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Driving Innovation In the Health Care Marketplace:

A CEO Report

A. O. Smith Corporation

A. O. Smith Corporation views employee health as a shared responsibility. To reduce health care costs, we must improve the health of our employees and their families. Consequently, we commit to providing cost-effective, market-driven health
and wellness programs for our 4,000 U.S.-based employees while they commit to share appropriately in the cost of health care and adopt healthier behaviors.

In order to maximize the effectiveness of our health care programs, we continuously study our covered population, which helps us focus our efforts accordingly. Our health initiatives and communications are tailored to the specific needs of the population.

Our efforts are multipronged. On the health care front, we aggressively negotiate favorable rates, competitive networks and premium care provider programs. We’ve driven 98 percent in-network use on a consistent basis. We have adopted cutting edge pharmaceutical, diabetes and other disease-management programs. We introduced consumer-driven health care and health savings accounts. Education and availability of mobile apps and online tools enable participants to understand and manage their conditions, provider choices and comparative costs.

On the wellness side, through a program called “Healthy by Choice,” we initiated rewards- based weight loss and exercise programs. Our larger plants provide onsite clinics and workout facilities, walking/jogging trails, and gym-membership subsidies. Some facilities offer after- hours onsite trainers. We sponsor tobacco cessation programs, annual “Know Your Numbers”
biometric screenings, wellness coaching and online health risk assessments. Through our health care providers, we provide targeted communications based upon treatment and diagnosis experience. Reduced employee premiums are an inducement to quit using tobacco and participate in the annual onsite screenings.

Our per-member per-month claims costs have trended at about 1.5 percent — or roughly one-third the national norm — since 2010. That represents almost $7 million in accumulated savings. We’re spending more money now to control certain diseases at earlier stages, which over the long haul, should reduce costs associated with treating the complications arising from these conditions.

Are we satisfied? No. We dive deeper into the reasons for our health care spending each year and target strategies to address the root causes as we better understand them. Through regular employee communication, we educate employees to help them make better decisions about their health care.


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BRT companies provide health coverage to more than 40 million Americans. We help American workers and their families remain healthy, receive quality treatment when necessary and achieve better health outcomes. The private-sector innovations in the insurance marketplace that enable us to provide these services to our employees and their families serve as models for public programs — but additional reforms are necessary.

This report highlights the innovations we have made and the public policy changes we believe would drive value by promoting health and improving outcomes.