Inspiring Innovation In Existing And Evolving Industries

From the Owner’s Desk

We Avoided a 2014 Health Insurance Code Blue

News flash — incentives work!! OK. That isn’t necessarily new news but our renewed evidence is fun to mention and consider. The Affordable Care Act and the government foibles in rolling it out have all of us wondering where the health insurance industry is headed. None of us is willing to simply accept growth in our health insurance bill whether that increase comes from the ACA or from other causes.

Traditionally, health insurance cost increases are the direct result of how many employees use how much of the benefits provided in the company’s health insurance program. Benefit usage is, in turn, affected by two primary factors: 1) the number and cost of claims filed and 2) the overall health condition of the work force.

Given the right motivation and direct reward, people make more economical choices regarding their medical assistance. Example: Use a walk-in clinic instead of the hospital’s emergency room when an illness or injury is not a real emergency.

We give each enrolled family that direct reward, through our Health Cost Management Account (HCMA), a $2,500 escrow (proportionately less for singles) that can be used to pay for any health care service whether covered by the company’s insurance plan or not.

The incentive to control expenditures derives from the provision that any balance in the HCMA at year’s end is rolled over into the next year and combined with a new $2,500 deposit by the Company. So a smart decision to avoid the emergency room when a walk-in clinic will do provides a direct reward to the participating employee. Unused funds in each employee’s personal HCMA just keeps accumulating. With some judicial management of their health care expenses, employees could end up with the company’s contributions offsetting their entire deductible. Smart employee decisions are significantly empowering them to manage their current and future health care costs — despite this volatile health insurance era.

Our employees are making smarter use of health care dollars now. That means that the first primary cost factor noted above is addressed. Next, we needed a way of encouraging our 180-plus employees to, on their own, do the things that would make and keep them healthier. Healthier people need less remedial health care (not to mention that they also work more effectively and with much better attendance.)

The answer to getting these results also turned out to be dollars in the pocket: Simply pay employees for maintaining a healthier life style…by reducing their premium for the company’s health insurance program.

The trickier part was selecting a basis for fairly determining who got what reduction. We settled on the two criteria we felt everyone would have the most control over…their weight (and since no two peoples’ “right” weight is the same, we further refined weight to a measurement of body mass) and whether or not they smoked.

There are three categories of employee insurance premium with different annual discounts assigned to each category — $300, $100, and $0. That means that non-smokers with healthy height to weight ratios pay the least premium. Overweight smokers pay the most.

Employees were given the choice to participate; but if you were electing the company’s health insurance there was little to lose but perhaps some minor embarrassment at weigh-in by not signing on. Participants had their body mass measured and declared their smoking status at the outset, and each was placed in an initial discount category. Through periodic re-measurements, a participant’s discount qualification could change, up or down, maintaining the incentive to either stay at a healthy level or move into a healthier one. We also provide professional medical review and guidance to anyone who wished it by contracting the services of a visiting physician. Dr. Bill, as he is affectionately known around the plant, performs minor checkups, blood pressure screenings, etc. and gives advice and encouragement.

Results? Beginning discussions regarding our 2014 health insurance program revealed that the “average” cost increase being quoted to other companies was in the 15% range. Ours? No increase. And that is the 5th year in a row with no increase. While that results in a significant dollar savings to employees and the Company, it is more important that we’ve now had five years during which our employees, more than they might otherwise have been, were concerned about the health impacts of their life style decisions. Most are enjoying the benefits of those choices, in both their wallets and wellness. In addition, we learned valuable lessons that will help us do ever better for ourselves in 2014 and beyond.

Engendren Corporation

After serving as IEA's CEO for five years, following four years consulting with the company on strategic and financial management issues, I was able to purchase IEA from its former owners, George and Sue Newell.

To take advantage of IEA’s many domestic and global growth opportunities, the Newells needed to expand the financing base. In light of the obligations such expansion presented, they felt the time had arrived to implement their established succession plan.

I became their preferred buyer because, as George explained: "Sue and I both felt having the company in the hands of someone who knew and appreciated our business would ensure the best possible future for our employees, customers, suppliers and sales representatives."

At the time of the sale, IEA consisted of four functional divisions, employing a total of 255 people in facilities in Kenosha and Menomonee Falls, WI. Each of these divisions will now be designated LLCs:

  • IEA, LLC, a world-class heavy industrial radiator manufacturer
  • ArcRon, LLC, a fabricator of steel and aluminum products and components
  • Silver Linings Systems, LLC. which designs and builds highly differentiated, thermally managed environments for technical data centers
  • Chrysalis, LLC, the newest addition to the group, will manage activities in international markets where there is growing demand for the products of the other companies

Each of the LLCs is wholly owned by the newly formed parent company, Engendren Corporation. The parent’s name is based on the word, ‘engender’, which means to ‘cause to exist or to develop’, which is a perfect focal point of our long-term strategic plan. Engendren is a platform for strategic growth of our existing companies and for the birth of new ones.”

Engendren and functional divisions

Strategic direction and overall financial control will be provided to the four operating units by the Engendren corporate team comprised of existing managers.