Health Inspector

Johnna Torsone: Chief Human Resources Officer, Pitney Bowes

by David Moss

Even 15 years ago, when health-care costs nationally ran a fraction of their current annual take, Johnna Torsone, the new chief human-resources officer for Stamford, Connecticut–based Pitney Bowes, the $6 billion mail- and document-processing company, knew she had a problem with its health-care system. Costs had been skyrocketing faster than revenues — by double-digit percentages annually — and the pure transaction-based system the company had in place didn’t focus on employees’ wellness or offer them any incentive to track their own usage. Thus began a decade and a half of trial and error that has blossomed into something profound — for both employee health and Pitney Bowes’s ­bottom line.

Torsone started with such initiatives as on-site health clinics and an array of education and wellness programs, branded “Health Care University,” that inclu­ded online courses and pregnancy programs. The company has since subsidized the cost of nutritious items in its cafeteria, distributed free pedometers and offered $200 bounties, in the form of premium discounts, for employees who enroll in smoking-cessation or weight-reduction programs. Still, health-care costs continued to spike, and by 2002, Torsone wanted quantitative answers. So Pitney hired a third-party software vendor to create an algorithm centered on a glaring question: What factors make a low-cost employee suddenly become a high-cost employee? “The ‘aha’ came when we began to try to understand what the drivers of cost in our population were,” Torsone says. “We found a definable proof to the proposition that if you invest in prevention, you will get a return on the back end.”

Pitney combed through three years of employee data, examining pharmacy claims, disability cases, worker’s-compensation costs, absenteeism rates and behavioral-health claims, while remaining ever-conscious of Health Insurance Portability and Accountability Act land mines. Feeding the reams of data into the model led to a startling diagnosis: The bulk of the increased costs came from the minority of employees who suffered from chronic illnesses such as diabetes, coronary artery disease, cardio­vascular disease or asthma. Even worse was the fact that they weren’t taking their medications. The employees weren’t straining the system initially but were instead practicing a kind of resurrection medicine — rushing to expensive emergency rooms and taking outrageously priced (albeit life-saving) drugs when their illnesses developed complications.

Torsone reached a contemplative crossroads. How could she keep these disproportionately expensive, health-reckless employees to take charge of their own well-being? “It’s not just about disease management,” says the 57-year-old. “It’s about health management. The only way to bring the cost structure down is to make structural changes, as opposed to a short-term fix.” Many companies, she notes, simply shift the majority of their costs, giving employees a specific amount of money and letting them figure out how best to apportion their health care. She was seeking something more empowering.

Torsone and her colleagues scanned medical-insurance literature and found a small but compelling series of studies suggesting that certain costs acted as a participation barrier, and that lowering them might increase employee compliance. They tested this hypothesis by reducing or eliminating copays for the most expensive preventative drugs, such as Lipitor. They provided free on-site screenings for varying chronic ailments like hypertension and diabetes. (Pitney also screens for cholesterol, obesity and osteoporosis, as well as skin, breast and prostate cancer.)

The results, for both employees and the bottom line, were dramatic. Because Pitney lowered barrier costs and caught ailments through early screenings, employees were more apt to take preventative medications. They didn’t develop many complications and ultimately avoided expensive drugs and staid treatments. The average annual pharmaceutical cost for diabetic patients went down 7 percent; for asthmatics, the average reduction was a whopping 19 percent. Diabetic disability costs plummeted 75 percent, and employee work absences fell 29 percent. “Every CEO would like to see these kinds of results,” says Pitney CEO Murray Martin, “but it has become standard procedure at Pitney Bowes thanks to Johnna.” Pitney estimates that it has enjoyed a 5-to-1 return on its investment, saving $39 million in health-care costs annually.

Torsone’s efforts have not gone unnoticed in the industry. “Too many companies are trapped into thinking that their costs are equal to their expenditures,” says Sean Sullivan, cofounder and CEO of the Institute for Health and Productivity Management, a Scottsdale, Arizona–based nonprofit that helps employers, including Pitney, look beyond the conventional wisdom about health-care costs. “The real costs show up in more places. If you can define and measure those, and save money in lost productivity, you’re going to come out ahead of the game.” 

Executive Summary

• Universal Problem: Pitney Bowes was ab­sorbing out-of-control health-care costs. Data mining revealed potential solutions.

• Pop a Pill: Reducing or eliminating copays for expensive drugs made employees more likely to take preven­tative medication.

• Healthy Living: Pitney provided free on-site screenings for ailments like hypertension and diabetes, and $200 bounties to quit smoking or lose weight. Total savings? $39 million in health-care costs.