Corporate Wellness Adds to the Bottom Line Creating a Productive and Healthy Workforce

1. Corporate Wellness Adds to the Bottom LineCreating a Productive and Healthy Workforce The material provided herein is for informational purposes only and is not intended as legal advice or counsel.

2. Please help yourself to food and drinks Please let us know if the roomtemperature is too hot or cold Bathrooms are located past the reception desk on the right Please turn OFF your cell phones Please complete and returnsurveys at the end of the seminar

3. Wellness ProgramsIn The Beginning… Charles Bruder

4. Corporate Wellness Adds To The Bottom Line!! November 2, 2011

5. Why Wellness? • Health Care Costs: Costs projected to jump 9% in 2011 (PriceWaterhouse Coopers, June 2010) • Most Illnesses Can Be Avoided: Preventable illnesses make up approximately 70% of the entire burden of illness and associated costs in the United States (WELCOA, Six Reasons for Worksite Wellness) • Expanding Work Week: Typical American now works 47 hours a week, 164 more hours than only 20 years ago. (JulienSchor, Harvard Economics professor) • Increased Stress Levels: 78% of Americans describe their jobs as stressful and the vast majority indicate stress levels have worsened over past ten years. (WELCOA, Six Reasons for Worksite Wellness)

6. WHY WELLNESS PROGRAMS? RISING COST OF HEALTH CARE

7. Recent “Proof” Points That Wellness Works • High Adoption Rates: More than 81% of America’s business with 50 or more employees have some form of health promotion program (WELCOA) • Lower Health Care Costs: Wellness programs reduce health care costs for companies by about 26% and cut sick leave by an average of 28% (American Journal of Health Promotion, 2010) • Effective Recruitment/Retention: 22 of Fortune magazine’s “100 Best Companies to Work For” – businesses that enjoy national recognition for desirable benefit packages, plan to add a total of 87,750 jobs this year. (Fortune magazine Top 100 Companies to Work For, February 23, 2010)

8. WHY WELLNESS PROGRAMS? • Reduce employee healthcare costs • Increase employee productivity • Reduce absenteeism • Reduce disability and workers’ compensation costs • Promote healthier, more satisfied workforce • Improve corporate profitability

9. WELLNESS PROGRAMS Employee Productivity

10. WORKSITE WELLNESS PROGRAMS

11. WELLNESS PROGRAMS How Do Your Employees Stack Up? Statistically, for every 100 employees in your company: • 5 have diagnosed diabetes • 10 have undiagnosed diabetes • 12 are heavy drinkers • 15 are bothered by excess stress • 23 have total cholesterol (>240) • 27 have no regular exercise • 29 have elevated blood pressure • 33 use tobacco products • 46 have high overall coronary risk • 60 are outside recommended weight range • Source: Center for Disease Control

12. WELLNESS PROGRAMS Plan Design Options Quality of WorkLife Traditional Approach Health and Productivity Management Program Model Fun activity focusNo risk reductionNo high risk focusAll voluntarySite-based onlyNo personalizationMinimal incentivesNo spouses servedNo evaluation Mostly health focusSome risk reductionLittle high risk focusAll voluntarySite-based onlyWeak personalizationModest incentivesFew spouses servedWeak evaluation Add productivityStrong risk reductionStrong high risk focusSome reqd activitySite and virtual bothStrongly personalMajor incentivesMany spouses servedRigorous evaluation Main Features Primary Focus Morale-Oriented Activity-Oriented Results-Oriented

13. WELLNESS PROGRAMS The Quality of WorkLife Model A good “fit” with: • Smaller worksite • ROI low priority • New to wellness • Not sure about EE reaction • Limited follow-through capability • Weak corporate direction Quality of WorkLife

14. WELLNESS PROGRAMS The Quality of WorkLife Model Quality of WorkLife Primary Wellness Targets • Fun events • Stress relief • Nutrition • Community service • General wellness information • General health information Participation: 15% to 35% Approximate Cost/EE/Yr: <$45 Likely ROI: <1:1.0 Typical Activities • Health fair • Lunch and learn sessions • Wellness “event” • Community sponsorship • Chair massage option • Free fruit • Wellness materials in HR • Health cartoons circulated • Nutritious pot lucks • Movie events • Company games • Celebrity event

