS ESTABLISH STAND-ALONE FACILITIES TO DELIVER SERVICES TO THOSE WHO THEIR WAY

A further development in medical treatment during the 1980s was the venturing by physicians into ownership of freestanding procedures to deliver medically required procedures. Operating rooms, testing facilities, labs, and other servicespecific facilities cropped up. In 1989, physicians were barred from “selfreferral” to physician-owned facilities regardless of whether they were more efficient or of better value by any metric! The Stark Law memorialized these restrictions, but no regulatory oversight was developed to address fixed-fee services, which had become standard practice, and the physicians’ incentive to treat ad infinitum rather than to minimize the need for treatment, prevent disease, etc. In other words, value was not contemplated in the formula for health care delivery. Thirty years later, we still make our way along that old path.

In later years, the rates allowed by Medicare took into the complexity of the patients’ conditions but not sufficiently to positively impact services quality. So incentives reducing the length of hospital stay started to become the norm. Value has not played a role in the health care cost formulas. The natural result is that costs have increased dramatically.

Interestingly, the stand-alone service-specific facilities have become an unwitting contributor to the broken system. It is not unusual for a single facility with a single piece of equipment (MRI for example), addressing a single medical procedure (hip for example), using the same staff and technology to charge between $800 and $2,300 for that very same procedure. (See appendix.) The difference is in network determination, who will pay, and what the agreed to discounts are. Here is a real-life example: Carol Gentry, writing in the Tampa Tribune August 27, 2007, said this: “The cost of heart by operations at Brandon, Florida Regional Hospital is $90,000. The same procedure at Tampa General Hospital is about $45,000. But go to Bayfront Medical Center in St.

Petersburg and the bill comes in at $30,450 for the same procedure!” Gentry goes on to say that while the difference may be surprising, it is not uncommon. And then she says this: “Case in point: Even though by surgery costs considerably more at Brandon, the other two hospitals received higher scores for effectiveness from WebMD Quality Services, which analyzes hospital-patient data and sells the analysis to insurance companies.”

THE CONSIDERATION OF VALUE AS IT RELATES TO THE AVAILABLE SERVICES ALONG THE WAY

Again the question in the forefront: What consideration do we give for value? We provide to our clients the value analysis of medical facilities, physicians, and other providers in the supply chain so that health care cost management and high-quality standards are within our reach. The OmniWell Model has a partner who has the various medical delivery sources and resources fully vetted. (See chapter 5 and appendix.)

The share of Americans with health insurance has been steadily declining over the last decade. As of 2010, just less than 84 percent of Americans had some sort of health insurance coverage. That number translates to about 49 million persons who were, at that time, without health insurance. The declining rates of insured people coupled with underinsurance are, of course, directly the result of high cost and high unemployment. Public programs are forced to take up the slack. Public programs now cover 31 percent of the US population and are responsible for 44 percent of health care spending. The cost of treating the uninsured must be absorbed by providers as charity care often is rendered, and those costs get ed along to the insured through cost shifting and higher health insurance s or they get paid by taxpayers through higher taxes—or both, sadly.

There is a lot of history that got us to where we are. This path has taken us as a nation to a position in which per capita health cost eclipses that of most other developed countries. The high cost of health care has not provided greater access to medical care. The number of Americans without health care insurance continues to grow annually, currently suring fifty million persons. Specialization by physicians allows for higher cost of medical care delivery, and hospitals are forced to pick up the slack, be it providing “free” (there is no such thing as a free lunch) care to those who need it. This enables—even mandates— poor consumerism in health care, and it ignores quality and value. At the same

time, a growing number of Americans both with and without insurance choose to not get treatment. Primary care is illusive in many demographics around the country, and patients are not equipped to navigate the health care waters. Until they are, these problems will continue to exist. But again, the health care consumer is one step removed from the insurance plan designs and the ability to vote for companies and plans with consumer dollars.

The debate has raged over where on the globe superior value health care can be found. Concierge services direct patients to various countries for various medical procedures and claim that quality is unsured. Lodging for family, airfare, the medical procedure itself, and follow-up are claimed to be a mere fraction of the cost for identical procedures in the United States. Health care costs are regularly reported to be higher in the United States than in any other developed nation. And do you the discussion above concerning hospitals providing “free” medical services to those who cannot pay for it? Well, the unfortunate people in that group rate the care that they receive at public expense as the worst among the same demographic in other developed nations.

You have heard the argument, I am sure. Acquaintances of mine who hold dual citizenship (how can that be?) argue that health care in Canada is superior to that available in the United States. You do not need the interference in the system that comes from insurance, they argue. Invariably, however, these folks grant that the wait to see a physician is exceedingly long. And if the patient needs extended or long-term care, the family can select two or three facilities, but the government makes the final selection! And there too, the wait can be long not to mention the fact that the ultimately selected facility might not be on the original list supplied by the family.

FOG AHEAD ON THE TRAIL: DISSATISFACTION WITH THE MEDICAL SERVICES INDUSTRY

On the other hand, dissatisfaction is well-founded in the overall system in the United States. Clearly, many physicians, medical services, procedures, and facilities in the United States are best in class. They are without equal. But that begs the question: What is the purpose of medical treatment? The high expenditures associated with health care domestically do not translate to either longer lives or more years of health. In fact, overtreatment, undertreatment, errors, and other quality-impacting matters often leave a lot to be desired. The cost and standard reimbursement amounts are not in alignment. Moreover, cost (true cost) and price (what is charged) are often not in alignment.

The same as can be witnessed in industries in America, decreased quality does not save money. The same is true in health care. To the contrary, resulting complications lead to substantially higher costs. Higher cost does not relate to higher quality. Studies confirm that regions in which higher spending is witnessed, better outcomes as measured, for example, by reduced mortality, are not in evidence. The exponential growth of malpractice insurance s absorbed by medical services providers and mindless, groundless lawsuits are the direct result of compromised quality and a cost that must be absorbed in the total cost of health care. It is a cost that must be absorbed by the practice and/or the practitioner and is, therefore, a cost that is ed on to the patient and/or the insurer. These costs do not add an ounce of value to the services rendered. They do not benefit the patient.

Another consideration that is too large and has such a significant impact on health care is the istrative burden. istration increases cost but not necessarily value or quality when looking specifically at the delivery of health care procedures. Paperwork is reported to take between one-third and one-half of a nurse’s time. Estimates put the cost of istration at a mind-boggling 30

percent of the total of all health care spending. Paperwork does not equate to better health care.

United States businesses are now getting the picture. General Motors has released figures that report over $1,500 of the price of a new car being the cost of health care that each vehicle underwrites. As we have followed the well-worn path, employers have swallowed increasing health care costs annually. Insurance agents or brokers bring the bad news to the employer about a month before renewal with the explanation, “You should be glad, consider the company down the street that got an increase roughly double the amount of yours.” As I have pointed out, many insurance agents are simply transactional-oriented messengers, delivering commodity services. They are not consultants. They do not have viable options to offer aside from the same commodities packaged under a different carrier’s banner. They are purveyors of various predesigned packages of health care insurance, reflecting various cost adjustments in each plan. Adjusting the more common co-pay expenses slightly (prescription drugs, office calls, annual physical wellness screens, etc.) are contemplated in the charges for each optional commodity plan description.

EMPLOYERS ARE IN THE CRITICAL POSITION TO GUIDE THE WAY TO WELLNESS

What is happening is clear: a steady, albeit small, deterioration of employmentbased coverage is under way. The mass of employers is the most effective way to bring about change, but change will be elusive if the employer mass of health care erodes. Between 1997 and 2010, the number of employees offered insurance through their employer decreased from 70 percent to 67.5 percent. Because the contemporary employment scene uses an increasingly itinerate workforce, the number of part-time workers has increased while the number of employees reporting that health insurance is too costly for them to afford has also increased. The result is that the number of uninsured persons has grown. Half of all workers whose employers did not offer health insurance benefits were uninsured, an increase of 6 percent since 1997. The distressing thing is that uninsured persons using the health care system increases operating costs, and those costs are underwritten by insurers and self-paying patients.

All this leaves employers in the position of accepting the increase, shopping with competing sources, reducing health care benefits, shifting costs to employees (co-pays and out-of-pocket stop-loss increases), or eliminating benefits. What has to get through is that employers are the first line of offense in this situation, and the result must be a win-win situation. If the employers in the United States educate their employees in financial literacy and health consumerism, if they establish value centers for the full scope of health care delivery, and if they incentivize employees and establish a culture of mutual ability and mutual trust, the tide will change. Health care will not be the monster in the GNP equation. Health care will have quality standards imposed through the expectation of value as expected by the health care consumers (employees), and the consumer will take a much more active role in health care, the options available, and the sources available to get superior results. This whole concept comes down to a single concept: behavior. How do we influence behavior?

Three things are required: appropriate incentives, education, and ability. The only way to effect these changes will be through the employer. Do you the discussion about Juran, Deming, etc., earlier in this book? The implementation of those management theorists’ processes required educating the workforce. The incentives to the employee were not in alignment with the desired outcomes. The efforts to achieve outcomes were not sustainable. Too often, the benefit was real but short lived. Wellness, properly implemented, is of great value to the employee and the employer. No hidden agenda is to be found. The result will be an enlightened and energized workforce propelling the employer to sustainable levels of production and customer service.

