In 1992, McLeod Regional Medical Center was a nonprofit hospital with 2,200 employees.
Today, McLeod Health, as it is now known, is a 4,500-worker conglomerate with three hospitals and six subsidiary divisions, including a home health agency, a health and fitness center, a medical equipment company, an ambulatory surgical center and physician practices and collections.
Moreover, as McLeod continued to acquire health care agencies, employee demographics shifted with the hiring of younger graduates and other workers from different regions and even foreign countries. People became more informed and outspoken about what they wanted, and benefit costs soared.
Clearly, the one-size-fits-all benefit program needed serious medical care. Timothy Hess, McLeod's director of human resources for compensation and benefits, was the doctor on call.
'With managed care coming in, there was a need to look and see what the employees wanted,' recalls Hess, this year's winner of the EBN Benny award for Health Care. 'That's when we started to go through our growth period. That's when we got real complex. The enrollment process and paperwork took weeks.'
So, beginning in 1998, Hess proceeded to overhaul the entire benefits program. He had a number of goals in mind, including dialing benefits costs back to 21% of McLeod's total salary budget, maintaining or increasing employee satisfaction and balancing corporate needs with operating needs.
Craig Butler, McLeod's director of HR for employee services, claims that Hess is uniquely qualified for the job because 'he's been a great mediator of needs ... He's helping identify where the bumps are, and he knows how to manage that change.'
In the process, Hess has implemented a cafeteria model with telephone-based enrollment, complete with vision, dental and dependant programs and a number of levels of life insurance and accidental death and disability employees can buy. He also has instituted full bidding of benefits plans and, possibly the most important change for the mostly female work force, integrated paid time off and disability management.
Previously, Hess says, McLeod gave its employees several sick days, 60-day short-term disability and six months of long-term disability. But sick days could be used only for personal illnesses, forcing employees to use their vacation time to nurse sick children back to health and short-term disability to give birth. The plan, Hess notes, was the source of 'a lot of dissatisfaction.'
Under the new system, short-term disability was reduced to two weeks and, instead of the silo model previously used, employees were given a bank of paid time-off plus three extra days added to accrual rates.
Of course, Hess says, 'because we've integrated everything, it's a time submission nightmare [for the HR department]. There are 75 to 100 people on a leave of absence at any given time.'
But while HR staff have more work to do, most of the time is invested on the front end, which Hess says is 'value-added instead of clean-up.'
Tiers for fears
Although cost-effectiveness, Hess insists, is not the primary goal of the benefits revamping process, he does acknowledge that high health care costs, the bane of many a benefits manager's existence, did play a part in the decision to change the plan.
To that end, McLeod added a second-tier health plan and, in a nod to employee concerns, shortened the eligibility requirement. And while workers, to some extent, had always shared premium costs with the hospital, they still didn't really know how much health care costs.
Therefore, while McLeod implemented preferred provider networks with the primary care physicians in its practices and made available a point-of-service plan that resembles an HMO, Hess made sure employees knew how much health insurance cost by putting on their enrollment worksheets and pay stubs exactly what percentage they were paying.
'I think people thought that because we were a health provider, insurance didn't cost anything,' Hess says. 'Well, it did. So we sneak in some education on what the true cost is.'
Hess also managed to turn McLeod's defined contribution retirement plan into a more participant-driven one, satisfying the demands of younger employees for something more portable. This year, Hess and his staff are putting into effect a Preferred Retirement 401(k) plan for current employees.
Proactive communications
While employees do appear to be satisfied now, that doesn't mean the new plan was so easy to implement. After all, says Butler, the health plan, retirement program, disability and paid time-off plan were all 'very sensitive, potentially volatile sacred cows.'
So an aggressive communications program was necessary for the program to stick, particularly since, as Hess notes, 'some changes could be seen as huge takeaways.'
To that end, Butler makes weekly rounds through the complex, talking to employees and finding out what their concerns are. Regular Q & A sessions are held with workers. Annual surveys and focus groups are also administered.
Butler calls Hess 'this corporation's benefits educator. How does an educator educate? Any way he can.'
Hess's efforts have not gone unrecognized. Not only have employees in large part expressed satisfaction with the revamped benefits program, but the health and welfare benefits communication curriculum has received several awards, including a Dalton Pen award.
'We're more into life event' communication,' Hess explains. 'We relate our benefit programs to where our employees are in their lives.'
Even though he's placing yet another award on his mantel, Hess does not plan to rest on his laurels. While McLeod is not yet ready to integrate disability, health and workers' compensation, among other things, Hess says it is 'on the radar screen.'
'We see the benefits program continually evolving,' he explains. 'Once we get to our near-term goals, there will be a whole new set of needs ... Our ultimate goal is to get us away from the paper-pushing, away from the routine questions and be able to provide help with special needs.'