15. WELLNESS PROGRAMS The Traditional Model A good “fit” with: • Medium size or larger worksite • ROI moderate priority • 2-10 years of wellness • Employee reaction a concern • Some follow-through capability • Follows corporate direction Traditional Approach

16. WELLNESS PROGRAMS The Traditional Model Traditional Approach Primary Wellness Targets Everything from the QWL Model plus… • OWS • Cholesterol • Blood pressure • Tobacco use • Obesity • Medical self-care • Physical activity Participation: 28% to 58% Approximate Cost/EE/Yr: $46-$150 Likely ROI: 1:1.5 to 1:3.0 Typical Activities Everything from the QWL Model plus… • Health risk assessment (HRA) • Biometric testing option • Fitness club memberships/facility • Weight management program • Smoking cessation program • Web-based health information • Healthy cafeteria/vending options • Self-care book • Preventive medical benefit coverage • Wellness newsletter • Short term incentive program

17. WELLNESS PROGRAMS The HPM Model A good “fit” with: • Larger work force • ROI very high priority • Very mature wellness • Prepared to educate employees • Strong follow-through capability • Strong virtual corporate program and site-driven Health and Productivity Management

18. WELLNESS PROGRAMS The HPM Model Health and Productivity Management Typical Activities Everything from the TA Model plus… • HRA (incented and used for targeting with 80% minimum) • Risk stratification and incented interventions • Telephonic coaching • Medical self-care and consumer workshop • Injury prevention • Benefit linked incentive • Wellness achievement incentives • Resiliency initiative for productivity • Spouses also served • Integrated programming (Level I & II) • Uses HPM framework • Onsite Clinic Primary Wellness Targets Everything from the TA Model plus… • Productivity • Injuries (All) • HC utilization issues • Presenteeism • Resiliency • Integrated programming • Health consumerism Participation: 65% to 95% Approximate Cost/EE/Yr: $250-$450 Likely ROI: 1:2.5 to 1:6.5

19. WELLNESS PROGRAMS Return on Investment

20. WELLNESS PROGRAMS Sample Incentive Program Design:

21. Incent Participants to Drive High Engagement & Reward Healthy Choices • Incentive can range from small tokens to 20% premium reduction • Gradual progression from activity to results based • Must have a “Wellness Champion” on the management team • Consider a “turnkey platform” • Employee portal drives engagement • Questions…..

22. WELLNESS PROGRAMSHow Benefit Sources & Solutions Can Help • Certified Wellness Planning Coordinators • Wellness program design assistance • Health fair coordination • Incentives/penalty program recommendations • Preferred vendor partnerships and referrals • Quarterly e-newsletters • Compliance issues guidance

23. Wellness Programs, Compliance Issues and Potential Hidden Costs(or how a good idea can go bad) Charles Bruder

24. SMART Health Partners, LLC Maximizing Workforce Health WELLNESS AS A BUSINESS STRATEGY Nora Tsivgas President & CEO

25. How Is Wellness a Business Strategy? Healthy Employees = Increased Profitability • PEOPLE – Employee satisfaction is the #1 metric used to assess the impact of benefit design changes and programs implemented to support healthy behaviors. • PRODUCTIVITY – Healthy employees miss fewer days of work and are more productive at work. • PROFITABILITY -- Utilization of prevention and wellness strategies leads to lower utilization of the most costly health services.

26. Wellness as a Business Strategy A strategic approach to managing your company’s  investment in health benefits and  programs is essential in these days of rising healthcare costs.   Benefits Health Wellness Preventive health strategies keep your employees well – physically, mentally, emotionally  and don’t require exorbitant financial investments.   Building a culture of health within your company can be an effective and measurable business strategy. A healthy workforce costs your company less.  Healthy employees are more productive and incur fewer health complications that cost your company in lost work days and higher claims costs. People are motivated by the health benefits they receive from your company and those benefits can be leveraged to motivate healthy behavior choices that can increase the value of your workforce.

