N.B. Power teamed up with its union to trim a projected $8.4 million in benefit costs
In a typical house in Fredericton, the telephone rings. A worker, off on short-term disability from his job at New Brunswick Power, hobbles over and picks up the receiver.
A terse conversation follows, he hangs up the phone angrily and shuffles back to the couch.
Hours later the telephone rings again. The same man shuffles over and answers the call. A friendly conversation ensues, laughter and pleasantries are exchanged, he hangs up in a good mood and heads back to the couch for more rest.
The topic of conversation? Exactly the same during both calls — just a check to see how he’s doing, if anything can be done to help out and if he’s following his doctor’s plan for returning to work as soon as possible following his injury.
The source of the first call? A company representative. The second? A representative of his union. Both sides are working in concert in an effort to get the worker back on the job as soon as possible.
It’s part of a unique partnership between N.B. Power and Local 37 of the International Brotherhood of Electrical Workers (IBEW) that has helped the utility accomplish some startling feats in the current benefits climate — no increase in health-care premiums this year and no increase in long-term disability premiums since 1999 while maintaining a comprehensive benefits package.
Fernand Ouellette, the chief human resources officer for N.B. Power Distribution and Customer Service, said that’s an entirely different landscape than what the company was facing. The numbers from the actuary weren’t pretty — in 1999 the cost of the health plan was $5.3 million. The projected costs for the 2009-2010 fiscal year were expected to balloon to $20 million. Drastic measures needed to be taken. The company wasn’t keen to slash the benefits package for its 2,700 workers, and knew the union wouldn’t accept it in any case for the 2,200 members it represented, so something different had to be put in place.
Under the leadership of Paul Theriault, vice-president of HR for N.B. Power, the company has enjoyed a good relationship with the union.
It used that relationship to work out an innovative program, and the numbers are noteworthy. A flexible benefits program was introduced that reduced the projected $20 million figure in 2009-2010 to $13.7 million. A further redesign of benefits in 2001 pulled it down to an $11.6 million exposure.
How it was done
In 1999 Ouellette said he felt like he was standing at the foot of a giant mountain. He knew he needed to get to the top of it, and that an entirely different benefits realm lay on the other side, but climbing it was a daunting task.
The first step was putting together a comprehensive, intertwined strategy that couldn’t be broken up into pieces.
“The HR team looked at all the facets of HR and we said whatever we do in one of those areas has to be in sync with the rest,” said Ouellette. “We cannot bring any program into this equation that does not fit in because it ends up undermining others.”
The company had to tackle the one-size-fits-all benefits program typical in many unionized environments. The benefits program — one of the best in Atlantic Canada, according to Ouellette — had kept piling on all the bells and whistles over the years.
In the meantime, costs were mushrooming. The ratio was supposed to be 60 per cent paid by the employer and 40 per cent paid by the employees. But it had risen and the employer was actually footing 70 per cent of the bill in 1999.
Getting employees to care about the tidal wave of increasing costs was next to impossible because most of them considered the plan to be a company plan and took no ownership or responsibility for it. So N.B. Power felt it had one option, and that was to move to a flexible benefits program.
Wade Greenlaw, the business manager for Local 37 of IBEW, said members were wary of flexible benefits at first because it goes against the general union ideology.
“A lot of union people don’t like it or it’s perceived that they don’t like it because it’s not everybody paying their fair share and everybody getting the same,” said Greenlaw.
A younger employee might opt out of a lot of coverage, and then have a $1,500 surplus at the end of the year that he can roll into a registered retirement savings plan. An older worker has to pay extra to keep an extensive package.
“The problem with that is the older fellows say these young guys aren’t putting anything into the system,” said Greenlaw. “Everybody pays for everybody — that’s the union attitude.”
Getting the message out
The company and the union teamed up to get the message out to workers that this was their plan, they owned it and they needed to get an understanding of how it worked. Many employees didn’t understand that they didn’t actually have health insurance in the traditional sense. N.B. Power has an administrative services only plan that is administered by Blue Cross. The employees and the company pay the actual costs, and Blue Cross simply charges a percentage to administer the plan for them.
“Most of the guys out there still thought we had health insurance, so if you went out and got five things done that you really didn’t need to do, the insurance company took the hit on that,” said Greenlaw. “I said ‘guys, guys, guys, no, no, no. We pay for our own plan, we don’t have insurance. Whatever the plan costs, we have to split it up between us’ and you could see their eyes open.”
Once employees got an understanding of that, many of them came around and started to take ownership of the plan and act like consumers.