Individual employees often greet wellness programs with enthusiasm. It is not uncommon for employees to set one of three reasons for participation: quit smoking, lose weight, or focus on physical fitness. Once they meet their shortterm goals, interest often decreases—or disappears. Sustainability is difficult. Looking at the wellness landscape portrays a clear vision: behavior lies at the core of wellness. Our behavior-based program provides the internalized motivation to improve overall wellness. An example: the number of highly stressed employees working in the United States today is astounding. Estimates suggest that as high as 40 percent of the employees in the US workforce are experiencing severe financial pressure and concern. More than half of all marriages end in divorce, and financial distress drives most divorces. If you employ a staff of one hundred married people, over half of your employees statistically are in threatened marriages. Those employees are stressed. They are thinking, at least subconsciously, about other things than their job. Stressed employees are functioning at high fatigue levels even after a regular night’s sleep. They are not good candidates to run off pounds on the treill. They are better candidates for safety problems in the workplace of the scope that impact the annual cost of workers’ compensation insurance. Incentives and a whole person wellness experience are the only satisfactory method of dealing with both the individual employee and the overall cost of wellness.

Value-based health care is a positive sum. We can turn the vicious circle to our advantage. When value improves, both the consumer and the supplier benefit greatly. The supplier-demand model takes over. Suppliers of superior medical

services experience growth. The consumer wins because as quality grows, cost falls. Competition impacts accepted costs. The more winners there are, and the space will not be crowded for some time, the more benefit there is to society. Isn’t this the model for other industries in our economy? Where is the downside?

THE OBAMA PLAN IS A BEND IN THE PATH

The Obama Health Care Plan begs comment at this point in the discussion. The plan loses sight of several key components that, in my opinion, will lead to its demise or at least major remake. First, the Affordable Care Act ignores the hinge-pin in the health care delivery system. Prescribed managed care removes the primary care physician, that critical professional relationship in the care of an individuals’ health, from the determination of design of care protocols. Obama likes to say that people can keep their doctors. That is not likely in many cases. The practice of medicine—the delivery of care—will be eroded to a point of no return. Doctors are victims, and therefore, their patients are victims as this new law delves into payment processes, reimbursement mandates, and prescribed care regimens. Further demand on physicians comes in the form of mandated data collection and dumps to s of purported experts somewhere who will analyze the data and provide further intrusion into the diagnostic and treatment routines doctors should be deg and delivering.

Insurance companies are not a winner in this grand new plan. The plan does not, to the best of my knowledge, use any real actuarial studies to authenticate the reality of the impact of underwriting everybody in the United States. Sure, a lot of healthy young people who do not have large impact on health care utilization are in the new demographic, but to what statistical impact? How do insurance companies underwrite this new actuarial reality? Then the issue of “exchanges” comes into play, but they do not level the playing field. To the contrary, risk is spread over a smaller demographic group. The greatest benefit of insurance is in spreading catastrophic loss over the largest risk pool possible.

Employers are not winners in this plan. Companies with more than fifty full-time employees must provide health insurance for the employees or pay a tax. The choice to provide or not provide insurance should be the employers’ right. Now employers will face a cost penalty either way and face even more istrative

work for government compliance. This cost of istration adds cost but no value to the employers’ products or services. While companies with less than twenty-five employees with average annual wages of less than $50,000 may be eligible for tax credits that will offset some of the cost, we are talking small employers. The effect on profit margins is not yet known, especially in struggling economies as will be the case as this new law takes effect. Companies I have queried indicate that the lack of specific information regarding the details of this new law is very frustrating and makes both staff and budget planning a very difficult matter.

The government appears to be the winner. More government will be required to govern. A rich topic for political debate is provided. Candidate positioning opportunities abound.

Wellness is the subject in this debate, but wellness is not the objective of this debate. In a country where legislators make law as a matter of special interest and as a matter of justifying a personal role in legislative professions rather than a role of contemplating and preparing legislation for societal needs, wellness is a popular topic and gets good play. We have before us a path that can redefine the employment experience and restore the economic dominance of the United States, or we can take the old route and get the same results.

Individually owned policies may be a great thing—when an educated and informed consumer-driven market is in place, but in the meantime, it is a selfdefeating downward spiral. Individually owned insurance policies would help expand the competitive nature of both health care and health insurance, but the element of education must be present if the system is to have any value at all. Indeed, I think we will gradually move toward individual health insurance policies absent in the Obama plan if the wellness initiative gets traction.

The federal Agency for Healthcare Research and Quality reported recently that in 2009, 21 percent of all health care expenses are used by 1 percent of the

population. That report did not say 1 percent of the insured. It said in fact 1 percent of the United States total population. In dollars that is, according to the report, $1.26 trillion annually. Said with another statistic, in 2009, 5 percent of the civilian population ed for nearly 50 percent of all health care expenditures. Older Americans do for higher expenditures than younger Americans, but the mandate intended to force all Americans to be insured or pay a penalty (tax!) does not guarantee that the pool will be sufficiently spread to cover all ages and costs. Then to be an effective delivery system, individuals must have an informed and enlightened approach to consumer-driven health care.

5

THE PATH OF HEALTH CARE COSTS

The reasons that health care costs have increased so much over the years are many. One might argue that there are increasing demands for medical services, that new best practice technologies have added costs to underwrite equipment and operator training, or that the aging population is using more services every year. Those are easy-to-accept arguments. But let us approach this from a different path. In other industries, when demand and volume go up or when technology adds efficiency and quality, does not cost typically go down? In fact, does not new technology become less expensive and more productive than the technology that is being replaced or updated? And does this not open the door to economic forces that bring new players into the market and then the force of competition keeps prices in check?

The economic forces contemplated in the foregoing set of questions simply do not apply to the health care industry. Here is why. Anytime we as consumers make a purchase of any other product or service, we consider three types of information:

First, we know why we are making the purchase, and we usually know the alternative services or products to consider. Second, we know or can get the prices of the alternatives. Third, we have information available to assess the quality of each alternative.

We consider all three pieces of information as we make a decision on who, what, and where to make the most appropriate buying choice for our particular need.

FACTORS IN THE HEALTH CARE PURCHASING DECISION

The health care purchase decisions do not fit the mold of other purchases we make. The payer of health care services is not the ultimate consumer or even the decision maker for payment of services. Said another way, a company paying for an employee’s health care benefit is very rarely involved in deciding where or what medical treatment the employee chooses. Further, the ultimate consumer (employee) does not know the price, let alone the alternatives or the quality of the available and appropriate health care services provider sources. Insurance carriers claim to make that information available, but the resource is a thinly veiled competition-eliminating network of selected providers who have a negotiated price with the carrier. Insurance companies credential those carriers, but the total value proposition and quality vetting is lacking and, in fact, generally cannot be made available to the ultimate consumers.

Many have reached the conclusion that through absent fundamental changes in how health care services are purchased, health care costs will continue to increase totally unchecked. Eventually, if this continues to be the path we follow, we will reach a point at which health care will simply be unaffordable. The totally unacceptable result would likely be government involvement perhaps to the point of total socialism. We need to come to the realization that the focus must be on providing resources to enhance the employee’s ability to make more informed decisions.

Two forces are at work. The ultimate consumer must understand and be able for health care consumerism, and the information available to the consumer must be in plain English and understandable, comprehensive, and compelling so as to cause the employee to take the best course of action: to exert the appropriate behavior.

The recent shortsighted trend has been for the employer to attempt to along individual health care financial responsibility via higher deductibles intended to offset increases in health care insurance s. The real long-term fix is in creating a transparent health care environment in which the consumers for health care services can see with clarity and understand the differences in costs, medical alternatives, and quality.

Employees’ awareness of the problem, the costs of health care, has been heightened by these measures, but to this point, employees have been powerless to respond in any meaningful way. Protests, discontinuing coverage, and bouthing the employer have been the most often selected tools of redress. In too many cases, the employee has a preconceived notion that the cost of necessary or suggested services will be so expensive that the employee throws up his or her hands in disgust and decides not to investigate much less to get the procedure. This kind of situation could have very serious implications on employee wellness if not, in fact, on mortality. It is clear that employees must have education and transparency of information.

THE NEW PATH TO INFORMED HEALTH CARE CONSUMERISM

These are not easy-to-implement initiatives. Getting to useful information has not been generally easy to accomplish. Information regarding quality, for example, has been limited in the past to such measures as in-hospital infection rates (a readily available statistic but rendered meaningless if the attending physician’s complication rate and that of other comparable physicians is not available). Quality information must be specific to the procedure. To expand the meaning of that statement, a physician’s overall quality rating does not necessarily indicate the quality rating for that physician in a specific procedure. Consider this example: An orthopedic surgeon might have the highest quality rating of all orthopedic surgeons in a given demographic grouping. That surgeon may do twenty knee surgeries per month and three hip replacement procedures. The hip surgeries, albeit few, may have high complication/mortality rates compared to other surgeons doing hip replacement surgery, but the surgeon’s overall quality rating may be very satisfactory due to mitigating statistics related to the knee surgery procedures in the subject demographic area. Which quality metric would you prefer? This data must be specifically rated and available.

There is also a cost element to evaluate when considering any specific procedures and a physician’s quality rating. The more often a physician performs a procedure, the less likely a complication and the less cost per procedure. Quality medicine is less costly. Is there any way to factor that cost into employers’ ROI on the wellness investment? The answer is a resounding yes! Provided that the information made available to employees must be procedurespecific, current, timely, and credible and that the employees are educated health care consumers. It is also important that a professional, disionate, and totally impartial third party be available to help interpret and understand the information. Insurance company referrals are not impartial as they refer patients to the captive network of providers based on negotiated prices for procedures and not fully giving consideration to quality. Medical consumers must be comfortable enough to ask questions, challenge proposed procedures, evaluate alternatives, and initiate the most appropriate action for the employee’s current

condition. The need for change is imminent in overcoming the fear and intimidation the medical industry brings to patient decision making. All too often, patients make medical mistakes that lead to unnecessary suffering and wasteful or inefficient spending by both the employer and the employee.