27. The Call to Action is Hard to Ignore % of US healthcare dollars spent in 2007 on treating patients with one or morechronic diseases In a five year span, two-thirds of the rise in healthcare spending was due to the rise in treating chronic diseases.* - Many cases could be prevented. - Most could be better managed. 75% GeneralPopulation 2/3 96% Medicare 83% Medicaid * Non-institutionalized U.S. population http://www.fightchronicdisease.org/pdfs/2009_PFCDAlmanac.pdf

28. Prevention vs. Chronic Disease - Reverse the “Flow” “The Natural Flow of Health Risks…is Toward High Risk in the Absence of Programs Targeted at Maintaining the Population at Low Risk” – Dee Edington, PhD General Wellness Presence of Risk Factors for Disease Established Disease Disease – with Complications $ $$ $$$ $$$$ • Costs follow risk – the greater the number of risk factors, the higher the cost • A culture of health that promotes healthy behaviors may prevent or slow progression of disease and keep employees as healthy and low cost as possible – to the left side of the risk continuum Edington DW. N C Med J. 2006;67(6):425–427; Mahoney JJ. J Manag Care Pharm. 2008;14 (6 Suppl B):3–8; National Business Group on Health. Issue Brief. March 2006.Washington, DC; 2006.

29. 5% of Employees Can Account for 75% of Cost 35% with establishedconditions • Most health care strategies focus on the 5% in the “sickest” category • While this may yield short-term savings, to provide quality, cost-effective care, the employer needs to manage the entire population 15%of cost 10% of cost 50% of the population is well or has risk factors 75%of cost 5% with complications * Total of risk groups = 90% of the employee population; 10% of employees were nonusers of health services. Source: Adapted from Mahoney JJ. J Manag Care Pharm. 2008;14(6 Suppl B):3–8. (Pitney Bowes Case Study) Percentage of Healthcare Costs Attributable to Employees in Different Health Categories*

31. 15%

32. Identifying Health Risk in the Organization Health Risks: Behaviors, Conditions, Events • Behaviors: • Smoking • Poor nutrition: <5 servings of vegetables/day • Lack of exercise: <60 minutes/day 5x/week • Inconsistent compliance preventive health measures / screenings/ annual physicals and medications. • Uncontrolled Conditions: • High blood pressure • High blood glucose (sugar) • Obesity : BMI>30 • Undiagnosed cancer • Unmanaged Stress/Anxiety/Depression • Events: • Heart Attack • Stroke • Cancer Diagnosis • Uncontrollables: • Age • Gender • Family History • Genetics

33. What is Obese? Normal Obese Overweight

34. Identifying Health Risk in the Organization Health Risk: Behaviors, Conditions, Events Financial Risk: Total Cost of Care • Eyeball • National/regional benchmark data • Employee Surveys • Health Risk Assessments • Biometric Screening data • Medical and Pharmacy Claims data • Premiums* • Medical Claims • Pharmacy Claims • Disability – illness or injury • Workers compensation • Lost productivity due to illness or injury * Degree of impact increases from community-rated to experience-rated to self-funded. Self-funded employers would look directly at medical and pharmacy claims vs. premiums.

35. Percentage of Healthcare Costs Attributable to Employees in Different Health Categories* The 15 most expensive health conditions account for 44 percent of total healthcare expenses Top 5: heart disease, cancer, trauma, mental disorders and pulmonary disorders People with multiple chronic conditions cost up to seven times as much as people with only one chronic condition 35% with establishedconditions 15%of cost 10% of cost 50% of the population is well or has risk factors 75%of cost 5% with complications * Total of risk groups = 90% of the employee population; 10% of employees were nonusers of health services. Source: Adapted from Mahoney JJ. J Manag Care Pharm. 2008;14(6 Suppl B):3–8. (Pitney Bowes Case Study) 5% of Employees/Dependents Can Account for 75% of Your Healthcare Cost