Ouellette said the company put together a training session for the flexible benefits redesign in 2001 and filmed it. It then gave every employee a videotape to take home to watch and discuss with their families “because the plan participants are not only the employees, it’s the employee multiplied by two, three, four, five or more. It’s all the family, and we had strong messages in there as to what we had and where we were going,” said Ouellette.
Initial acceptance was a bit slow. In 1999, 100 per cent of the union members were in the one-size-fits-all plan. By 2000, that number had fallen to 82 per cent. But as the message got out, the movement picked up steam and by 2003 just 32 per cent of staff were still opting for the one-size-fits-all plan.
The wellness factor
When Ouellette saw the savings attributed to flex benefits, he was ecstatic. It had mitigated costs from $20 million to $13.7 million. But when the numbers from the plan redesign came in — dropping the projections for 2009-2010 to $11.6 million — he wasn’t as impressed.
“That gave us an indication of one big consideration: redesign is not the option for the long run,” he said. “We were redesigned substantially, re-educated the workplace and we basically saved a projected $2 million for 2009.”
He came to the conclusion that redesign was simply not the way to save money. The answer: an increased focus on wellness and prevention.
Ouellette said they decided to target what he called the “triangle” of health problems — stress and mental health, heart and gastro.
“These are the three main areas that are the cost drivers for our health and long-term disability programs,” he said. “They represent close to 50 per cent of the costs. So what’s clear is that we needed to focus on mitigating the number of people who actually happen to have these medical situations.”
For example, it scrapped a drug preauthorization program that had workers running around from doctor to pharmacist back to doctor to get expensive or new medicines approved.
“I tell you, if you want to upset people, how long does it take you to see a doctor nowadays? So you get a prescription after waiting a month-and-a-half if not more, and you go to the pharmacy and they say you need to talk to your doctor about the preauthorization form,” said Ouellette. “You need to fill out this form — and doctors just love that — and bring it back to the pharmacy and the insurance carrier will tell you whether you’re covered or not.”
That scenario, while fiscally responsible for the health plan, was playing havoc with workers’ well-being. The new philosophy is that if the doctor prescribes it, it’s covered.
“I started by saying we had different programs and they all had to be in sync,” said Ouellette. “If we don’t open it up and offer more and better options, we actually end up undermining people’s wellness because if you’re sitting at home for a month because you could not get that drug or treatment to get better, then you’re getting worse. And we need you to be at work.”
It also scrapped the requirement for employees to get a doctor’s referral before the plan would cover physiotherapy or massage.
“We said if you’re stressed and you need that massage, geez, go get it,” said Ouellette. “Because for us it’s all supportive of other programs that we have. We saw wellness as an investment and not so much as an expense. It’s about prevention, intervention and support of our employees and their families.”
The union was on the wellness bandwagon from the beginning and has worked closely with the company on prevention, said Greenlaw. He said programs such as having free fruit and fruit juice around all the time, and encouraging employees to go for walks during lunch, have had positive impacts.
“People can’t help but be healthier,” said Greenlaw. “If they’re going to eat a piece of fruit everyday, if they’re going to drink a juice instead of a pop and they’re going to go for a walk at lunchtime, they’re going to get healthier.”
But he said there’s still some work to do on getting the word out to middle-level managers that wellness is something that should be encouraged.
“We have management people that think it’s just reprehensible that a person might go out and walk on their lunch hour,” he said. “It’s like, ‘I don’t want this guy to work through his break in the morning and take an extra 15 minutes at lunch so that he can get a 35-minute walk in. I want him to take his break and take a 20-minute lunch so that he’s back from lunch and at his desk on time.’ They can’t see the forest for the trees.”
Savings in LTD
N.B. Power has negotiated zero-per-cent increases since 1999 despite numerous attempts by its carrier to increase rates for long-term disability coverage. N.B. Power bears the burden for up to four months of short-term leave, depending on seniority, and then the cost shifts to the LTD provider if the employee qualifies.
Ouellette said the key was bringing in the vendor as a partner. It convinced the carrier to staff a position to manage short-term disability cases to ensure they didn’t move to long-term.
“Every instance of people that we would have heading towards the LTD plan while on short-term sick leave, we would interfere and provide support and work with their doctors to get them back to work as soon as possible,” said Ouellette.
The union also staffed a position, and gets in touch with members on short-term leave to ensure they understand how the system works and have all the help they need to return to the job as quickly as possible. Greenlaw said a call from the union has a lot more legitimacy in these cases than a check from the employer or carrier.
