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4/11/2017
1
Together Makes All The DifferencePartnering to bring personalized health and wellness to the workplace
Building a Healthier Community Through Wellness and Employer Partnerships
• $3.7B in revenue• 1.1M patient encounters• 221K managed lives• 9 hospitals• More than 475 primary care physicians and 1,250 specialists
St. Joseph Hoag HealthWe are the trusted partner transforming care to
create healthiest communities.
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Employer
SJHH Payor
Employer
Broker
CURRENT
Consumer
FUTURE
Consumer
Partnering with Employers and Building a Healthier Community Through the SJHH Wellness Strategy
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The Hypothesis
Healthier Workforce
Medical
Wellness
Fitness
Improved Cost of Care
Convenient, Integrated & Personalized
To become our community’s partnerin achieving optimal health by providing integrated
medical, wellness and fitness services where people live, work and play.
Wellness Corners(Retail Wellness Centers)
Direct to EmployerWellness Centers
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WELLNESS CORNER
Chris
Park Place(Irvine)
The Village(Irvine)
Park Plaza(Irvine)
Newport Center
(Newport)
AnaheimPromenade
Retail wellness centers serving small to mid‐size employers in multi‐tenant office communities
• Medical care for minor illnesses, minor injuries, chronic conditions
• Lifestyle coaching—exercise, nutrition, sleep & stress
• Lifestyle labs—cardiometabolic, micronutrient & genetic
• Direct to employer services: lunch & learns, skin care events, biometrics and flu shots
WELLNESS CORNER OUTCOMES
4,000 unique customers
1,000 new members to the network
Improved Productivity
Reduced Absenteeism
97% satisfaction rating
Health Improvement
• 5% increase in percentage of employees rated low‐risk
• 4% decrease in employees rated moderate risk
• 1% decrease in employees rated high risk
11 employer partnerships where services are brought onsite
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DIRECT‐TO‐EMPLOYER WELLNESS CENTERS
Opened July 2015
• Wellness centers serving a single employer
• Designed to meet an employers’ workforce health needs, as well as further their
wellness and medical benefit goals.
• Operate as an onsite accountable care model
• Four employer partnerships in Orange County
Business Overview
February 2017
©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
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Western Digital
• In a strong strategic position to lead global evolution of broad-based and changing storage industry
• Broad storage portfolio, including HDDs, SSDs, embedded and removable flash memory, and storage-related systems
• 17,000+ active patents worldwide
• Vertically integrated business model to maximize operational efficiency
• Consistent profitable performance, strong free cash flow
A Storage Solutions Leader
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©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
Our 9 largest sites EMEA
AustriaBelgiumCzech RepublicDenmarkEgyptFranceGermanyIrelandItalyNetherlandsPolandRussiaSaudi ArabiaSouth AfricaSpainSwedenSwitzerlandTurkeyUAEUKUkraine
Americas
ArgentinaBrazilCanada
APAC
AustraliaHong KongIndonesiaSouth KoreaTaiwanVietnam
SitesHeadcount:WD, HGST,
SD
China 10,718India 976Israel 648Japan 2,008Malaysia 14,332Philippines 8,515Singapore 707Thailand 25,590US 8,204All Other 795Total Headcount 72,493
Where Western Digital is in the World
Presence in 31 additional countries
+
©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
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The Power of We.
©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
Innovation Fuels Our Growth
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1976 | WDFirst Disk Array Sub-System Patent
1956 | IBMInvented First Hard Drive (RAMAC)
1991 | IBM MR Heads
2000 | SanDiskFirst MLC NAND
2010 | HGSTSAS SSD
2008 | SanDisk16Gb TLC
2013 | HGSTFirst Helium
HDD (6TB)
2014 | WDFirst WD Purple
HDDs for Video Surveillance
2015 | SanDiskBiCS2 256Gb X3 48-layer
2016 | SanDiskBiCS3 256Gb X3 64-layer
2015 | HGSTActive Archive System
4.7PB Object Storage System
2015 | SanDiskInfiniFlash™ All-flash Array
1988 | SunDiskFirst System Flash
©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
4/11/2017
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Broadest Portfolio of Products & Solutions
15©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
Client Devices
Client Solutions
Data Center Devices & Solutions
Delivering the Possibilities of Data
City Medical Industrial Autonomous Vehicles
Machine Learning MobileHome
©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential. 16
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Industry’s Largest Storage Solutions CompanyLTM Revenue1
17©2017 Western Digital Corporation or its affiliates. All rights reserved. Confidential.