36. Percentage of Healthcare Costs Attributable to Employees in Different Health Categories* The 15 most expensive health conditions account for 44 percent of total healthcare expenses Top 5: heart disease, cancer, trauma, mental disorders and pulmonary disorders People with multiple chronic conditions cost up to seven times as much as people with only one chronic condition 35% with establishedconditions 15%of cost 10% of cost 50% of the population is well or has risk factors 75%of cost 5% with complications * Total of risk groups = 90% of the employee population; 10% of employees were nonusers of health services. Source: Adapted from Mahoney JJ. J Manag Care Pharm. 2008;14(6 Suppl B):3–8. (Pitney Bowes Case Study) “Can we mitigate the trend?”

37. Percentage of Healthcare Costs Attributable to Employees in Different Health Categories* The 15 most expensive health conditions account for 44 percent of total healthcare expenses Top 5: heart disease, cancer, trauma, mental disorders and pulmonary disorders People with multiple chronic conditions cost up to seven times as much as people with only one chronic condition 35% with establishedconditions 15%of cost 10% of cost 50% of the population is well or has risk factors 75%of cost 5% with complications * Total of risk groups = 90% of the employee population; 10% of employees were nonusers of health services. Source: Adapted from Mahoney JJ. J Manag Care Pharm. 2008;14(6 Suppl B):3–8. (Pitney Bowes Case Study) Can we prevent migration from risk to chronic disease?

38. Percentage of Healthcare Costs Attributable to Employees in Different Health Categories* The 15 most expensive health conditions account for 44 percent of total healthcare expenses Top 5: heart disease, cancer, trauma, mental disorders and pulmonary disorders People with multiple chronic conditions cost up to seven times as much as people with only one chronic condition 35% with establishedconditions 15%of cost 10% of cost 50% of the population is well or has risk factors 75%of cost 5% with complications * Total of risk groups = 90% of the employee population; 10% of employees were nonusers of health services. Source: Adapted from Mahoney JJ. J Manag Care Pharm. 2008;14(6 Suppl B):3–8. (Pitney Bowes Case Study) Can we shrink the cost of healthcare and grow the size and strength of our workforce?

39. How Does Productivity Affect Profitability • Productivity: Measurable production per employee or group per time period • X# of cars washed per day • X# of phone calls handled per hour LOSSES • Absenteeism • Presenteeism • Time spent distracted by family/personal responsibilities / stress GAINS • Days of physical presence at work • Hours mentally present at work • Bursts of creativity that result in meaningful outcomes • Brand Stewardship

40. Lost Productivity Has a Measurable Impact (Total # of employees * prevalence) * (average annual salary * % avg productivity lost) = Annual $ lost productivity due to that condition Example: 200 employees with a 17.5% prevalence of flu, an average annual pay of $50,000, losing 4.7% productivity due to flu (equivalent of 7 days out of work and 7 days at half presenteeism = $70,000/year

41. Worksite health promotion programs can yield a $3 to $6 return on investment for every dollar spent over a 2- to 5-year period J&J‘s leaders estimate that wellness programs have cumulatively saved the company $250 million on healthcare costs over the past decade, from 2002 to 2008, the return was $2.71 for every dollar spent.¹ 46% of employees participating in on-site smoking cessation program quit; 48% smoked less – L-3 Communications Classes and fitness training offered to prevent back injuries resulted in increased employee morale, reduced worker’s comp claims, medical costs and sick days related to back injuries producing a net cost-benefit ratio of 1 to 1.79 – County in California Participants in their “Stay Alive & Well” program significantly lowered cholesterol levels, blood pressure and weight and experienced 21% lower lifestyle-related claim costs than non-participants. Resulting savings: $127.89 per participant with a benefit to cost ratio of 1.68 to 1 over two years. – Reynolds Electrical & Engineering Company, Las Vegas 22% fewer admissions to a hospital, 29% shorter hospital stays, and 42% lower expenses per admission – Superior Coffee and Foods, Illinois Employees whose lifestyles included two to four health risks such as smoking, little exercise, overweight—were 75% higher than those of low-risk employees. High-risk employees who improved their health habits through the company’s health promotion program and became low risk cut their average medical claims in half, lowering their medical insurance costs by an average of $618 per year. – Steelcase ¹Harvard Business Review, December 2010, W. Braun, What’s the Hard Return on Employee Wellness Programs? Reference: The Cost Benefit of Worksite Wellness, www.welcoa.org/Worksite_cost_benefit.html

