ARTHUR J. GALLAGHER & CO. | AJG.COMHEALTHCARE

CASE STUDY

Client Profile:

Industry: Healthcare

Location: Eastern U.S.

Number of Employees: 7,800

Strategies for absence management and paid time off saved the client more than $8 million.

Challenges & Opportunities

Every employer wants to control medical plan costs while providing broad coverage for employees. However, for employers with thousands of workers, the collection and analysis of vast amounts of data for effective plan management can often exceed their expertise and resources.

That was the case for a prominent hospital on the Eastern Seaboard, which struggled to understand the cost drivers and utilization patterns for its employee medical plan. Additionally, the hospital had an inefficient paid-time-off (PTO) program that created a financial burden by allowing employees to “bank” hundreds of unused leave hours.

The hospital turned to Arthur J. Gallagher & Co. to develop:

• A robust data mining process to determine the plan’s effectiveness in managing cost and improving health

• Strategies to manage utilization and lower plan costs

• An updated absence management program to reduce the number and duration of employee absences

• An income-protection plan for disabled workers

A Tailored Approach

Using its proprietary data mining tool, Gallagher analyzed every aspect of the client’s medical plan — from costs and utilization to employee wellness and substitution rates for generic drugs. Based on this analysis, multiple strategies were recommended to improve efficiency and lower costs.

For example, when the data showed a high rate of emergency room visits for non-emergency conditions, Gallagher recommended plan design changes to encourage more appropriate utilization of ER services. To lower pharmaceutical costs, tools were implemented to prevent unnecessary use of prescription drugs and limit access to certain drugs. Gallagher also recommended strategies for effectively managing diabetes, heart disorders, asthma and other high-cost conditions.

Gallagher’s data analysis showed that the client averaged more than 200 absent employees per day, leading to excessive costs for replacement, overtime and per diem expenses. To lower these costs, the account team developed strategies to reduce absences and help employees return to work faster. Among these recommendations were:

• Hiring return-to-work specialists

• Training managers to make accommodations for injured employees who could not perform all of their job tasks

• Coaching employees to work more ergonomically

CASE STUDY:Healthcare

HEALTHCARE ARTHUR J. GALLAGHER & CO. | AJG.COM

Data mining is uncovering cost drivers in the medical plan, enabling the client to make better decisions.

Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc. is a licensed insurance agency that does business in California as “Gallagher Benefit Services of California Insurance Services” and in Massachusetts as “Gallagher Benefit Insurance Services.” Neither Arthur J. Gallagher & Co., nor its affiliates provide accounting, legal or tax advice.

© 2015 Gallagher Benefit Services, Inc.

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To reduce the client’s financial liability, Gallagher helped revamp the PTO program, changing the policy related to unused hours. Moreover, the organization used the resulting savings to provide fully insured disability coverage for all employees.

Results Delivered

The new strategies for absence management and PTO have saved the client more than $8 million, while cutting daily absences nearly in half and significantly reducing their duration.

Meanwhile, Gallagher’s sophisticated data mining is helping the client understand employees’ utilization of the medical plan, identify cost drivers and make more informed decisions to control plan costs.

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