Source: Company website; Public filings; analyst reports; S&P Capital IQ1 Last 4 quarters ending Sep 30, 2016 for WDC, Seagate, Toshiba, Samsung, Micron and SK Hynix; ending Oct 1, 2016 for Intel; ending Oct 28, 2016 for NetApp; and ending Jun 30, 2016 for EMC
2 For the LTM, Toshiba revenue converted to USD at an average exchange rate of 111.78 JPY/USD; Samsung and SK Hynix revenue converted to USD at an average exchange rate of 1160.00 KRW/USD
3 Includes Non-Volatile Memory (Trade and Non-Trade) and Other
Non-Volatile Memory
NAND 2 Storage and Memory 2
Pro-formaIncluding SanDisk
NAND2Non-Volatile Memory 3
InformationStorage
$17.7B$15.9B
$11.7B $11.1B $11.0B
$5.4B $5.2B$3.4B $2.4B
DRIVE WELLNESS STRATEGY
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Key Drivers ofClaims CostIncrease in large claims 2013/14: 10 large
claimants/1,000 2015/16: 14 large
claimants/1,000
Shift of enrollment to Northern California 2010/11 – 57% (WD) 2012/13 - 66% (HGST) 2016/17 – 75% (SanDisk) Northern California providers are
on average 15-20% higher than Southern California
Increase in specialty rx ingredient cost per script 2013/14: $1,795 2015/16: $2,590 (+44%)
Periodic reduction in force activities impacts overall utilization of plan and PEPY
PEPY – per employee per year
$61M
Cost Management
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Employee Annual Contribution below $2,250 between 2011 - 2017
PEPY – per employee per year
Drive 1.0 - Renewal Assumes the following annual change for employees enrolled:
• Anthem BC: +5.9%
• Kaiser: +10%
Drive 2.0 - RenewalAssumes the following annual change for employees enrolled:
• Anthem BC: +0%
• Kaiser: +10%
EE Annual Contribution
20
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$39.5MTotal WDC funding of H.S.A funds and incentives since 2011
FYI: Feb 17 Total Assets @ $30.8 M
PEPY – per employee per year
$33.6 M85%
$5.9 M15%
H.S.A Funding
Incentives
Drive services to on-site clinics Increase engagement by proactive
activities Manage EE/SP costs
H.S.A Seed + Rewards
Significant change for employees
Change in how WDC spends budget
Impact on clinic and facilities
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$4,3702016/17 YTD averageH.S.A balance (data reflects addition of SanDisk)
FYI: Highest balance: $57k
26%Of employees have an account balance in excess of $5,500 as of Feb 2017
PEPY – per employee per year
52%Of employees can meet their deductibles based on current balances
H.S.A EE Balances
2016/17 average WDC H.S.A Seed amount = $1,080
2016 H.S.A IRS contribution limit: $3,350 / $6,750 | 2017: $3,400 / $6,750
On average, H.S.A Contribution split: WDC: 40% ($1,080) --- Employee: 60% ($1,620)
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Make it Happen
DRIVE
Tier 1 and 2 large claimants and associated chronic conditions have a large impact on costs. Recommendation to modify current engagement program.
