Land O’Lakes, with more than 9,000 employees, is one of America’s premier agricultural cooperatives, conducting business in all 50 states as well as internationally.
Several years ago, the Land O’Lakes benefits team, led by Pamela Grove, launched a multiyear strategy to transition its workforce to a more market competitive benefit offering, a significant undertaking for a company that had traditionally offered benefits with minimal employee cost-sharing. In 2007, the first consumer-directed health plan (CDHP) was introduced with a projected 18% enrollment.
“We did not introduce CDHP as a silver bullet solution. Rather, we saw this as an opportunity to allow employees to have more ownership of their health care and deepen the partnership we have with them in controlling our shared health care costs,” said Grove, director, Benefits and Human Resources Operations. Grove and her team committed to offering a sustainable plan and educating employees about CDHP nearly 18 months prior to implementation. “Early on in the process, it became clear that design and communication were equally important.”
Through an excellent employee communication effort, enrollment reached an unprecedented 72% participation rate in the first year. Participation has increased each year and by 2009, 82% of Land O’Lakes employees were participating in a CDHP. This is significant as the company also offered two PPO plans alongside the CDH plans. It also added a second high-deductible health plan for balance accumulation in 2009.
The company helped employees control costs by creating wellness programs. Employees are encouraged and rewarded for living healthier lifestyles in an effort to reduce overall health care costs, decrease absenteeism, and increase productivity. Through these programs, Land O’Lakes reduced its health care cost trend from 13% to a negative 5% trend in the first year of the plan and realized a $10 million savings over the first two years after implementing the CDHP. Significant employee engagement in health care consumerism during the first year of the CDHP included:
- Use of preventive care increased 12%
- Emergency room visits decreased 14%
- Urgent care/convenience clinic visits increased 8%
- Use of 24-hour nurse hotline increased 34%
Grove led the effort and gained the necessary approval and support from the company’s senior leadership by ensuring balanced cost-savings between the employees and Land O’Lakes, designing a plan that could be maintained over several years, justifying a phased-in approach instead of full replacement in the first year, engaging employees to achieve higher than projected enrollment in the plans, creating programs to ensure that the health care decisions of their employees would help to drive down costs, and creating a structure and implementation that would be acceptable to both union and nonunion employees
“Our journey over the past seven years has allowed us to deepen our partnership with employees—we have gained their trust through upfront and honest communication and education about how health care impacts the employee and the company. And the success of the CDHP is not just in enrollment numbers, but is reflected in the experience our employees have with the plan itself. With our continued emphasis on wellness, employees are taking an even greater stake in their health and are realizing lower health care costs. We are truly in this together.”
- Organization: Land O’Lakes Inc.
- Headquarters: Arden Hills, MN
- Website: www.landolakesinc.com
- No. of employees: 9,000
- Nature of business: Land O’Lakes is a nationwide co-op offering an extensive line of agricultural supplies, state-of-the-art production, business services, and a marketer of dairy-based food products.
Key executives:
- Chris Policinski, president and CEO
- Dan Knutson, senior vice president and chief financial officer
- Karen Grabow, senior vice president, Human Resources and Business Development Services
Key solution providers: 
- Cigna HealthCare and Personal Health Team, health
- Cigna Group Life, Accident, and Disability Insurance, group insurance
- Delta Dental, dental
- EyeMed Vision Care, vision