american electric power integrated disability management ncsi – naples, fl june 2008 loyd hudson,...
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American Electric PowerIntegrated Disability Management
NCSI – Naples, FLJune 2008Loyd Hudson, IDM Manager
Who is AEP?
One of the Largest Investor-Owned Utilities Largest Generator of Electricity in the United States Serves Customers in 11 States 23,000 Employees in 400+ Locations One of the Largest Inland River Transportation System
in US with over 60 boats in operation. Headquarters in Columbus, Ohio
AEP Environment Self-Insured for Sick Pay, Long Term Disability & Workers’
Compensation Unionized (UMWA, IEBW, USWA) Rich Benefits Long Term Employees Aging Workforce Employees are Exempt or Highly Paid Skilled Laborers
What is IDM?
Integrated Disability Management is a holistic approach and philosophy to how an organization uses the processes, tools, and benefits associated with occupational and non-occupational programs to minimize
Disabilities from occurring Cost Impact on productivity.
What Is AEP’s IDM? Culture Change Managing the disability not the payment stream Focusing on claims management, not risk management Early intervention, early connection Continuity of care Promoting RTW and quality care Control Costs Employee Advocate
Why Implement Integrated Disability?
Why Implement Integrated Disability
Costs Containment Direct Indirect
Increased Service Increased Efficiencies Increased Morale Increases Communication Benefits Already Offered
What’s In It For Senior Management? Reduced Cost of Services RTW and Productivity Improvement Improved Management of Non-Productive Time Increased Employee Morale and Job Satisfaction
Through a System Designed to Value an Employee’s Contribution to Organizational Success
Sentinel Effect that an Employee is Needed and Missed
What’s In It For The Supervisor?
Help in Managing the Workforce and Time-Off Costs
Increasing Productivity and Decrease Costs
Information to Help Manage Short-Term Disability and Absence Control
Additional Expertise
What’s In It For The Employee? Support from Internal Sources with Advocate Medical Advice, Guidance and a Source of Information Quick Response with Appropriate Treatment Recovery Plan Options that Enhance Ability to RTW RTW Plans Based on Realistic Goals / Expectations
with Supervisory Support Joint Participation in Decision Making
What Does AEP IDM Program Look Like?
It’s a changing and evolving process
Recovery Center Vision Statement
Recovery Center Mission: “Manage Absence Recovery”
Recovery Center Vision: “Maintain Excellence and National Leadership in Integrated Disability Management”
Recovery Center Purpose: “Provide a Customer-Focused, Flexible Human Resource Team Dedicated to Providing High
Quality, Timely and Consistent Service While Striving For Continuous Improvement”
3
AEP’s Integrated Disability Components
Absence Management Employee Advocacy Consulting Services Subject Matter Resources Cost Containment / Liability
Management
Compliance Management Development of Policy/
Legislation Managing Department
Relationships Vendor Management
What Has AEP Done Right!
Total Integration Absence Management
Use of Technology to Improve Efficiencies
Third Party Administrators (TPA) Oversight
Consulting Measurements/Benchmarks
Measure and Benchmark Costs as a Percentage of Payroll
Historical Business Unit Comparisons
Productive Employees (FTE) Employee Satisfaction Business Unit Satisfaction Expenses as a Percentage of Claim Costs Claim Specialist Matrix
Management Reports
Recovery Center Utilization
• The Recovery Center managed absences for 3,006 employees consisting of 3,733 individually reported claims
• Processed 844 employee workers compensation claims
• Contacted over 1,084 supervisors, of whom 69 supervisors had 10 employee absences or more
6
More than 20% of AEP’s total population is involved with the Recovery Center on a yearly basis
Workers’ Compensation
Self-Insured Workers’ Compensation is an assumption of risk that is impacted by severity and frequency of accidents. Self-insured losses are capped by excess insurance for most states based upon the date of the accident. The self-insured retention for 2007 was $500,000 per claim and The Jones Act per claim was $150,000.
0.50%
0.70%
0.90%
1.10%
1.30%
1.50%
1.70%
1.90%
19941995199619971998199920002001200220032004200520062007
AEP
NationalAverage
Workers’ Compensation Costs as a percentage of payroll are:Actual
2007 costs are $7.8 million dollars lower than 1997 costs.
Costs average $2.7 million dollars per year lower since the inception of the Recovery Center – a total reduction of $27.3 million dollars.
Benchmark 2007 costs are $8.0 million dollars lower than the
national average Costs are an average of $6.0 million dollars per year
lower than the national average since the inception of the Recovery Center resulting in an accumulative total of $60.2 million dollars below the national average.
Workers’ Comp costs are significantly lower than the national average and lower than our 1997 benchmark year and continue to decline
13The Recovery Center’s oversight of workers’ compensation has helped lead to a decrease in associated costs.
Workers’ Compensation Non-Productive Full Time Employees
Workers’ Compensation days continue to decline resulting in 45 non-productive full time equivalent employees being made available for productive employment since 2001.