20%
37%33%
2%20%
30% 30%
9%
40%45%
50%
20%
0%
10%
20%
30%
40%
50%
60%
Closed Gapsin Care
PrenatalProgram
ConditionMgmt
Case Mgmt
2014/15 2015/16 Target
Health Consumer Profiles impacting costs97% of total costs are incurred by 30% of the WDC population
Tier 3Managing Health
70%Members = 10,331
Plan Paid (Avg) $166 PMPY
Total Plan Paid $1.7M | 3%
Tier 2 Managing Care
Tier 1ManagingCrisis
29%Members = 4,279
Plan Paid (Avg) $6,820 PMPY
Total Plan Paid $29.2M | 53%
1%Members = 148 (Spouses: 56 or 40%)
Plan Paid (Avg) $160,551 PMPY
Total Plan Paid $23.8M | 44%
Problem Space
Driving to target engagement from Tier 1 and Tier 2 members
Data below is based on Anthem BC claims only
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Think Big
Make it Happen
DRIVE$4,188
$5,535$4,875
$6,227$5,357
$6,725
$4,899
$6,258
$1,000$2,000$3,000$4,000$5,000$6,000$7,000
Employee Spouse
2015/16 2016/17
52%
41%
62%
22% 21%
36%
0%
10%
20%
30%
40%
50%
60%
70%
BiometricsScreenings
HealthAssessments
Mobile Health
Employee Spouse
Spouses on average cost 32% higher than employees and account for 36% of high cost claimants
Targeting spousal engagement to increase to similar or higher levels as employee.
Anthem Enrollment (Feb 17) = 15,735 members (38% EE | 24% SP | 38% CH)
Kaiser Enrollment (Feb 17) = 3,428 members (41% EE | 23% SP | 36% CH)
PMPY
Problem Space
Improved risk and cost management requires higher engagement from spouses
24
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Solution Considerations
25
$80.00
$85.00
$90.00
$95.00
$100.00
2016/17Drive 1.0
2017/18Drive 1.0
2017/18Drive 1.5
2017/18Drive 2.0
Mill
ions
Savings$2.60 M
Savings$5.21 M
Target EngagementTarget Engagement
90 – 100%50%
+ 5.9%
+ 3.0%
+ 0.04%
Achieving Western Digital’s Goals with
DRIVE Wellness Center
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4,600 sq. ft.
• Primary Care
• Acupuncture
• Behavioral Health
• Mindfulness
• Yoga
• Chiropractic Care
• Physical Therapy
• Health Coaching
• Onsite Medication Dispensing
Added in September:
• Care Management
• Disease Management
Physical Therapy
Exam
ENGAGEMENT & VISITS
Visit VolumesFY16
Annualized VisitsFY17 YTD
Actual Visits Through January
Engagement 50% 65%
Primary Care 1,559 905
Physical Therapy 294 162
Chiropractor 496 220
Acupuncture 148 174
Behavioral Health 635 297
Body Composition 207 80
Health Coaching 106 50
Nurse 931 559
Total 4,376 2,414
50% of employees engaged in year 1 and 65% in year 2.
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Patient Satisfaction
40%
Same‐Day Appointments
20%
Implementation Success20%
Employee Engagement
20%
Year 1 Incentive Goal Weightings
Implementation Success
30 days
Employee Engagement 46%
Same Day Appointments
100%
98.00%70% ‐79.99% 80% ‐ 89.99% 90% ‐ 100%
Threshold Target Exceptional
85% ‐ 89.99% 90% ‐ 93.99% 94% ‐ 100%
Threshold Target Exceptional
30%450 employees
35%525 employees
40%600 employees
Threshold Target Exceptional
31 days 29‐30 days 28 days
Threshold Target Exceptional
Patient Satisfaction
(Total year to date unique visits at DRIVE (general utilization) measured as a percentage of WD's 1,500 employees)
PAY FOR PERFORMANCE INCENTIVES
Chris
WD’S COST SAVINGS
Operating Performance (Surplus)Year 1 Annualized Actuals(Based on June actuals)
Revenue (Employee Contributions) ($64,511)
Staffing $584,190
Non‐Staffing Operating Expenses $76,211
Management Fee and Performance Incentives $406,400
Total Expenses $1,066,802
Net Expense (Surplus) $1,002,291
Estimated Productivity Savings* ($749,850)
Market Costs Avoided ($725,139)
Pharmacy Savings ($24,380)
Savings from Avoided ED/Urgent Care Visits** ($136,620)
Net ROI (Surplus) ($633,698)
*3 hours for visits and 1 hour for prescriptions. **2013 blended average emergency department and urgent care costs of $688 plus a 5% increase for 2014 and another 5% increase for 2015.
$634K savings in year 1.
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QUESTIONS & DISCUSSION