RESOURCES TO GUIDE THE ALTERNATIVE HEALTH CARE DECISIONS

A partner in the OmniWell Model is Delphi of Florida. The company provides the transparency of information on a nationwide basis needed by employees to be informed consumers. The extensive propriety database includes performance profiles on physicians and facilities throughout the United States. The information is ed by staff nurses who discuss medical issues with the patient on a confidential, impartial basis. The firm is on the leading edge of consumer-based health care and documented quality-based innovation. Ed Dillabough, cofounder of Delphi of Florida, says, “Add to the static information that we have a staff constantly updating a real-time application that we can deliver through social networking. We can program a personal cell phone, for example, to remind a diabetic on a daily basis that they need a blood analysis at four times throughout the day. This is real-time medical care and . It can apply to nicotine, drugs, alcohol, and other conditions that help people self-direct their health care. More exciting is that the system can generate reports to family or other ive persons to act as a mentor so that behavior can change because of the review. Using a mentor other than anyone associated with the employer means that employers remain in HIPAA compliance because they do not get employee-specific information, but they facilitate the behavior change. The system does allow, however, that employers can get in the event that employee incentives can be adjusted.” According to Dillabough, the Delphi Medical Advocate Program assists employees in finding the highestquality physicians and facilities. “We are not just cost-driven in our services,” he said.

Jon Wittorff, cofounder of Delphi of Florida, points out that Delphi has data proving that the highest quality of service actually costs less when all factors are considered. “We have found that while hospital quality is important, that metric is usually a reflection of the physicians who practice there and comparing various metrics of physicians who are itted to practice at a given hospital will give us very meaningful and informative useful information to use in

making life-impacting decisions. Absent, these kinds of information decisions are too often little more than guesswork.”

Complication and mortality rates are factors that come into play with more serious procedures. Consider open-heart procedures. In any hospital, one can generally find a significant difference in performance among the practicing and itted physicians. The data confirms the assumption that, like any other profession, those that do a single task (procedure) more often within a given period of time will usually perform the task with fewer errors and more efficiency. The Delphi system has established certain guidelines and criteria to analyze volume of procedures performed required to make a minimum proficiency for a given procedure. For example, the Delphi system contemplated that for total knee replacement surgery, the minimum volume per year requirement is seventy-five procedures. “That is because we are convinced that volume plays a large role in complication rate results,” said Wittorff.

What Delphi calls physician tendencies are also part of the evaluation. While complication data and volume proficiencies are very important, so are trends or tendencies. These trends have a cumulative effect on the costs insurance companies must bear and along in their rate structures. For example, it is commonly agreed that a cesarean section is more dangerous and more costly than vaginal births. C-sections are sometimes medically indicated and required, but other times, they are for the comfort or convenience of the mother. The impact on the baby’s overall health if full-term pregnancy is shortened is dramatic even between week thirty-seven and week thirty-eight. However, some physicians tend to have a dramatically higher cesarean rate than others. Dillabough’s comment is, “Yes, but it is also interesting that in some areas of the country we can see OB-GYNs who have a low cesarean rate and also a high vaginal birth rate after cesarean [VBAC] rate.” “Wouldn’t you want a valued employee to know those details if you had the method of providing the information? And wouldn’t you want that employee to have a minimum of three quality OB-GYNs from which to select the best true value in medical care?” asks Wittorff. This is type of information, presented in easily understood vernacular, is at the core of the OmniWell Model.

It is important that the vetting process surface any malpractice and disciplinary actions, academic qualifications, board certifications, and the physician’s flexibility in scheduling appointments. Further, cost information on most every medical facility in the United States is factored in to the analysis provided to patients. Case in point: the Delphi of Florida Medical Advocate Program demonstrates their information using five hospitals in Des Moines, Iowa, delivering a simple two-view chest x-ray. The charges range from $120 to $482, depending solely on which hospital the patient chooses. Medicare, the gold standard for procedures payments, pays about $25 for the same x-ray in each of the five hospitals. It is not uncommon for hospitals literally across the street from each other to charge as much as 40 to 50 percent more for the same procedure. In some cases, medical providers do what is known as balance billing meaning that the health care provider bills the patient for the difference between their billing amount and the insurance Medicare-based rate reimbursement amount. Further, if the patient does not have insurance, the medical source’s billing rate absent, any discounts is the charge to the patient. If that amount is unpaid, it must be written off, and the uncollected debt becomes a cost that must be reflected in the health care providers’ billing rate and future rates charged to insurers. In any event, it is a cost in the system that must be underwritten. Clearly, the long-term strategy is to educate employees on the ability to access salient information then to use it wisely. The combination of getting the best physician to perform the highest-quality procedure in the most costeffective facility setting is the key to lowering the risks and costs of health care, and the employee-employer relationship is the most efficient and effective way to implement the required behavior changes in the mass market. (See appendix.)

USING THE MAP IN THE OMNIWELL MODEL

Obtaining medical care is complicated and confusing. It is a totally unfamiliar path to many employees who have taken the path of least resistance without the information that provides a map (map: the prescribed route of travel built on the MAP: Medical Advocacy Program) and thereby unwittingly impacted insurance costs for their employer. The medical industry is not organized into any kind of a logical matrix with quadrants that identify names and instructions. Navigating the paths through this maze is both frustrating and expensive. Patients often get lost and find it difficult to get back on the right path. Missteps often result in duplicated diagnostic steps, labs, and x-rays as the patient endures waiting rooms and conferences in physicians’ offices. Each development, each diagnosis or test in an episode of care is a new mystery to the patient, and doctors often are on a ten-minute (or less) schedule of direct patient consultation. Explanations are hard to come by in that kind of mass-production environment.

The OmniWell Model capitalizes on the Delphi Florida approach, which provides the of a nurse to help the patient decide where to start. The nurse is responsible for tracking the patient through the entire episode of diagnosis and care, explaining what is happening and what the following steps will be. Employee stress is dramatically reduced whether the patient is the employee or an employee’s dependent. The patient receives coaching on what to ask and what to be certain to tell the physician about symptoms. Medical alternatives may be suggested by the nurse to help the patient feel comfortable in discussing options and managing their own case with the physician. If a second opinion is advisable, the nurse points that out and suggests optional sources from which the employee can make a selection while remaining in control of and able for their medical course of direction.

HOW TO AVOID GETTING LOST IN THE UNFAMILIAR TERRAIN OF HEALTH CARE

Given that confusion and fear are often as much of an enemy as the diagnosis itself, the intent is to provide employees with peace of mind. The medical community is not generally geared to provide emotional stability during trying times, but the employees’ lives go on, and their stress expresses itself in all facets of life, including at work. Having professionals to answer questions and to provide , encouragement, and empathy to the patient as well as the family is a very valuable resource. On occasion, the Delphi nurses are able to get through the physician’s front office and assure that timely access to the doctor is obtained.

The goal of all this is to find the best quality medical care possible and to make the employee an informed and able consumer. Again, the best care is the most cost effective as well. The reverse (the most cost-effective care is the best care) is not true, and the OmniWell Model fully contemplates that fact. Getting competition into the delivery of health care will be a benefit to everyone. By helping employees choose those physicians who have the fewer complication rates compared to other similarly positioned physicians, employees experience fewer complications, and employers have less stressed, more well employees. On average, each complication that occurs increases the overall cost by about 30 percent and could, in some cases, cost over 200 percent more than the same procedure without a complication.

It is incumbent on employers to bring about fundamental changes to the way their employees access, understand, use, and pay for health care. Cost shifting is not a sustainable strategy as employees reach the point of not being able to manage increased annual deductibles and out-of-pocket stop-loss maximums. Employees must be educated and able to make intelligent decisions about medical costs and decisions, and they must see the relationship to those

decisions not just as it relates to a medical event but also as it impacts their own financial destiny and the employer’s viability to continue being an employer pursuing growth and ROI.

6

FROM THE EMPLOYEES’ PERSPECTIVE

A poll by CNN (CNN September 30, 2009) declared that money worries are the American workers’ greatest cause of stress. Other studies appear in the public domain suggesting that as many as 52 percent of Americans are losing sleep over their current financial plight. Irritability, anger, and fatigue are all expressions of the stress welling up in those employees today. The National Bureau of Economic Research has released information (June 2011) stating that about a quarter of Americans would not be able to raise $2,000 in thirty days. Another 19 percent said they would have to sell or pawn assets in order to amass $2,000 within a calendar month. Four out of ten Americans, if given thirty days, would be unable to raise $2,000! George Washington University professor Annamaria Lusardi has research findings that the majority of Americans have not done any financial planning. Said another way, some thirty million (one in four) report that they are seriously financially distressed. That spells stress in the workplace.

MITIGATING THE STRESS OF NOT KNOWING WHAT LIES AHEAD

Employees think that financial planning is futile, that they are not going to get long-term returns on any investment, that they are hostages to the medical insurance costs ed on by their employer, that for younger employees social security will be an unreliable retirement income source, and that any new management theory is a “here we go again” experience. They have gone down the path, been there, done that, and got the T-shirt. Too many of the individuals in the United States’ workforce are making decisions affecting their financial destiny on secondhand, piecemeal information. They have not connected the dots, including health insurance and ancillary benefit coverage, property and casualty insurance, umbrella coverage, debt management and elimination, tax planning, income deferral, and estate options to get the whole picture, and there are not many nonsolicitous sources for that kind of information and education. The 401(k) or 403(b) agents are not the source for that education. ERISA does hold employers to a fiduciary duty of providing that education. Through the Heartland Institute of Financial Education, the OmniWell Model does deliver that very curriculum.

Fifty percent of the people age forty-five and up have never calculated their savings needs to prepare for rainy days or retirement. Sixty-two percent of married couples disagree on when to retire. Twenty-five percent of the people now sixty-five years old will live to age ninety, stretching their savings beyond limit and potentially becoming a cost to children and heirs. Seventy percent of the people sixty-five and up will need long-term health care. Employees are petrified.