14
The Recovery Center’s oversight has led to more available productive employees – (45 FTEs)
Days of Lost Time Indemnity Payments
0.00
10000.00
20000.00
30000.00
40000.00
50000.00
60000.00
2001 2002 2003 2004 2005 2006 2007
Days
Long Term Disability
0
0.001
0.002
0.003
0.004
0.005
0.006
0.007
0.008
0.009
0.01
199319941995199619971998199920002001200220032004200520062007
AEP
NationalAverage
Long Term Disability costs as apercentage of payroll are: Actual
2007 costs are $3.7 million dollars lower than 1997 costs.
Costs are an average of $3.2 million dollars per year lower since the inception of the Recovery Center – a total reduction of $32.7 million dollars.
Benchmark 2007 costs are $1.6 million dollars higher than
the national average. Costs are an average of $1.0 million dollars
higher than the national average since the inception of the Recovery Center resulting in an accumulative total of $10.0 million dollars above the national average.
Long Term Disability (LTD) costs are above the national average but have been steadily decreasing since the inception of the Recovery Center
15 The Recovery Center’s involvement has led to decreased Long Term Disability costs.
Long Term Disability Employee Count
Long Term Disability employee count continues to decline resulting in 167 more full time equivalent employees since 2001.
16
The Recovery Center’s oversight has led to more productive employees – (167 FTEs)
Long Term Disability Employee Count
0
200
400600
800
1000
2001 2002 2003 2004 2005 2006 2007
LTD
Sick Leave Plan
1999 – Eliminated the 3 day wait ($4.1 million dollars)2001 – Eliminated the banks to give 6 months of benefits ($5.3 million dollars)
0.01
0.012
0.014
0.016
0.018
0.02
0.022
0.024
0.026
0.028
0.03
199319941995199619971998199920002001200220032004200520062007
AEP
NationalAverage
AEP Sick Pay Costs as a percentage of payroll are: Actual
While Plan changes averaged $7.7 million dollars since the inception of the Recovery Center, costs have increased an average of $5.6 million dollars – a net savings to the company of $2.1 million dollars per year.
Total net benefit increases have been $69.1 million dollars while costs have only increased by $45.0 million dollars – a net total savings of $24.1 million dollars since the inception of the Recovery Center.
Benchmark 2007 costs are $2.0 million dollars higher than the
national average. Accumulative cost averages since the inception of
the Recovery Center have been $21.9 million dollars lower than the national average resulting in a yearly average of $2.2 million dollars below the national average.
17 Increased benefits have resulted in higher Sick Pay cost which has been mitigated by Integrated Disability
Sick pay costs are at the national average
Sick Hours Used
Sick hours continue to decline resulting in 61 more full time equivalent employees since 2001.
18
The Recovery Center’s oversight of sick leave has helped lead to a decrease in associated costs – (61 FTEs)
Sick Hours Used
0.00200,000.00400,000.00600,000.00800,000.00
1,000,000.001,200,000.001,400,000.001,600,000.00
2001 2002 2003 2004 2005 2006 2006 2007
SickHoursUsed
AEP Total Disability Costs
AEP’s Total Disability Costs as a percentage of payroll are:
Actual 2007 costs are $9.5 million dollars lower
than 1997 costs even with a $7.7 million dollar benefit increase.
Costs average $5.6 million dollars per year lower since the inception of the Recovery Center – a total reduction of $55.8 million dollars.
Benchmark 2007 costs are $11.4 million dollars lower
than the nation average. Costs average $6.1 million dollars per year
lower than the national average since the inception of the Recovery Center resulting in an accumulative total of $60.9 million dollars below the national average
1999 – Eliminated the 3 day wait 2001 – Eliminated the banks gave 6 months of benefits
0.025
0.027
0.029
0.031
0.033
0.035
0.037
0.039
0.041
0.043
0.045
1994
19951996
1997
19981999
2000
2001
20022003
2004
20052006
2007
AEP
Marsh
Disability costs are lower than the 1997 benchmark and well below the national average while providing additional benefits to our employees
19 With Recovery Center involvement disability costs continue to decline while employee benefit costs have increased.
Absent Non-Productive Full Time Employees (FTE)
20
334 non-productive full time employees have been made available for productive employment
The Recovery Center’s Integrated Disability Program has led to more available productive employees – (334 FTEs)
0500
100015002000
Absent Nonproductive FTEs
Sick Pay
LTD
Workers'Comp.
Additional Productive FTE Available for Work
Compared to 2001 we have 334 additional productive employees
Recovery Center Survey 2007
Employees who have utilized the Recovery Center rate our performance a 4.24 out of 5.00
7
The Recovery Center has proven its ability to manage the programs with high employee satisfaction
January February March April May June July August Sept Oct Nov Dec1. Was the Recovery Centerstaff courteous and 4.59 4.53 4.09 4.57 4.49 4.60 4.24 4.57 4.41 4.40 4.27 4.44responsive?