“Because if it’s the company guy calling, they think they’re being checked up on, that they don’t believe you and they’re trying to catch you in a lie,” said Greenlaw. “But if it’s the union that calls, it’s perfectly legitimate. That’s why we got involved in this, to try and reassure people and members that no, nobody is trying to harass you. If it comes down to where you think you’re getting called too many times, we’re there to help and we’re there to intervene in that.”
Ouellette said it simply wasn’t acceptable any more for workers to be off on short-term leave with no questions asked.
“I couldn’t sit here myself and say to anybody who wants to come forward, we accept to be exposed for four months,” said Ouellette. “Let’s get real here. This has to change. If anybody is going to be sick for a prolonged period of time, we have a right as an employer to expect employees to co-operate with us and work with us at getting better.”
He said N.B. Power does everything in its power to accommodate workers by rebundling jobs and getting the right medical attention as soon as possible. It even went so far as to send a letter to every doctor in the province outlining the return-to-work strategies to ensure physicians were aware the company would bend over backwards to accommodate injured workers.
Employees going on short-term disability are asked to sign a waiver allowing a company doctor to speak with their physician about the ailments. If they don’t sign the waiver, short-term sick leave may be discontinued.
“To qualify under our plan, you need to co-operate,” he said. “If you don’t co-operate, we can’t force you under law and we won’t force you, but then we don’t have any reason to keep paying you either. You’re asking us to pay your wages, full 100 per cent for four months, and what you’re asking us to do is not ask any questions and we can’t do that anymore.”
All of this had led to a decrease in LTD, and put Ouellette in a position where he can dictate terms to the carrier.
“That’s why we said this year we can’t accept this increase because we don’t believe it’s the reality, and I’m quite sure that we’re right,” he said. “If we use five years’ history, it was showing a very different outlook. If we partnered in making our processes and plan better, we need to hang in there together, and not jump every time there is a little bump.”
Greenlaw said the program has been effective because the vast majority of workers want to return as quickly as possible.
But one noticeable area that could use improvement is eliminating the stigma surrounding mental health.
“Mental health in the workplace is a really, really serious issues nowadays,” said Greenlaw. “There’s still a stigma attached to it. If Bob broke his leg, he ought to stay home until it’s healed. If Bob’s clinically depressed, people don’t understand that. It’s like ‘Why can’t he be at work, he’s just depressed right? Why can’t he come and do his job?’ But that’s a hard thing to try and educate middle-level management stuff on. A lot of the field personnel are old-world guys. You just suck it up and come to work, do your job and don’t complain and it’s difficult to impart all that. It’s a long education process.”
A terse conversation follows, he hangs up the phone angrily and shuffles back to the couch.
Hours later the telephone rings again. The same man shuffles over and answers the call. A friendly conversation ensues, laughter and pleasantries are exchanged, he hangs up in a good mood and heads back to the couch for more rest.
The topic of conversation? Exactly the same during both calls — just a check to see how he’s doing, if anything can be done to help out and if he’s following his doctor’s plan for returning to work as soon as possible following his injury.
The source of the first call? A company representative. The second? A representative of his union. Both sides are working in concert in an effort to get the worker back on the job as soon as possible.
It’s part of a unique partnership between N.B. Power and Local 37 of the International Brotherhood of Electrical Workers (IBEW) that has helped the utility accomplish some startling feats in the current benefits climate — no increase in health-care premiums this year and no increase in long-term disability premiums since 1999 while maintaining a comprehensive benefits package.
Fernand Ouellette, the chief human resources officer for N.B. Power Distribution and Customer Service, said that’s an entirely different landscape than what the company was facing. The numbers from the actuary weren’t pretty — in 1999 the cost of the health plan was $5.3 million. The projected costs for the 2009-2010 fiscal year were expected to balloon to $20 million. Drastic measures needed to be taken. The company wasn’t keen to slash the benefits package for its 2,700 workers, and knew the union wouldn’t accept it in any case for the 2,200 members it represented, so something different had to be put in place.
Under the leadership of Paul Theriault, vice-president of HR for N.B. Power, the company has enjoyed a good relationship with the union.
It used that relationship to work out an innovative program, and the numbers are noteworthy. A flexible benefits program was introduced that reduced the projected $20 million figure in 2009-2010 to $13.7 million. A further redesign of benefits in 2001 pulled it down to an $11.6 million exposure.
How it was done
In 1999 Ouellette said he felt like he was standing at the foot of a giant mountain. He knew he needed to get to the top of it, and that an entirely different benefits realm lay on the other side, but climbing it was a daunting task.
The first step was putting together a comprehensive, intertwined strategy that couldn’t be broken up into pieces.
“The HR team looked at all the facets of HR and we said whatever we do in one of those areas has to be in sync with the rest,” said Ouellette. “We cannot bring any program into this equation that does not fit in because it ends up undermining others.”