Financial education is not simply retirement planning. To the extent that an employee has at least a basic knowledge and understanding of personal financial management, that understanding (or lack of understanding) drives behavior. Any education regarding finances and behavior must be designed and compelling

enough to move the employee beyond simple intention to some level of action— if only to ask questions of a competent advisor. Financial education is not intended to make stock traders out of the students. The intent is that the employees be able to make better decisions and hopefully to maintain orderly financial records and reach a level of financial satisfaction as a result. The financial curriculum must address attitude toward personal financial management, setting financial goals, developing spending plans, the use of credit, rainy day reserves and accessibility, financial risk, financial need (shortand long-term), risk management, control of personal financial matters, and options for addressing these topics.

MENTAL DETOURS DISTRACT EMPLOYEES FROM EFFICIENT PERFORMANCE

Employers try to wrap their minds around the statistics that establish stress levels in the workplace brought on by factors that can be effectively mitigated. How do these factors impact or express themselves on the bottom line? Productivity has to be affected. Quality and customer service most certainly reflect the effect of employee stress. It is difficult to interpret the effect, and the ranks of business professionals debate the dollar value. Here are the results of one study. Financial Literacy Partners estimates that, on average, up to 80 percent of the employees suffering from personal financial distress waste or use twelve to twenty hours per month for personal business, and they estimate the cost of this lost productivity to be $7,000 on average per employee per year. There is, in this set of statistics, an opportunity. The opportunity is to build ability and trust into the employment experience. A total program to the benefit of the employer and the employee is the opportunity. Alan Gappinger, founder and president of the Heartland Institute of Financial Education, a Colorado 501(c)(3) and partner in the OmniWell Model, says that a reality in today’s organizational environment is the degree to which employees who are “financially unwell” are costing companies’ profits, customers, and business. “More and more studies are showing direct links between financial distress and workplace outcomes. Examples of personal finance-work conflict are everywhere, and they are expressing themselves in of overall employee health and work performance.” Gappinger cites findings from the Personal Finance Employee Education Foundation that make the argument that return on investment for employers who offer employees easy access to quality financial resources is 3:1 or more.

Gappinger continued that as a result, progressive organizations are seeking partners to provide employer-sponsored financial education to their employees. Gappinger’s Heartland Institute of Financial Education has presented classes nationally and has a solid stable of instructors throughout the country. “It has never been more important to employers than the current time to recognize that

employees with financial worries affect profits negatively. But in fact, total wellness, including career wellness and physical wellness in addition to financial wellness, is now a doable deed,” he concluded. The employees are given the tools and personalized resources to evaluate and manage their own destiny

THE NEW FRONTIER LIES AHEAD

Today’s workplace is unprecedented in the evolving demands and expectations of employees. An accelerating evolution is pushing us from the traditional workplace to some unknown and now-unfolding frontier. As discussed earlier, the workforce is fast becoming one that expects instant gratification, instant communication, and immediate rewards. This feeling is wicking through the entire workforce irrespective of the generational groupings. iPads and iPhones more and more know no generational preference. Employees have strong demands and expectations of their employment experience. Employers have the right and duty to have strong requirements and behavioral standards resulting from the employment experience. But they also have a rare opportunity to facilitate the changes that the emerging workforce, the health care delivery system, and the US economy so badly need.

With the high unemployment rates of the 2011 era, multiple studies found that 30 to 40 percent of the employees who were working were looking for alternative employment. Research also documented that employers had no concept that the number was that high and employers have generally estimated that perhaps 10 percent was the number that represented employees in transit. And if an employee has made the decision to move on, they are in transit when they make that decision—not when they formally resign. They become part of the “presenteeism” count—present and ed for, but stressed to the extent that the stress impacts performance and translates directly into added costs for the employer.

Employers have the opportunity to deliver a true value proposition to employees. That value proposition is in consciously facilitating the link between the employees’ discretionary behavior in their jobs and the directly corresponding impact on the employers’ goals. The contemporary concept is labeled employee engagement.

Engagement is not about employees working harder or more efficiently in a lean organization. It is about employees working more effectively. It is about the employees’ wellness and the resulting advantages to the employer that a well workforce delivers.

The American Psychological Association uses the term flow to describe the state of mind in which people become completely involved (engaged) in an activity and become so immersed that they lose track of time. That does not happen with stressed employees. Employee total well-being is at the very core of the flow concept. The wants, needs, and behaviors of the evolving workforce mandate changes in the traditional attraction, selection, performance management, retention, and education practices employers have used all along the employment path. Education is becoming more and more important. Alan Gappinger has said that the Heartland Institute of Financial Education gets many requests for employee education in the personal finance realm and that many companies who are embarking on major downsizings engage the institute to teach the personal finance curriculum, thinking that financial destiny education is as important (and in some cases more important) than outplacement for excessed employees. Gappinger also confirms that ERISA has mandated that employers have fiduciary responsibility to prepare (educate) employees for retirement. He comments that lawsuits stemming from retired employees who were not prepared for that event by their employer are becoming more and more common. “The typical annual 401(k) employee enrollment meeting is one in which a financial advisor gives employees forms with a few questions to answer and which then determines risk appetite and planned retirement dates resulting in a portfolio that would be appropriate, that is not education,” according to Gappinger. Mr. Gapppinger launched the Heartland Institute of Financial Education out of a sense of frustration. A college professor, he said he wanted to turn education into behavior. “The education needs to go beyond the threshold of the classroom,” he says.

THE REASONS EMPLOYEES MIGHT MAKE WRONG TURNS AND SOME PROVEN COURSE CORRECTION TOOLS

Employees are also disillusioned by performance management systems. They report to us that the process is many times simply a “going through the motions” type of exercise. Performance management, including coaching, mentoring, evaluating, and developing employees proactively, will not disappear from the obligations of organization management. Randy Hopkins’ book, Team Covenant, points out that “most companies conduct performance appraisals—often using the paper and pencil method. Many companies use some sort of psychological testing in the pre-employment screening process and in coaching or training activities. And some companies occasionally survey their employees to assess their level of satisfaction.” Then Mr. Hopkins takes the position that “I could never understand why these three sets of data (pre-hire, performance evaluation, and employee ) were always separate processes with separate vocabularies. Together they represent a very comprehensive and holistic assessment of both an individual and an organization.” The calf path comparison springs to mind. Treating these as individual processes, often with different strategies and forms supplied by different consultants is, after all, how we have always done these things. But taken together, we have a starting point for employee engagement, or flow as discussed above, and a metric to measure management effectiveness in this new employment experience model.

Total employee wellness interventions coupled with health care insurance cost mitigation are achievable and sustainable initiatives. In fact, a very real return on investment in wellness can be demonstrated. Total employee wellness goes hand-in-hand with employee engagement (flow). Studies have repeatedly surfaced identical findings. The leading causes of employee stress today are (in order)

personal financial condition and destiny;

work-related concerns regarding longevity and fear of layoff; family concerns, including pending or potential divorce situations; personal concerns, which could include relationship, appearance, or commitments, for example; physical health.

The recent economic meltdown has affected both employers and employees on many levels. The drastic changes in workplace norms, the changing family roles (life-work balance, later-in-life parenthood, hovering parents, etc.), personal satisfaction with the new recipes for happiness, the unending news articles on health insurance, Medicare and Social Security, and what is good or not good for you (chocolate, red wine, and egg yolks) create the stress and are confusing and bewildering, but rest assured that inadvertently and involuntarily, the confusion comes to work with employees every day.

Results of wellness education can be tracked directly. The Heartland Institute of Financial Education has studies that indicate that, as a result of their financial curriculum, an employer can expect about a 40 percent reduction in employee turnover, employees feeling much better about their benefits and benefits choices, heightened regard for the employer, and an increase of 30 percent in 401(k) deferrals, given the employees who increase their deferrals and employees who had not been involved in the 401(k) starting deferrals as a result of the classes. Team Excellence also has studies substantiating greatly reduced employee turnover and markedly better attraction of employment candidates than industry-specific rates for turnover. Both practices help client employers attract and retain the human capital needed to sustain the business and, in fact, distinguish the employer as an employer of choice. People would leave an otherwise acceptable job for a chance to work for an employer offering holistic wellness.

The Society for Human Resource Management released a white paper that made

several very salient points (November 16, 2011, “Employee Education and ability Help Manage Health Costs”).

Forty-five percent of surveyed organizations reported that turning employees into educated consumers of benefits was a “very high priority.” The CEO or other top-management executive is the primary advocate for employees becoming educated consumers of health benefits, leading to the conclusion that “health care benefits are increasingly being seen as directly impacting bottom line profits.” Consumer-directed health plan options are being offered by more companies (47 percent in 2011 as compared to 27 percent in 2006). Thirty-eight percent of surveyed employers say they have seen desired changes in employee behavior as the employees become better health care consumers. The number of organizations offering financial education to their employees has increased from 22 percent in 2006 to 36 percent in 2011.

An interesting contrast comes from a survey of employees published March 28, 2012 in www.hrmorning.com. Here is what employees said would increase their productivity:

Work/life balance programs (82 percent) Access to more health and wellness programs (81 percent) Financial advice and guidance programs (72 percent)

There appears to be alignment between employee and employer thinking. But we cannot wander down the old habitual path again. This is an achievable goal

whose time has come. In the effort to make workers healthier, employers and insurers have dangled carrots, and they have threatened with sticks. Now, some are trying things like games. In a counter-productive initiative, some are even using games that pit employees against each other as we have witnessed in some cases! Employers must avoid strategies that are not sustainable strategies and that do not produce a real result in ing standards and long-term return on their wellness investment.