2. Was the Recovery Center staff knowledgeable about 4.31 4.25 4.29 4.35 4.48 4.62 4.04 4.46 4.30 4.27 4.09 4.46your disability relatedquestions or benefits?
3. Was the Recovery Center's 4.32 4.30 4.06 4.38 4.39 4.55 4.00 4.33 4.23 4.25 4.05 4.20assistance helpful?
4. Were your benefits 4.43 4.41 4.13 4.36 4.44 4.50 4.17 4.43 4.44 4.38 4.23 4.38provided in a timely manner?
5. How would you rate the 4.41 4.39 4.05 4.46 4.38 4.62 4.12 4.36 4.36 4.25 4.18 4.24Recovery Center's overall performance?
Employee Survey -- 2007
Question
Management Expenses As a Percentage of Disability Costs
AEP Management Expenses are 5.13% -- well below the 10% target.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
1998199920002001200220032004200520062007
Expenses as a Percentage of Claim Costs
22
HR Function
Through improved process efficiency, the Recovery Center has continued to decrease operational expenses as a percentage of claim costs.
Measurementsof
IDM
AEP – National Leader in Integrated Disability Management
•Mercer/Marsh -- Columbus, Ohio, Cleveland, Ohio, Chicago, Illinois•Consol Energy -- Pittsburgh, Pennsylvania•ArvinMeritor Corporation -- Detroit, Michigan•Kaiser Permanente – CA•The Ohio State University -- Columbus, Ohio•Longaberger Basket Company -- Dresden, Ohio•Dow Chemical Corporation -- Charleston, West Virginia•Honda of American -- Marysville, Ohio•Southern Company -- Atlanta, Georgia•Alabama Power Company – Birmingham, Alabama•First Energy -- Akron, Ohio•Goodwill Industries -- Columbus, Ohio•Holiday Retirement Corporation -- Portland, Oregon•PCC Structurals -- Portland, Oregon•Ohio Health -- Columbus, Ohio•Chevron Texaco Corporation -- California •Owens Corning Corporation -- Toledo, Ohio and Newark, Ohio•Portland General Electric – Portland, Oregon•Eugene Electric and Water – Eugene, Oregon•Allegheny Energy – Greensburg, Pennsylvania•Southern California Edison -- California
Companies that we have benchmarked at our center since 1998
23
The AEP Human Resources Recovery Center is a nationally recognized leader in Integrated Disability Management.
Questions & Comments Thank you
WC Claim Cost By State
Claim Costs are totals paid out and do not reflect recoveries made through subrogation and excess insurance.
32
STATE 2003 2004 2005 2006 2007
Arkansas $16,400 $34,088 $2,144 $1,163 $3,744Illinois $45,636 $47,706 $225,263 $55,002 $61,018Indiana $373,584 $285,424 $534,283 $374,812 $283,448Kentucky $1,053,479 $1,012,387 $1,100,321 $679,525 $863,403Louisiana $134,588 $143,455 $257,567 $208,463 $189,834Michigan $414,223 $159,874 $79,175 $81,318 $82,836Ohio $5,055,449 $5,667,976 $4,998,987 $4,567,966 $4,255,909Oklahoma $813,490 $841,725 $864,819 $782,061 $534,688Tennessee $167,412 $79,310 $45,902 $177,544 $226,728Texas $2,465,819 $1,496,713 $1,868,304 $2,762,663 $1,496,405Virginia $629,139 $766,580 $1,135,579 $739,524 $748,058W. Virginia $3,629,551 $3,378,786 $2,518,229 $2,271,268 $1,976,344
$14,798,770 $13,914,024 $13,630,573 $12,701,309 $10,722,415
AEP Workers’ Compensation Assessments
33
STATE 2003 2004 2005 2006 2007Illinois $2,440 $588 $2,267 $486 $1,177Arkansas $1,200 $2,300 $2,300 $2,000 $22,419Texas $30,147 $12,812 $27,027 $1,303 $44,848Michigan $9,795 $12,129 $1,646 $1,646 $2,715W. Virginia $899,327 $917,002 $708,414 $804,945 $895,948Ohio $767,496 $637,094 $698,375 $654,833 $612,040Virginia $18,225 $19,012 $18,135 $10,689 $13,891Tennessee $11,919 $6,876 $7,425 $6,876 $10,159Kentucky $279,653 $61,056 $29,393 $21,997 $13,673Louisiana $3,183 $1,195 $957 $2,886 $12,779Oklahoma $14,236 $25,186 $29,487 $27,089 $13,075Indiana $1,714 $5,869 $4,704 $14,918 $2,933Longshore & Harbor $41,153 $23,905 $5,947 $4,918 $7,906
$2,080,489 $1,725,024 $1,536,077 $1,554,587 $1,653,563
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