The company had to tackle the one-size-fits-all benefits program typical in many unionized environments. The benefits program — one of the best in Atlantic Canada, according to Ouellette — had kept piling on all the bells and whistles over the years.
In the meantime, costs were mushrooming. The ratio was supposed to be 60 per cent paid by the employer and 40 per cent paid by the employees. But it had risen and the employer was actually footing 70 per cent of the bill in 1999.
Getting employees to care about the tidal wave of increasing costs was next to impossible because most of them considered the plan to be a company plan and took no ownership or responsibility for it. So N.B. Power felt it had one option, and that was to move to a flexible benefits program.
Wade Greenlaw, the business manager for Local 37 of IBEW, said members were wary of flexible benefits at first because it goes against the general union ideology.
“A lot of union people don’t like it or it’s perceived that they don’t like it because it’s not everybody paying their fair share and everybody getting the same,” said Greenlaw.
A younger employee might opt out of a lot of coverage, and then have a $1,500 surplus at the end of the year that he can roll into a registered retirement savings plan. An older worker has to pay extra to keep an extensive package.
“The problem with that is the older fellows say these young guys aren’t putting anything into the system,” said Greenlaw. “Everybody pays for everybody — that’s the union attitude.”
Getting the message out
The company and the union teamed up to get the message out to workers that this was their plan, they owned it and they needed to get an understanding of how it worked. Many employees didn’t understand that they didn’t actually have health insurance in the traditional sense. N.B. Power has an administrative services only plan that is administered by Blue Cross. The employees and the company pay the actual costs, and Blue Cross simply charges a percentage to administer the plan for them.
“Most of the guys out there still thought we had health insurance, so if you went out and got five things done that you really didn’t need to do, the insurance company took the hit on that,” said Greenlaw. “I said ‘guys, guys, guys, no, no, no. We pay for our own plan, we don’t have insurance. Whatever the plan costs, we have to split it up between us’ and you could see their eyes open.”
Once employees got an understanding of that, many of them came around and started to take ownership of the plan and act like consumers.
Ouellette said the company put together a training session for the flexible benefits redesign in 2001 and filmed it. It then gave every employee a videotape to take home to watch and discuss with their families “because the plan participants are not only the employees, it’s the employee multiplied by two, three, four, five or more. It’s all the family, and we had strong messages in there as to what we had and where we were going,” said Ouellette.
Initial acceptance was a bit slow. In 1999, 100 per cent of the union members were in the one-size-fits-all plan. By 2000, that number had fallen to 82 per cent. But as the message got out, the movement picked up steam and by 2003 just 32 per cent of staff were still opting for the one-size-fits-all plan.
The wellness factor
When Ouellette saw the savings attributed to flex benefits, he was ecstatic. It had mitigated costs from $20 million to $13.7 million. But when the numbers from the plan redesign came in — dropping the projections for 2009-2010 to $11.6 million — he wasn’t as impressed.
“That gave us an indication of one big consideration: redesign is not the option for the long run,” he said. “We were redesigned substantially, re-educated the workplace and we basically saved a projected $2 million for 2009.”
He came to the conclusion that redesign was simply not the way to save money. The answer: an increased focus on wellness and prevention.
Ouellette said they decided to target what he called the “triangle” of health problems — stress and mental health, heart and gastro.
“These are the three main areas that are the cost drivers for our health and long-term disability programs,” he said. “They represent close to 50 per cent of the costs. So what’s clear is that we needed to focus on mitigating the number of people who actually happen to have these medical situations.”
For example, it scrapped a drug preauthorization program that had workers running around from doctor to pharmacist back to doctor to get expensive or new medicines approved.
“I tell you, if you want to upset people, how long does it take you to see a doctor nowadays? So you get a prescription after waiting a month-and-a-half if not more, and you go to the pharmacy and they say you need to talk to your doctor about the preauthorization form,” said Ouellette. “You need to fill out this form — and doctors just love that — and bring it back to the pharmacy and the insurance carrier will tell you whether you’re covered or not.”
That scenario, while fiscally responsible for the health plan, was playing havoc with workers’ well-being. The new philosophy is that if the doctor prescribes it, it’s covered.
“I started by saying we had different programs and they all had to be in sync,” said Ouellette. “If we don’t open it up and offer more and better options, we actually end up undermining people’s wellness because if you’re sitting at home for a month because you could not get that drug or treatment to get better, then you’re getting worse. And we need you to be at work.”
It also scrapped the requirement for employees to get a doctor’s referral before the plan would cover physiotherapy or massage.
