Sony Promotes Wellness to Stabilize Health Care Costs

By Santora, Joyce E. | Personnel Journal, September 1992 | Go to article overview

Sony Promotes Wellness to Stabilize Health Care Costs


Santora, Joyce E., Personnel Journal


In 1990, after several years of double-digit inflation, executives at Sony Corporation of America decided to take a closer look at the health care claims of their 12,000 employees. An exhaustive study of medical care claims filed during a three-year period 1988, 1989 and 1990--turned up two disturbing trends:

* Approximately 50% of total claims costs were for illnesses and accidents that might have been preventable or modifiable through behavioral changes

* The company was paying what it considered to be retail prices for hospital and medical services that could be obtained wholesale through preferred provider arrangements.

As a result of these discoveries, Sony embarked on an Employee Wellness Campaign for 1992, designed to raise the health-consciousness of its employees as well as stabilize the cost of providing health care coverage. Two major features of this campaign are the addition of coverage for preventive care under Sony's indemnity plans and the provision of incentives in the form of flex benefits credits for employees who take advantage of certain health screenings. These credits can be applied to the following year's flex benefits' elections.

"Over the last several years, we had experienced a 150% to l6% increase in the cost of health care to our employees," explains Alfred E. Hayes, vice president of benefits and administration at Sony's Corporate Human Resources Group in Park Ridge, New Jersey. "During that time, the concept of wellness coverage was being raised by our employees and by our benefits committee members. Consequently, we decided to look at the demographics of where we were with our claims--what claims were heavy compared with industry standards, what risks were prominent and what we were paying."

To conduct a thorough study of its claims, in mid-1990 Sony retained Hewitt Associates of Bedminster, New Jersey. Because Sony's health care plans are self-insured, it was merely a matter of having its benefits administration company turn over three years of computer tapes for analysis by Hewitt's corporate physician.

Hewitt ran the tapes through its Health Information Systems, which examines several factors: The types of claims submitted, patterns of claims utilization and costs of claims. That information then was compared to similar employer data and adjusted for Sony's particular medical plan design, employee demographics and geographic locations.

What they found was that one-third of the claims resulted from what they believe to be modifiable conditions. Further, the study showed that about half of that group--17% of all employees--were responsible for 50% of all of the medical claims.

Supplied with that information, Sony "first looked at the risks we have with actual claims, to find areas we could do something about," says Hayes. Smoking, alcohol abuse and not wearing seat belts figured high on the list of risks that could be reduced through behavioral changes. Other potentially preventable risks included medical conditions such as heart disease, induced by stress-related factors like high blood pressure and high cholesterol levels.

Believing that early detection and treatment of some medical conditions might lead to lower claims costs in the long run, Sony adopted many wellness features in its 1992 medical coverage plans.

First, Sony initiated improved coverage for preventive care and wellness programs, regardless of whether employees enroll in an HMO or in one of three indemnity plan options. For 1992, this coverage includes:

1) Annual blood screening. Sony employees age 30 or over are reimbursed in full for the cost of obtaining a blood-pressure reading and blood tests, which include testing of cholesterol levels, blood sugar and red blood cell count. (At some locations, testing is available on site at no cost for all employees, regardless of age.)

2) Annual pap smear. Female employees are reimbursed in full for the expense of having a pap smear once each year. …

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