42. Where to Begin • Engage a Broker or Consultant to Design an Comprehensive Strategy ¹Wellnss for Small Business, Welcoa, http://www.welcoa.org/wellworkplace/index.php?category=22 Capture CEO Support Designate a Company Wellness Leader Conduct an Employee Health Interest Survey Provide an Opportunity for Health Screening Administer an Annual Physical Activity Campaign Hold a Healthy Eating In-service/Lunch 'n Learn Establish an In-house Wellness Library Disseminate a Quarterly Health Newsletter Implement Healthy Policies and Procedures Support Community Health Efforts

43. Some Business Philosophies Underlying A Successful Wellness Strategy • Companies (must) offer health benefits in order to compete for talent in the local marketplace • Healthcare cost affects companies’ bottom line • Health risk drives healthcare utilization and cost • Health behaviors drive health risk • Health status affects productivity, both physical and mental/creative, and productivity affects your bottom line • Employees will practice smarter health behaviors if properly motivated • A culture of health at work has significant impact on and value to employees and their families

44. Conclusion: Wellness IS a Business Strategy Benefits Health Wellness Plan for Success • Assess: Baseline Risk and Wellness Needs • Develop or Purchase: High Quality Wellness Services • Communicate: Your Wellness Program and Culture Change • 4. Measure: The Success of Your Culture Shift Success takes time: 3 year vision • Assess goals annually • Stay “on message” in promoting healthy lifestyles to employees • Build and leverage buy in from the top of the organization

45. Wellness As a Business Strategy SMART Health Partners’ Role • General Assessment and Program Design • Baseline • Prioritization • Goal Development • Strategic Plan • Implementation • Budgeting • Cost Neutral Resources • Vendor Management • Engagement • Data Collection • Measurement of Results • Translation of Value • “Marketing” of Results Nora Tsivgas President & CEO SMART Health Partners, LLC 16 Mt. Bethel Drive, Suite 238 Warren, NJ 07059 nora.tsivgas@smarthealthnow.com 201.321.3532 http://www.smarthealthnow.com

47. Corporate History • Hall’s Warehouse Corp. founded in 1966 Mission Statement “To provide superior logistical services in a manner that meets or exceeds the requirements of Hall’s clients while enhancing our competitive position in the market place” • • Hall’s is comprised of three enterprises • Hall’s Warehouse Corp. • Hall’s Fast Motor Freight • Hall’s Logistics Group Inc.

48. Company Overview • Operate over 1,651,000 square feet of dry, refrigerated and frozen storage • 5 facility locations encompassing 7 warehouse operations ▪Kentile Campus, South Plainfield, NJ (Headquarters) - Hall’s Fast Motor Freight Inc. ▪ Oak Tree facility, South Plainfield, NJ ▪Edison facility, Edison, NJ ▪ Bridgewater facility, Bridgewater, NJ ▪Piscataway 120 & 140 facilities, Piscataway, NJ

49. Company Overview • Hall’s Fast Motor Freight Asset Based 75 unit regional carrier • Hall’s Logistics Corp. (Strategic Carrier Partnership) • • Service retail and food service customers and manufacturers in the north east market • • We cross-dock and transport over 25mm lbs per month for our largest consolidation client “We Treat Your Business As If It Were Ours”

50. Why a Wellness Program? 1) Concern with the direction of healthcare costs - Average increase of healthcare costs 10% since 2004 2) Compliance, Safety, Accountability (CSA) ▪ Close monitoring and evaluating the safety and compliance records of motor carriers and their drivers ▪ Taking rapid action against those with apparent safety problems, to get them to improve 3) Other avenues ineffective 4)Firm belief in having “feet on the ground” in order for lasting behavior change to occur