“We said if you’re stressed and you need that massage, geez, go get it,” said Ouellette. “Because for us it’s all supportive of other programs that we have. We saw wellness as an investment and not so much as an expense. It’s about prevention, intervention and support of our employees and their families.”
The union was on the wellness bandwagon from the beginning and has worked closely with the company on prevention, said Greenlaw. He said programs such as having free fruit and fruit juice around all the time, and encouraging employees to go for walks during lunch, have had positive impacts.
“People can’t help but be healthier,” said Greenlaw. “If they’re going to eat a piece of fruit everyday, if they’re going to drink a juice instead of a pop and they’re going to go for a walk at lunchtime, they’re going to get healthier.”
But he said there’s still some work to do on getting the word out to middle-level managers that wellness is something that should be encouraged.
“We have management people that think it’s just reprehensible that a person might go out and walk on their lunch hour,” he said. “It’s like, ‘I don’t want this guy to work through his break in the morning and take an extra 15 minutes at lunch so that he can get a 35-minute walk in. I want him to take his break and take a 20-minute lunch so that he’s back from lunch and at his desk on time.’ They can’t see the forest for the trees.”
Savings in LTD
N.B. Power has negotiated zero-per-cent increases since 1999 despite numerous attempts by its carrier to increase rates for long-term disability coverage. N.B. Power bears the burden for up to four months of short-term leave, depending on seniority, and then the cost shifts to the LTD provider if the employee qualifies.
Ouellette said the key was bringing in the vendor as a partner. It convinced the carrier to staff a position to manage short-term disability cases to ensure they didn’t move to long-term.
“Every instance of people that we would have heading towards the LTD plan while on short-term sick leave, we would interfere and provide support and work with their doctors to get them back to work as soon as possible,” said Ouellette.
The union also staffed a position, and gets in touch with members on short-term leave to ensure they understand how the system works and have all the help they need to return to the job as quickly as possible. Greenlaw said a call from the union has a lot more legitimacy in these cases than a check from the employer or carrier.
“Because if it’s the company guy calling, they think they’re being checked up on, that they don’t believe you and they’re trying to catch you in a lie,” said Greenlaw. “But if it’s the union that calls, it’s perfectly legitimate. That’s why we got involved in this, to try and reassure people and members that no, nobody is trying to harass you. If it comes down to where you think you’re getting called too many times, we’re there to help and we’re there to intervene in that.”
Ouellette said it simply wasn’t acceptable any more for workers to be off on short-term leave with no questions asked.
“I couldn’t sit here myself and say to anybody who wants to come forward, we accept to be exposed for four months,” said Ouellette. “Let’s get real here. This has to change. If anybody is going to be sick for a prolonged period of time, we have a right as an employer to expect employees to co-operate with us and work with us at getting better.”
He said N.B. Power does everything in its power to accommodate workers by rebundling jobs and getting the right medical attention as soon as possible. It even went so far as to send a letter to every doctor in the province outlining the return-to-work strategies to ensure physicians were aware the company would bend over backwards to accommodate injured workers.
Employees going on short-term disability are asked to sign a waiver allowing a company doctor to speak with their physician about the ailments. If they don’t sign the waiver, short-term sick leave may be discontinued.
“To qualify under our plan, you need to co-operate,” he said. “If you don’t co-operate, we can’t force you under law and we won’t force you, but then we don’t have any reason to keep paying you either. You’re asking us to pay your wages, full 100 per cent for four months, and what you’re asking us to do is not ask any questions and we can’t do that anymore.”
All of this had led to a decrease in LTD, and put Ouellette in a position where he can dictate terms to the carrier.
“That’s why we said this year we can’t accept this increase because we don’t believe it’s the reality, and I’m quite sure that we’re right,” he said. “If we use five years’ history, it was showing a very different outlook. If we partnered in making our processes and plan better, we need to hang in there together, and not jump every time there is a little bump.”
Greenlaw said the program has been effective because the vast majority of workers want to return as quickly as possible.
But one noticeable area that could use improvement is eliminating the stigma surrounding mental health.
“Mental health in the workplace is a really, really serious issues nowadays,” said Greenlaw. “There’s still a stigma attached to it. If Bob broke his leg, he ought to stay home until it’s healed. If Bob’s clinically depressed, people don’t understand that. It’s like ‘Why can’t he be at work, he’s just depressed right? Why can’t he come and do his job?’ But that’s a hard thing to try and educate middle-level management stuff on. A lot of the field personnel are old-world guys. You just suck it up and come to work, do your job and don’t complain and it’s difficult to impart all that. It’s a long education process.”
