Pitney Bowes: Employer Health Strategy

1. Evaluate the major components of Pitney Bowes’ strategy for employee health.

Pitney Bowes believes employee health management directly affects the bottom line.
The management team has taken an aggressive stance on employee health management with
the objective of reducing costs while improving outcomes. As a result, the data appears to
reinforce the effectiveness of their strategy. Pitney Bowes’ employee health strategy focuses on
four major components; investing heavily in employee health management staff, using data to
shape plans, programs and benefits, focusing on preventative care, wellness and low cost
treatment of chronic diseases and offering choice and flexibility.
Pitney Bowes’ employs a staff of eight people working on health plan design and
wellness programs. Though it is not fully clear from the case, this number appears to be in
addition to the senior management team a Corporate Medical Director and an Executive
Director of Global Benefits Planning. While this large staff is often questioned by third-party
consultants, Pitney Bowes believes that the up-front investment in analysis and plan design is
far offset by overall lower healthcare costs, citing firms with lower overhead that have higher
overall costs.
Utilizing the large employee health management staff, Pitney Bowes has taken a data
driven approach to plan design and program management. The Firm collects data from various
sources such as claims data, chronic disease prevalence, hospital admissions and third-party
benchmarking to make sure they are optimizing their plans and programs to meet the needs of
their populations. They even pioneered a software algorithm for anticipating future health care
costs by geography. By performing extensive data analysis, Pitney Bowes makes sure their
healthcare management efforts are properly prioritized with the companies goals of prevention,
cost reduction and low absence rates due to illness.
Each plan offered by Pitney Bowes offers comprehensive preventative care treatment
with little or no cost sharing. In addition, programs are available for managing chronic diseases
and treating mental health. These measures are not only good for keeping employees healthy,
they are also very targeted at reducing costs, addressing the early signs of health problems and
keeping employees at work. A past Corporate Medical Director was quoted as saying they look
at the 75% of the population incurring 25% of the costs, unlike most employers who only look at
the top 5% most costly employees. By expanding their scope and developing preventative care
and disease management programs, they keep people from entering the top 5%. The Firm
takes preventative care further by offering many of these services though onsite clinics. The
added convenience of onsite clinics means less work missed for healthcare related
appointments and better utilization of preventative care services. All together, Pitney Bowes has
designed their programs and health plans to keep people healthy instead of treating them when
they are sick.
Finally, Pitney Bowes has maintained a high degree of flexibility in their healthcare
benefits options. They offer a full range of PPOs, HMOs and high deductible plans to meet the
needs of their employees, split over both self-insured and fully-insured plans. The broad degree
of variety allow them to adapt to the many different patient populations they serve, whether it be
corporate employees or dispersed workers such as repair people.
 2. What recommendations would you make to improve Pitney Bowes’ health strategy?
What challenges and constraints must it overcome?

Pitney Bowes has done an impressive job slowing the rate of healthcare cost increases
in comparison to benchmarks. However, the firm is still seeing rapidly escalating healthcare
costs which is consistent with the rest of the industry. To address these escalating costs, Pitney
Bowes must address several issues. First, many of the benefits Pitney Bowes offers to its
corporate and onsite employees is not accessible to dispersed employees such as repair people
and the sales force. Many of these employees cannot take advantage of the on-site medical
services and wellness programs through the Health Care University which have been
fundamental in the firms ability to keep costs low. One way to do this would be to shift more of
the Health Care Universities programs over to an online model as opposed to a live classroom
based program. As shown in exhibit 5 in the appendix, this is a rapidly growing area of focus for
many large employers, with 32% indicating they will be adding such capabilities between 2008
and 2010. The online model would be ideal for addressing the health education needs of
dispersed populations.
While online tools will assist with expanding the reach of the Health Care University, it is
more difficult to offer the benefits of the onsite clinics to dispersed employees. Instead, the firm
will need to negotiate for better primary care coverage for their dispersed employees allowing
them to seek cost effective care locally. This will be a challenge because health care plans
have been unwilling to improve access to primary care, unlike the progress made expanding
behavioral health benefits. Pitney Bowes many need to form alliances with other large
employers to apply pressure to health insurers to make progress in this area.
Finally, Pitney Bowes may want to consider more difficult decisions to reduce cost. This
could include expanding cheaper HMO and high deductible options. Currently, HMO options
are being reduced each year in favor of more popular but also more expensive PPO options.
The firm could also look at its policy for offering healthcare benefits to retired employees,
especially those who are eligible for Medicare. The firm could consider offering cheaper
supplemental insurance options fully replacing Medicare for this population. Neither of these
options would be popular, but given Pitney Bowes excellence in the many other areas within
their healthcare management strategy, they may be able to flex on these opportunities for cost
savings.