WE CAN’T KEEP RUNNING AROUND THE ROUND-ABOUT IF WE INTEND TO MOVE FORWARD

Employees become wary of recycled and/or restarted programs. Employers introducing new programs probably do not have the nine runs at life that a cat has, and in fact, the wellness concept is big enough that restarts will be difficult to not only sell but to restart. A key energizing force of the concept is that peer pressure, personal value, and rewards will encourage people to improve their overall health. Now, I ask you, do false starts not also introduce unnecessary stress into the workplace? Is that not what all the flash-in-the-pan management theories have been? How long does it take for this scam to become old hat and get tossed into one of the discarded woodpiles along the trail? A well-planned and expertly executed wellness intervention that has continuing and ongoing involvement in the company culture is the action required of employers. Would it not be much more productive and much more valuable if employees were given the opportunity to become informed and to take control of their wellness, financial, and career destiny and then all the facets of their total wellness, impacting the employer’s destiny?

Recognizing the importance of health management and the need for best-of-class care, employees must be able for and make every effort to be wellinformed, make appropriate decisions, and proactively engage in preventative as well as diagnostically prescribed procedures. That is a tall order. But the shift to consumer-driven health care requires ability and education to be confident in accepting the ability. Employee reaction is predictable: “I have to pay more, and now, I have all this other stuff to worry about. It is too overbearing, and I don’t know where to start.” Health insurers will rush to the rescue, saying, “We have sources in the network for any and every condition that you need treated. Call us.” The key word is network. These are those contracted medical suppliers who have negotiated discounts with the insurer in exchange for the insurer marketing their services, funneling patients to them and diminishing or eliminating competition. By comparison and critical to consumerdriven health care, competition in the medical services delivery areas and

independent third party quality evaluations are all very desirable components in the wellness concept. These are all available today. These are also key components that are delivered through the OmniWell Model of wellness. The importance of these components requires a little introspection.

The future of health care needs to be driven by value centers rather than negotiated discounts. Network restrictions are anticompetitive and need to go away. Penalties for out-of-network care need to disappear. Health care insurance needs to become ive and consultative to the buyers and, ultimately, the consumers. Physicians with whom I have spoken to are eager to embrace such a system. One primary care physician told me that the practice of medicine has become less than a satisfying career because the options at his disposal are limited by network and policy restrictions. He said, “I don’t have to think about alternatives for patients, I just have to go to the multiple choice options sheet that is the coded key to how much I will get paid and pick one. My thinking is done for me. And on occasion, I am told that even the medications I would prefer my patient take are not, for some reason, covered by the insurance company. The tail wags the dog.” Are the objectives of the total health care system not in alignment? Is there reason for employees to be frustrated? They are the rope in this tug-of-war.

Ultimate consumers must eventually accept ability for their health and the professional resources and costs that they use in maintaining their health. I have said before that health care is not a right or an entitlement. Wellness is an organizational imperative and an individual ability. Healthy lifestyles, preventative measures, accurate diagnosis, and any resulting treatment regimens are the primary ingredients in the recipe for consumers in the health care market. Consumer enlightenment will pave the way to properly based competition and value. But again, the consumer is generally one level removed from the buying decision for insurance as we do it most often today, and that consumer is poorly prepared to be an informed, engaged consumer. Of course, patients do not currently readily step up to an active role in health management. The system is confusing, insurers are self-serving, and the process is overwhelming. If employers begin to make appropriate information on outcomes and costs, both transparent and available, and then that with education, the benefit of

health insurance will be of real benefit to the employee, and the pendulum will swing toward consumer-driven health care and employer ROI. Any design of health care insurance and medical delivery will benefit from informed consumers, and the employer is the most advantageously positioned source, given the current system. But the employer community will miss a great opportunity for cost containment and ROI if the current wellness opportunity is missed. If we capitalized on the opportunity, the choice of more expensive health care with marginal or worse outcomes will decline markedly. The cost of insurance will retreat. In so doing, insurance carriers will remain profitable, given the benefits of cost control as it favorably impacts the carriers’ costs of doing business. Medical care will have true competition at the care level, and quality will increase. Everyone wins.

What must happen is to educate employees to use value centers. The employer has a vested interest in educating employees to use value centers because insurance s are tied to costs and value centers reduce cost. Value centers create a vital level of competition between medical services providers and not between networks. There are real returns on investment for employers, which are delivered through educated employees. And if employees are incentivized to use value centers, they will. It is that simple. The incentive is the pivotal factor. The OmniWell Model delivers a service that vets medical services sources and services across the country. The employee makes one call and has options from which to select the provider of choice and educated medical professionals to speak with in evaluating options and choices. Informed, involved, and empowered employees will work with their physicians to improve outcomes, reduce costs, and give the employee control of the process rather than being a victim of the process. As a matter of fact, we teach employees to alert their medical services providers to the fact that the employee will take an active role in managing their care, and we find that physicians welcome that disclosure.

Contrast that process with the current scenario of medical services delivery. Rather than blindly deferring the important diagnostic and treatment decisions to others, the patients and their families have value-driven options. Make no mistake. Value-driven is not the low bidder. I have made the point that valuedriven takes into not just cost but also a wide range of other metrics,

such as recidivism, mortality, number of like procedures performed, etc. The value center may, in fact, not be the lowest cost per procedure provider. By having health care professionals available to patients with information and alternatives to consider, the patient will not feel embarrassed or presumptuous asking questions. They are empowered, and they are in control of their destiny. In similar fashion, the patient can discuss and evaluate costs, and because the patient is incentivized to evaluate cost, they are now working with real money: their money. Higher cost in health care, like higher costs in anything, does not translate necessarily to better quality and value. The “why bother” attitude becomes one in which “I will be informed and equipped with choices and alternatives to discuss with my primary health care provider.” A lack of cost sensitivity is simply the habitual response to an ingrained trust in the system and a void of information on price, quality, and more importantly, alternatives.

Insurance carriers may penalize employees if they select out-of-network providers. This usually means a lower reimbursement than if network providers had been used. This pall on competition holds the employee hostage. Health reimbursement s or gap insurance plans can mitigate these costs and advisably so. The benefits of engaging the employee as the consumer by providing information and choices trumps the anticompetitive network referral system.

Let me coin a concept: behavioral ability. Let us define that concept this way: “A concept of consistency of actions, values, methods, measures, principles, expectations, and outcomes.” Games will reinforce behaviors that are short term in focus and are of benefit only for the moment. Behavioral ability is built on attitudes—a word which I will define as “habits of thought,” and if it is a habit, it can be changed and/or replaced with other habits and actions. In OmniWell Model, we establish a team covenant. The Team Excellence concept is a psychological contract that embraces ability and musters peer . It does not pit employees against one another but rather focuses on goal attainment, individual effort for the common cause, and full management buy-in. “I won’t bad-mouth it” is not a sufficient position or option for management. A buy-in with the highest level of commitment is required from

the executive staff of any organization going down the wellness path, and why not? That level of commitment is what we are soliciting from the employees. And we get it because we make them informed consumers of health care, and they see and reap the benefits; they become informed managers of their financial destiny because they have tools and resources, including live access to professional financial advisors. They are partners with full ability in the management of health care insurance and health care provider costs. We even the playing field through the performance management system and the prehiring metrics to give employees permission to be just exactly who they are, which lets us avoid the “hired for skills and fired for behaviors” syndrome. And then we facilitate management through instruments, processes, and vocabulary that all remain consistent throughout the total process.

7

FORGING A NEW PATH

Wellness is an emerging concept, a new path. It is multidimensional, and it contemplates the whole of the employee and the total of the employment relationship. It is a complex subject. Career wellness (employment wellness), financial wellness, and physical wellness are part and parcel of the wellness initiative, and success will be determined by each individual employee as expressed by their individual behaviors and understandings of what wellness is and does as well as what it is not and does not do. The employee and the employer each must have ongoing trust and ability in the wellness initiative as the continuous improvement requirements (so eloquently professed by the management gurus discussed in chapter 2) shape the future. Case in point: The Juran Institute suggests that poor process quality s for 30 percent of total health care costs in the United States. We are talking about preventable errors to a large degree in this number.

Career wellness, financial wellness, and physical wellness are factors that influence personal as well as corporate wellness. Employee wellness, by its very nature, falls into one of two broad categories: physical and mental/emotional. Plan designs, insurance plan designs, and employee wellness plan designs must address both components with the objective of ing the consumer torch to the employee.

As I have argued repeatedly in this book, given the understanding that the health care consumer, at this point in time, is one-off from the buyer and that the buyer is positioned between the consumer and the insurer, it is clear that the employer is initially the pivotal link in the wellness concept. Consumer-driven health care is the ultimate target. Two things are missing: consumer education and ondemand credible information regarding personal financial management and health care choices.

Employers are often told that there is nothing that can be done about the rising cost of health care insurance. Reasons (and excuses) given include such generalities as “the graying population,” medical litigation excesses, expensive and required technology, doctors who make “too much” money, the research and development costs related to pharmaceutical drugs, and advertising budgets of pharmaceutical companies, and many more. What these causes have in common is that there is nothing an employer can do to alleviate or even mitigate them. Do these costs exist? Yes, they do. Moreover, similar costs are to be found in most industries. The salient point is this: there are ways to mitigate health care cost from an employer’s vantage, and there are ways in which the employer can facilitate employees getting better medical services at lower cost.

