Federal Express

Health Risk Reduction and Cost Reduction Program

Description | Challenge | Solution | Outcomes | Additional Info

Description

FedEx Corporation, the premier world-wide provider of transportation, logistics, e-commerce and supply chain management services, is a global enterprise with over 200,000 employees and annual revenues of $19 billion. Rising healthcare costs, a tight labor market and the need to increase productivity led to the design of innovative health promotion, injury prevention and disability management efforts within FedEx as part of the FedEx Express-Health Risk Reduction and Cost Reduction Program. Program objectives include: managing and controlling rising healthcare costs; increasing employee productivity; minimizing the utilization of inappropriate and unnecessary medical services by employees; educating employees on managing their own use of healthcare; and improving employee satisfaction with employer healthcare benefits.

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Challenge

Rising healthcare costs, a tight labor market and the need to increase productivity led to the design of innovative health promotion, injury prevention and disability management efforts within FedEx as part of the FedEx Express-Health Risk Reduction and Cost Reduction Program.

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Solution

FedEx offers a variety of Human Capital Management (HCM) programs to its employees as part of the FedEx Express-Health Risk Reduction and Cost Reduction Program. A number of different internal organizations contribute to the program including: Safety and Risk Management, Health and Wellness, Disability and Human Resources Services and Operations. Its varied programs include:

• Safety Above All Initiative: This component is effective in preventing injuries and provides for safety to be included in corporate strategies and business planning. Included in this initiative are: safety metrics for measurement of injuries, safety goal setting at the corporate level, management bonus pay that incorporates safety objectives and goals, recognition awards for safety, a safety rating factor in performance reviews of all employees, safety continuous improvement teams (SCIT), required management and employee safety training, and a chargeback system to local budgets for injuries
• Health and Wellness Centers: FedEx provides on-site wellness facilities at the majority of their facilities and offers employees without on-site facilities access to the FedEx Fitness Network
• Medical Leave of Absence Management: HCMP’s manage employees on medical leave of absence in order to keep disability claim duration lower than the transportation industry average
• FedEx Temporary Return to Work (TRW) Policy: Allows employees to return to work and remain productive during a partial disability. Employees work in a temporary assignment and perform duties within temporary restrictions specified by the physician
• Demand Management (part of FedEx Employee Benefits): These services are designed to minimize the utilization of inappropriate and unnecessary medical services by empowering employees to make medical decisions based on a consideration of benefits and risks. It includes a toll free 24-hour telephone counseling service provided by CIGNA and United Healthcare. The goals of the program are the following: to teach employees how to handle common illnesses at home and to determine when to consult a physician, teach efficient use of time spent with healthcare providers, help control costs by eliminating inappropriate visits to the emergency room or a physician’s office and improve employee satisfaction with employer healthcare benefits
• Utilization Management (part of FedEx Employee Benefits): These programs are included in all employee medical options
• Catastrophic Case Management (part of FedEx Employee Benefits): These programs deal with specific, severe illnesses in order to facilitate continuity of care and provide patient education in order to enhance the consumer knowledge and give support when needed most
• Disease State Management: This program provides early intervention along the healthcare continuum. It uses a systematic, proactive case management model to encourage patients to actively participate in managing their disease and maintain their optimum state of health
• Lifeworks Program: Improves the health and quality of life of FedEx employees by providing stress reduction, work/life support, resource and referral for childcare, elder care, self-care and employee education and counseling.
• Employee Assistance Program: This program allows pre-paid short term counseling services to employees, dependents and household members experiencing quality of life problems
• Maternity Education Programs
• Smoking Cessation Program

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Outcomes

• FedEx’s programs resulted in a cumulative five-year medical benefit cost savings of about $579 million.
• Six year cumulative cost savings related to decreases in medical-related lost time from work were estimated at approximately $479 million.
• Average duration for a FedEx disability claim is 61 days, compared to 107 days for the transportation industry.
• Disability duration at FedEx was also nearly 75% below the average disability duration of other transportation industry employers.
• Total disability claims have decreased 28% since FY94 and 7.2% between FY99 and FY00
• Disability claims costs have decreased by 2.5% in the five fiscal years from FY96 to FY00, even as employment has increased by 20,000 in the same time period
• Since 1997, the Leave of Absence Days/100 Employees has been reduced by 28.4 days, while TRW utilization has increased from 32.4% to 54.9%
• FedEx Fitness Program participants reduced their overall benefit costs from $1,210 to $1,021 (16% savings) in the year following program enrollment, while non-participants’ total benefits decreased from $2,104 to $1,947.
• Safety Above All initiatives have resulted in a 47% improvement in injury rates between FY96 and FY01.

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Additional Information

The program was implemented in a provider of transportation, logistics, e-commerce and supply chain management services with 200,000 employees

***For further information, please visit, http://healthproject.stanford.edu/koop/Federal%20Express/description.html

Published: January 26, 2009