1. Background in 2000

Blue Ridge Paper, a 92 year old paper manufacturing company with a workforce of 2000 employees averaging 50+ years of age, with 6 locations in 5 states, was struggling to survive in large part due to healthcare costs that were skyrocketing at 15-16% per year.

The company’s unionized employees had little or no understanding of what drove healthcare costs, and had very rich benefits with little contribution to the cost.

Total costs were about $6,300 per employee per year, compared to the national average of $4,500.

  1. Risk Management Principles Implemented

Over 60 different cost containment initiatives were implemented during a 5 year period from 2002-2006. These included the following:

  1. To engage the workforce, an Advisory and Educational Task Force was established.

  2. A Health Risk review was conducted, including Health Risk Assessments, medical/Rx claims auditing and analysis.

  3. Interventions such as Disease Management and Wellness programs, including financial incentives.

  4. Health Coaches were used to focus on covered individuals with chronic conditions.

  5. An on-site clinic and pharmacy were established in Western North Carolina to reduce cost of specialist utilization, and meet acute/urgent care needs.

  1. Results:

  1. Medical trend declined to less than 2% per year over a five year period.

  2. Costs projected to be $35 million per year in 2000 were actually only $20.5 million for the year 2006.

  3. Savings for 2002-2006 totaled $17.6 million dollars, as a result of all of the cost containment initiatives.

  4. Claims cost for covered individuals with chronic conditions declined from 42% to 37% of total spend, saving $1.0 million per year.

  5. Productivity, measured in “tons per day” increased by 16%.

  6. Absenteeism for illness related reasons declined by nearly 50%.

  7. Disability costs dropped by 30%.

  8. Return on Investment (ROI) was $6-$8 for each $1 spent on the implemented initiatives.

Health Risk Management, LLC
P.O. Box 22517
Knoxville, Tn. 37933

2008 Health Risk Management, LLC
Jerry Burgess, Principal jerry@healthriskmgmt.com

Darrell Douglas, Principal darrell@healthriskmgmt.com

Gaye Fortner, Principal