FOCUSING DOWN THE ROAD WHILE MAKING NEAR TERM COURSE ADJUSTMENTS

Scarcely mentioned or acknowledged in the ongoing public health care debate is the global understanding or misunderstanding of the overall structure of health care delivery to patients, the convoluted concept of value, and the impact that value-driven competition would have on health care and the resulting impact competition would then have on value, quality, efficiency, and safety. Why should we focus on anything less than results or outcomes at every step of the way, along the path of medical diagnosis and treatment? Employers can be the largest and loudest voice in leading the change process. The right information, coupled with the right incentives, the right time lines, the right education, the right attitudes, the right mind-set, and the resulting right ability and behaviors are the path upon which we must embark, mark the waypoints along the course for progress and culminate at meaningful reform. Wholeness must mean just exactly that. Piecemeal initiatives will result in less than the total reform that is needed if the health care system is to be sensitive to, and cater to, the ultimate consumer.

Many have advanced the theory that Section 125 health savings s and the cafeteria plan concept are the natural segue to consumer-driven health care. It is not. Setting aside money into a Section 125 by an employee for tax benefit is a good strategy, and certainly, ability becomes part and parcel of the ultimate employee benefit. The downside has always been that the is a “use it or lose it” scenario. Money diverted to the is pretax and must be used in the prescribed time on qualified medical purchases, or it is lost by the employee. The degree that employees are taught how to maximize the plan is a very positive component. It can be argued that health savings s introduce some of the concepts that begin to shift medical services to a value-based system. It must also be argued, however, that the move to consumer-driven health care is minute within the confines of HSAs (health savings s) because employees are generally not prepared to take management responsibility for these s. At the open enrollment, the discussion of appropriate

amounts to withhold and the allowable uses of the money in the employee’s are received with skepticism and lack of surety.

Employer contributions to HSAs become a little dicey, however, because the employee owns the funds once the employer contributes to the savings plan. The same money directed to HSA s could well be used for long-term cost containment measures that would have greatly increased value to the employee. Moreover, more than one employer has created a competing company with the then former employer’s money in an employee-directed HSA.

If an employer opts for a high-deductible health insurance plan, health savings s are sometimes offered as a way of moving to a high-deductible plan without shifting cost to the employee. Some would take the position that, in this arrangement, the employee (patient) is encouraged to make better health decisions. Better health decisions come from informed consumers. The HSA, with all its benefits, is not a sustainable option unless employees are educated on how to most effectively use them. Left to their own devices, we again are going down the path laid down years ago when the novelty of the then-vogue concept brought interest and a sense of possibility.

So health savings s are not the solution by themselves, but they are great tools for employees to use in the management of their cost burden in the overall plan. The greatest benefit is realized only when the employee has real provider choice, credible and authoritative information about the suppliers throughout the medical delivery structure, and a basic understanding of how to approach and manage their own health care services.

ALTERNATE VEHICLES TO GET TO THE DESIRED DESTINATION

A health reimbursement (HRA) remaining on the employer’s side of the ledger and used by the employer for the benefit of the employee at the discretion and strategic advantage for both the employer and the employee are a better choice. Let us be realistic, however. The consumer-driven model is not a simple supply-and-demand market-correcting phenomenon. From this perspective, it is clear that health care consumers (employees) cannot, by themselves, create a consumer-driven market in the health care arena.

The assumption of many, given the current view of consumer-driven health care, is that choices in health plans, rather than the more important factors of health care providers, who are centers of value, vetted sources of treatments, and the selection of physicians and other health care providers as may be required represents the objective of wellness. For example, employers have attempted, in a misdirected initiative, to offer up to three medical plan options from which employees can select. The company offers a set contribution, and the employee selects the plan he/she determines to be most appropriate or more likely affordable, and the employer funds the selection per the predetermined amount. Certain market fairness may be stitched into this fabric. Young healthy males will select the lowest cost, perhaps limited coverage and higher deductible and out-of-pocket stop loss while the obese smoker selects the higher cost plans because the deductible and out-of-pocket stop loss will be met quickly in the plan year. For everyone to have the same deductible and stop loss penalizes some and benefits others. It spreads insurance risk unfairly because the risk factors are individually controllable or manageable. The concept at the core of insurance is that of spreading and sharing risk. One can see there is a component of consumer drive, but not the consumer drive that is needed at the supplier level of the equation. Clearly, employers providing for and enabling choice for employees in choosing a plan acknowledges the wisdom in the consumer-driven concept but does not recognize the need for creating competition at the supplier level by allowing patient dollars to vote for superior providers.

IF ALL THE FILLING STATIONS ARE CONTROLLED BY THE SAME COMPANY THE BENEFITS OF COMPETITION ARE NONEXISTANT

Insurance companies have credentialed network providers. Through these networks and by imposing cost disincentives for using out-of-network providers, the access to providers, that is to say, the creation of market-level competition, is limited. Consumers need advice, guidance, decision , and follow-up resources. In educating employees, the resources to determine value centers in medical providers is a major subject. Networks create dysfunctional competition. A total change in thinking and behavior is required. This massive shift can take place in the mass market only through employers, and those employers must see and focus on the need and the opportunity that now is present.

Employers are becoming cognizant of quality standards and the effect of quality on medical services costs. The misalignment of purchaser (employer) and consumer (employee) objectives make the process between patient and provider a nearly impossible communication link. It becomes like the old party game of ing a message from person to person around the room by whispering the message in your neighbor’s ear. In the end, the messages are distorted. There is a new and largely uncoordinated realization among the employers in the United States that getting this kind of information into a data bank and providing some measure of quality and value is necessary. Interestingly, the data does exist. At the end of the day, the only way to measure value is to apply consistent metrics to the end result of medical treatment and then teach the patient how to access, interpret, and use the information. Only with strong employer involvement, incentivizing, behavior modification, and process control can the move to consumer-based health care be accomplished. ing the torch will include educating employees and holding them able for the appropriate and necessary use of health care services.

The skeptics will say in unison, “Patients do not desire the role of managing and

being able for the choices necessary in consumer-driven health care. They would strongly prefer that the doctor make all their decisions for them.” Left to their own devices, many assert, patients will simply select the most convenient, easily accessible medical supplier. This response is really an expression of frustration, resignation, and/or disgust, but the decisions are of utmost importance. We are talking about health and, ultimately, life here. If ability is a part of the system, we can demonstrate that most employees will not only take responsibility for establishing healthy (or healthier) lifestyles but also seeking the value providers of health care and getting necessary information to be an informed consumer. Employees’ behavior will change if they see the impact of assuming ability, especially if they see the impact on their own financial destiny and the employees have the education and selfconfidence to act and the ability to the employer and other employees to behave in a manner consistent with achieving the overall wellness objectives. The OmniWell Model memorializes these objectives in the team covenant.

Specifically, the ability for decisions can be summarized in six points, which address the duties of an astute medical services consumer:

Become a proactive player in the management of the health of self and dependents. Seek out relevant and credible information on medical procedures and options, make informed decisions, and monitor the procedures throughout the entire delivery process, making adjustments when necessary. Learn the benefit of using centers of value in health care services, not necessarily the least expensive but rather the best overall value. Make wise decisions on health care plan design selection, use voluntary benefits and Section 125 health savings s to maximum benefit. Always use a general practitioner instead of a specialist for routine health management and use carefully selected specialists only when necessary. Take the role of health management seriously and accept ability for both

the decisions and the results.

Employers have a role as well. Employers will

provide a stable work environment built on trust and ability with clear communication and loops and a clear and fair performance management process; select medical insurance plans that help employees avoid catastrophic loss and supply an adequate selection of voluntary benefits to provide employees control of their personal and unique situations; provide education and ongoing communication to keep employees contemporary in health care decisions. Employers will also provide employees and dependents with certain basic diagnostic procedures (for example, annual wellness screens for employees and spouses, colonoscopies, mammograms, etc.) and pay for these through health reimbursement s generally funded by insurance cost savings; provide access to credible and accurate information to determine the appropriate value center providers; incentivize employees and reward employees for the use of medical services as framed in the health care plan designs.

AUTOMATIC PILOT IS UNACCEPTABLE AND INDIVIDUAL RESPONSIVE BEHAVIOR IS THE REQUIREMENT

The shift requires a behavior change. More correctly, a set of behavior changes are necessary. The assumption is that if employer and employee behaviors change dramatically the medical community will, by necessity, change their behaviors. So in order for employers to start the ball rolling and for employers to reap ROI on these wellness initiatives, it is the employers who must guide the behavior change and ability transfer to realize the objective in which the ultimate consumers manage their own personal health. Employers got into the fad of workout facilities for employees a few years back. The expenses of costly machines, space utilization, trainers, and incentives are often (usually) very misspent dollars. These are short-term fixes for long-term issues, and the benefits from the cost are both unsustainable and out of proportion with the costs. Let the professional neighborhood gyms, the YMCAs, the bicycle clubs, and the intramural basketball games handle the exercise. They are the professionals or the sources that generate and sustain enthusiasm. Employers should use their monetary resources in places where an ROI on wellness can be realized and sustained. Deg and delivering health plans with incentives and disincentives geared to establishing ability in the use of the medical plans is where employers need to focus their attention. Education, behavioral intervention, and ongoing communication are exactly what will fill the need.

8

IMPLICATIONS

By now, it should be clear that in the writer’s opinion, the path on which we are traveling does not have the inherent mechanisms or initiatives to change the ultimate destination. A destination of choice is attainable if the correct path is chosen. It should also be clear that I think the conscious trend must be toward consumer-driven health care. That is not an easy shift to make. The fact of the matter is that other than Medicare- and Medicaid-insured persons, the biggest buyers of health insurance in the United States are employers. Ultimate s are one-off from the medical insurance purchase decisions and have little influence in the plan designs that are purchased. Cost considerations are the most influential factors in the ultimate buying decisions. Some macroeconomic considerations will my views. While I am not an economist but rather a student of wellness, I do have some data that reflects on the topic and resonates with me. It appears to me that we have been down this path before too.

WE COULD BE LOOKING AT A WRECK JUST AHEAD

Studies repeatedly indicate that to the extent that health care costs exceed the growth in gross domestic product (GDP), that excess has a direct negative effect on employment, output, and value added to the GDP. GDP is the market value of all final goods and services produced within our country in a given time frame. It is the “standard of living” quantifier for countries around the globe. The components of GDP and the method to determine GPD is the resulting quantity using the following formula: private consumption + gross investment + government spending + (exports - imports). So every employer in the country contributes to the GDP. But employers are also caught in the upward spiral of health costs. Obviously, increased health care costs translate into higher labor costs, which may result in reduced employment, decreased output, and/or increased prices.

According to Rand Corporation, a nonprofit research organization, in a 2009 study spanning nineteen years (1987–2005), “Economy-wide across all 38 industries in the sample, a 10 percent increase in excess health care cost growth will result in about 120,000 fewer jobs, $28 billion in lost revenues, and about $4 billion in lost added value.” Rapidly rising health care costs promote redistribution of workers from jobs with health care insurance to jobs without health care insurance availability. GDP directly reflects these kinds of changes in the economy.

Consider the start-up entrepreneurial company in the United States. Even a company with a sufficient amount of venture capital to an innovative game-changing product has a very difficult time attracting top-rate, qualified talent. The effect is that these costs are even impeding US innovation—a main artery in our commerce stream. “In the cradle of American innovation, workers are making choices based on co-payments, pre-existing conditions, and other minutia of health insurance,” writes David Leonhardt in the New York Times.

This health care cost matter also impacts new jobs creation from companies that might otherwise have expanded or relocated to the United States. The opposite has been the case. Offshoring has become a common term in the boardrooms across our country, and there is no long line of foreign-based companies wishing to establish a manufacturing base in the United States.

The American workforce is fully aware that they use a large amount of their discretionary income for health care; the rising cost for health insurance is one big reason that wages have been stagnant for years. However, the opinion of many is that further expansion of government involvement in the health care system will only make it more expensive. But the workforce also realizes that having health insurance is a very desirable benefit if it is affordable. The United States employer-based health insurance market provides insurance to approximately two-thirds of the insured population under sixty-five years of age. Employer-sponsored health care also provides coverage to workers’ dependents. Yet a sizeable group of employees and dependents remain uninsured, and that is a growing number. Exchanges will not change the trend as penalties (taxes) may be less costly and, certainly, the easier route for uninsured Americans.

WE HAVE NOT AVERTED THE WRECK

So what do we have to show for our increasing costs of health care investment? The United States has fewer physicians per capita than most other industrialized countries. A Forbes article (July 2009) revealed much more that is interesting. Only four other countries of the Organization for Economic Cooperation and Development (OECD) have fewer physicians per capita than our 2.43 per one thousand compared to an average among other who average 3.2. The OECD is a group of thirty-four countries with advanced and mature economies. Only four OECD countries have fewer acute care hospital beds per capita than the United States. We have 2.7 compared with the organization average of 3.8. Japan has an astounding 8.2 per one thousand persons despite spending half as much of its GDP on health as the United States does.

Given its high spending level on health care, the United States cannot lay claim to better health metrics than other countries in the OECD. Life expectancy at birth in the United States has increased by 8.2 years since 1960 (78.7 years according to 2010 data) but has risen by 9.4 years in Canada and by over 10 years in both and while it rose by 15 years in Japan. Infant mortality is another good general measure of quality in health care. In 2006, 6.7 infants per one thousand live births died. That statistic represents a sharp decline from the twenty-six deaths per one thousand live births recorded in 1960. But the infant mortality rate is lower in every other OECD country except Turkey and Mexico. The average rate for all OECD countries is 4.9 deaths per one thousand live births.

The United States does lay claim to exceeding in one metric, and that is the amount of highly expensive medical equipment per capita. In 2007, there were twenty-six MRI machines per one million people versus an OECD average of less than ten. A few years ago, the United States had more CT scanners per capita than any other country in the world! You might like to quantify these

statistics in of dollars. The latest information available reveals the fact that the in 2010, the United States’ combined spending on health care (including both public and private spending) totaled $8,233 per person. That number is more than double what the cost of universal care costs per person in the well-to-do nations like , Britain, and Sweden.

The health care investments by the United States have purchased one other distinction to which we can lay claim. The obesity rate in the Home of the Brave is the highest of all thirty-four OECD nations. The United States is also held to be one of the most proficient s of elective surgery providers in the world.

Face-lift surgeries and bariatric (weight loss) procedures by whatever name (gastric sleeve, gastric by, gastric band, lap band, etc.) for the majority of these procedures. The obesity matter may help explain the data about health care costs in the United States contemplated above. It is estimated that some three hundred million people worldwide are considered to be obese. Estimates suggest that fifty million US citizens (one in four adults) are obese. Childhood and juvenile obesity is an increasing issue of concern. This condition brings with it very serious consequences and can be the direct cause of death. The recidivism rate (repeat surgeries) for elective weight loss surgeries is over 30 percent. Many of these elective weight loss procedures are insurance funded, and the ultimate success rate depends largely on the ability of the patient to sustain the weight loss. The number of procedures increased from approximately 103,000 in 2003 to an estimated 171,000 in 2005. That is a huge insurance cost that insurance s underwrite. This issue needs to be handled before it becomes a problem for the individual, or it needs (in nonmedically required situations) to be a noninsured expense since it is an elective procedure. Many other elective procedures fall into the same scenario. In a consumer-driven health care market and one that values wellness, the required behavioral practices and the education and systems can be provided. ability and the duties and obligations of wellness can permeate the workplace. The OmniWell wellness model is one model that is starting the groundswell under this concept.

I cannot believe that it is not possible for the United States to spend far less on health than it does today while at the same time improving the general quality of health. We have to figure out how to do that in the midst of a very complicated health system encumbered by massive government programs, huge health insurance companies, increasing pressure from the employer segment of the economy, and a growing segment of the population being uninsured. Some physicians have described to me their relationship with health insurers as “open hostility.” I have witnessed the effects of broken professional relationships between medical providers (most especially physicians) and insurers. Rather than focusing on the behavioral choices the patient has available in consultation with a physician, the physician is burdened with coding, compliance, and justification so that the physician can get paid for services rendered. Couple that with the now-common practice of insurance companies trumping the decisions of physicians by issuing blanket policy statements that, for example, a certain drug will no longer be considered for payment by the insurer. What is a patient to do when dealing with this kind of conflicting information? The doctor is, after all, the most important link in the diagnostic chain and has actually seen the patient and has his or her records and health history. There is a serious lack of collaboration between physicians and patients. The patient as well as the physician are held hostage to the insurance coding and justification process. Costs are increased with absolutely no value added as simultaneously the physicians (or any other medical services provider for that matter) and the patients confront the greatly increased istrative costs brought to bear by the insurance companies.

Health insurers span the globe of medical information. Health insurers are to medical providers as employers are to consumer-driven patients. They are the tie that binds. Medical health insurance companies should be in a ive and collaborative role to the health care providers. They have the data from many practices that can be reviewed, validated, and provided to individual practices. Insurance companies have on record the results of medical routines from success to mortality. Insurance companies would have a conflict of interest if they were providing this valuable information to physicians and also referring patients to their own networks. The quality and value analysis must be independent as in the OmniWell Model. The kind of information available from insurers would be of great value in of the referrals that physicians routinely must make rather than the all-too-common routine of making referrals for diagnosis or treatment

for the purpose of covering the physician’s backside rather than the primary objective of treating the patient. This kind of information at the medical practice level of medical services delivery would facilitate competition. A natural result of this kind of structure will lead to networking of a different kind. The “approved in-network” provider list that resides with insurance companies will be replaced with a professional network of value-driven practices and facilities between and driven by the physicians themselves and resulting in superior costeffective care that focuses on eventual outcomes rather than interim procedures on the way to resolution of a patient’s case—whatever that resolution might be.

IS IT POSSIBLE THAT LEGISLATION WILL PROVIDE LONG TERM SAFE JOURNEY?

Here is a bit more cannon fodder for consideration. The United States spends an estimated $2 trillion annually on health care expenses. That is more than any other industrialized country. We have seen in part now why we spend $8,233 per person on average compared to $2,964 on average among all thirty Organization for Economic Cooperation and Development countries. Norway, the country with the second most expensive system on a per capita basis, spends $4,763 (using currency conversion based on purchasing power). I see comments from various analysts repeatedly that say an increasing number of US businesses are less competitive globally because of the unending increases in medical costs. The cost of health care is a fixed cost on the company’s annual budgets and profit and loss statements. The cost does not flex directly with increases in production or output. It follows then that the recent economic downturn has heightened the woes and burden of health care costs. While the law signed by President Obama is intended to lower costs, whether the reforms will reduce the health care cost burden on United States industry or increase (some say “dramatically increase”), the burden remains under debate. The Supreme Court has, at this writing, just announced its decision. The health care legislation really focuses largely on decreasing the number of uninsured according to some projections by as much as 60 percent. Getting these people off the indignant roles, which we pay for through higher insurance rates and taxes, and into a government plan, which we pay for with taxes, does not strike me as a long-term solution. The law, according to the Congressional Budget Office, will do little to stem the rise in health care expenditures. The report went on to forecast an increase to at least 20 percent of GDP in the next decade if we stay on this path. (See further comment below.) No matter what the outcome, health care costs will not mitigate to any large degree.

The three banners of this legislation include first, health insurance exchanges, which are intended to foster greater competition among insurers thereby making it easier for individuals and businesses to compare and purchase health

insurance. Secondly, the law also imposes an excise tax on generous (“Cadillac”) plans, which the istration blames for rising health care costs. The third banner is a system of comparative health care delivery efficiency with the goal of providing justification for cost cutting thereby making US businesses more competitive globally by nature of the cost reductions. There you have it. An ission by the government that health care costs are penalizing American companies globally!

Here is a summary of popular response to the law, an interesting dialogue given the speakers: Company owners and officials hold that a wasteful public-private system would push costs much higher. It would add cost but no corresponding value. Jeffrey Rideout, a medical doctor and former head of the Internet Business Solutions Group at Cisco Systems’ Health Care Practice says the amount businesses pay for employee (health care) insurance is just one element of their total health care costs. He charges that businesses will incur a “triple tax.” First, they pay for health insurance programs through the health benefits they offer their employees. Second, businesses indirectly subsidize Medicare and Medicaid programs for the elderly and poor American population. Third, businesses also subsidize the strain on the system brought on from higher insurance s resulting from the cost of treating America’s uninsured population. Businesses pay higher insurance s to make up for the fact that Medicare and Medicaid reimbursements often do not match the total costs hospitals claim they incur in treating these patients.

The Center for Medicare and Medicaid Services, an official United States government agency, responds, saying that they found that the legislation would, in fact, do little to stem the rise in health care expenditures, and they confirmed in their statement the projection that these expenditures would increase to more than 20 percent in the coming decade. The Congressional Budget Office is estimating that federal spending for Medicare and Medicaid will rise from 5.3 percent of GDP to 6.4 percent in 2020 and to 10 percent by 2035. Most of this growth is attributed to an increase in spending per beneficiary rather than the aging of the population. The budget office continues that spending for Medicare has risen 2.3 percent per year faster per beneficiary than growth of nominal GDP per capita since 1975. That means that the path we are taking will lead to

Medicare eventually eating up 100 percent of currently projected tax receipts!

Let’s come at this from a different path: What effect on the tax rates in the United States does health care exert? It is obvious that in the current system, if health care rates continue to rise, taxes will be forced to mirror the upward movement. We already know that the health care reform law increased taxes on the high income workers to keep the program solvent for the next decade. But how high might they have to go in the future? How much GDP will be sacrificed due to tax-driven changes in labor supply and savings behavior? I turn to the National Bureau of Economic Research in a study released in June 27, 2012. The study assumes a baseline of 17.6 percent of GDP for health care spending and an increase to 26 percent in 2035. The findings are based on mathematical models that suggest marginal tax rates would rise from 18 to 21.8 percent for the lowest income group and from 42 to 70 percent for the very highest income group (those now in the 33 to 35 percent bracket). The effect would be to slow GDP growth so that in 2060, per household GDP is 11 percent lower than it would have been otherwise. The 2060 GDP hard numbers are these: $133,900 instead of $149,400 per household.

With the United States paying in excess of 17 percent of its GDP for health care, higher than any other developed nation, the Congressional Budget Office has estimated that the number will increase to 25 percent by 2025. That is a call to arms. With employer-funded health insurance coverage being employer sponsored and with employer-sponsored insurance being the structural mainstay of the US health insurance system, employers cannot afford to take a nonchalant, cavalier attitude. It is time to transfer ability to the ultimate consumers and to prepare, equip, educate employees for the transfer. The employer will benefit as well as the employee.

Employers are the best positioned, most influential, and, therefore, must be the trail masters, the guides, the leaders, as we journey down this new path. Employers must use their clout to bring honest competition to health care delivery rather than investing ongoing effort to beating down costs through

negotiation and cost shifting. The resulting short-term cost savings are offset in increases to other employers. This approach to purchasing health care has not been successful. Employers, being the major purchasers of health care insurance, must drive the requirement for competition in the health care system, value, transparent information availability, and the educating and enabling of enlightened consumers and the establishment of total wellness. The basic lessons of supply and demand and the force of that economic model should not be ignored as it has in the past as we deliver health care. All suppliers are not equal. Employers must take responsibility

Health care insurance s have risen 114 percent in the last decade. Health care is the single most expensive benefit paid by employers for employee welfare. It is an enormous expense. I have read along the way that General Motors says that health care expense adds $1,500 to $2,000 to the sticker price of every car. A government-run plan is not an option in my mind. Government does not have a history of cost containment, and private enterprise built on supply and demand has, in every case, proven to be superior to government intervention. A private, enlightened, and consumer-driven system with value and competition is the only solution. Employers are the only venue to address the masses, but employers have a vested interest in solving the problem. And the United States would benefit greatly in economic dominance and GDP advantage.

9

CONCLUSION

The path ahead is clear. The roles for employers need to change from one of cost negotiating and cost shifting to one of educating and enabling employees in the consumption of health care services, personal financial management, and career wellness. The objective is the achievement of universal wellness. Management must be willing to manage appropriately in the emerging workforce and to consciously build ability into every action, every decision at every level. Mutual trust between employers and employees must be the goal. The role of health insurers must then be to accept and enable the role of educated and informed consumers as well as to and contribute to the fair competition in the health care provider community. Health care insurers must shed the role of constraining patient choice and overseeing heath care services delivery. Insurers cannot be allowed to micromanage health care services. Insurers must stop the practice of restraining competition through their network provisions that limit consumer choice. Value-based competition is an important ingredient to service improvement and cost. And insurers must stop the mindless barrage of needless and redundant istrative burden and expense both internally and as a requirement placed on health care providers. The system that requires so much costly redundant istration, costs that increase prices paid and underwritten by health care s but which add no value, must replace dedicated billing clerks with efficient automated systems.

Public policy must bring to the forefront of the change a focus on diagnosis and treatment of the total of medical condition of patients and not a geographically or istratively defined approach. From prevention to diagnosis and treatment, the focus must be health condition management, and that management must be delivered to educated consumers. Public policy, in other words, must be intent on value-based competition and consumerism. The focus must be on final outcome of any medical situation.

EVERYONE HAS A ROLE TO PLAY IN THE MAGNIFICENT PATH THAT IS AVAILABLE RIGHT NOW

The most important cog in this wheel is that a new set of behavioral abilities on the part of the employee. When retirement plans are handled and managed by others rather than an informed employee and the financial advisors deliver investment possibilities like prepackaged commodities, employees are docile, uninformed, and ive. When educated to manage and guide or have input to their personal financial destiny, that employee is a better employee, who has perhaps shed some stress and feels in control. When employees are informed and able consumers of health care, they are more motivated and productive with the options offered by the employer, and their health care management decisions are in alignment with the employer’s plan design and buying decisions. And when employees have a universally understood process and vocabulary for relating to a fair and predictable performance management process, they are better and more engaged employees. It all works together, and all the pieces are required to complete the puzzle; but now, like no other period in history, the workforce, the political arena, the economic environment, the health insurance community, and the medical delivery system are all looking for meaningful and sustainable change that will be to the benefit of everyone.

Physicians must network around entire, all-encoming medical event management from beginning to end, focusing intently on the final result of treatment and not on geography or insurer credentialing and negotiated pricing. The system needs to focus on the patient, and the patient needs resources that will speak to the value of service providers. Patients need to be educated but have available to them an unbiased medical advocate.

Employees must be equipped with employer to accept the ability of managing their total wellness: financial destiny, career or employment

positioning, and physical health management. Employees must now play a very active role in their welfare, and they must be in concert and in agreement with the employers’ strategies for these things. Employees must accept and wear the robe of ability. Health care is not an entitlement or a right. Wellness is an organization imperative and an individual ability. That duty and obligation extends beyond the person of the employee to the employee’s family and employer.

Correspondingly, the employer must be totally dedicated to increasing wellness of all employees and in working to make the systematic changes (insurance and delivery) that wellness. The employer must then set goals, provide education, make available resources, and incentivize employees.

What has been described in these pages is intended to set a new path. No effort is made to avoid offending any of the practitioners or systems that are involved. A different set of plans, a fresh map is the intention of writing these thoughts. The overwhelming thought is that these new pathways will bring health care costs into proper balance with GDP, leading to significantly improved national economic performance; additional tax monies are not required; employers will redirect expenditures and, beyond doubt, not just save money but realize true, growing, and sustainable ROI beginning with fiscal year one, and that employees will emerge as best-in-class world benchmarks for a quality workforce.

I started with a poem, and I will end with another. Everyone has heard the statement that if you keep doing as you have always done, you will keep getting the results you have always gotten. That is not acceptable for America or its workforce. The path is available to holistic wellness. It stands on three behaviorally based wellness parameters: career, financial, and physical. The question, dear reader, is this: Which path will you choose? Which path will our country choose?

I watched them tearing a building down,

A group of men in a busy town.

With a HO HE HO and a lusty yell

They slung a beam and a side wall fell.

So I asked the foreman “Are these men skilled

And the ones you would hire if you were to build?

With a laugh he replied “No, indeed.

Common labor is all that I need.

I can wreck in a day or two

What other hands, heads and hearts have taken years to do.

I thought to myself as I started the path away

Which of these roles have I chosen to play?

Am I a builder who works with care

Measuring life by rule and square?

Am I shaping my deeds to well-made plan

Patiently doing the best I can

Or am I a wrecker walking the paths through town

Content with the labor of tearing down?

Real opportunity for employers, employees, and the United States of America is available if we select the right path: the path that builds. The employment relationship will become more satisfying for employees and employers with ability and trust built on the team covenant. Health care cost and quality will be much more advantageous to employees and employers, and health care practices will be more lucrative and satisfying to physicians as competition hones the practice of medicine and the nonproductive costs of istration are contained. Employees will control their financial destiny, and employers will benefit from an engaged workforce. Employers will realize an actual return on investment for every dollar invested in wellness rather than being forced into the dead-end path of cost savings and cost shifting. The US GDP will not carry the

heavy burden of health care costs, and a return to worldwide economic dominance will be within our grasp.

There is no middle ground. There are, in reality, only two paths: growth or liquidation. Need we say more?

APPENDIX I

APP ENDIX II