May 16, 2011

Benefits package to be reviewed

The university has embarked on a comprehensive review of its benefits package with the aim of reducing costs by $15 million annually, while still working to maintain Johns Hopkins’ highly competitive and broad faculty and staff offerings.

The university will examine current benefits, look at peer institutions as benchmarks and consider alternatives to existing practices to bring about more-efficient delivery systems and design a more cost-effective program.

The 14-member Benefits Advisory Committee, which includes representatives from each academic division, was formed by Lloyd Minor, provost and senior vice president for academic affairs, and Daniel Ennis, senior vice president for finance and administration.

The committee, which has already met three times, will present a set of recommendations to Ennis and Minor by early fall, with subsequent review needed by President Ronald J. Daniels and the university’s board of trustees. The group is co-chaired by Donald Steinwachs, a professor and director of the Health Services Research and Development Center at the Bloomberg School of Public Health, and Fred Puddester, senior associate dean for finance and administration for the School of Arts and Sciences. (As Puddester will be leaving Johns Hopkins in June, a new co-chair from an academic division will be named soon.)

Key priorities for the committee will be to consider the market competitiveness of JHU’s benefits program for both faculty and staff groups, pay careful attention to the needs of the university’s most vulnerable populations and consider creative and nontraditional health management strategies.

The university’s benefits package includes health care coverage, a tuition remission program, retirement plans, life insurance, flexible spending accounts, vacation days and sick leave, a commuting-to-work program, adoption assistance and many other offerings. The committee’s reach will not extend to the benefits offered to Applied Physics Laboratory and Johns Hopkins Health System employees.

Charlene Hayes, vice president for human resources, said that the entire package will be examined. She said that the review will be an open, inclusive and somewhat fast-tracked process that will help the university position itself for the future.

The undertaking was prompted by the rising costs of health care and education, Hayes said, and increased pension regulation.

In fiscal year 2010, the university’s actual benefits program costs were more than $342 million, a 25 percent increase from 2006 totals. The projected costs in fiscal year 2015 represent a 70 percent increase from 2006 figures.

“We need to be proactive,” Hayes said. “We’re not in crisis mode, but we don’t want to be in that position sometime down the road. We need to be thoughtful about our benefits offerings and do this in a way that retains our competitiveness.”

Ennis said that the university has done much in recent years to manage rising costs, efforts informed by the 2004 Benefits Advisory Committee. However, in 2011 Johns Hopkins faces a new slew of challenges, he said.

“We think it makes good sense to continually review our programs to manage cost while also ensuring that we are meeting the needs of our community,” Ennis said. “Given recent economic pressures—which include likely declines in federal budgets, tuition pressures and rising health care costs—it is particularly important that we conduct a systematic review now so that we are well-positioned both financially and competitively in future years. We must also consider the impact of health care reform on our programs.”

Hayes said that Johns Hopkins is committed to offering a robust benefits package.

“We’ve always been ranked high among our peers and in the local area, and we want to keep it that way,” she said.

The group will meet every other week and plans to conduct an online faculty and staff survey later this month or in early June.

Steinwachs said that failure to address the rising price tag of benefits could mean that the university would need to shift more of the costs to its employees.

Ennis said that this committee’s work will be thoughtful and thorough, realizing that the review will not be an easy task and is one that requires a large measure of sensitivity.

“We are all feeling economic pressures both at work and in our personal lives,” he said. “We are confident that the Benefits Advisory Committee will appropriately balance the university’s financial and competitive needs along with the needs of our community. We are certain there will be trade-offs for everyone, and we are committed to an open and transparent process so that everyone in our community understands the challenges that we are faced with and the changes that may come from the review.”

He said that the committee’s review “will be informed by JHU peer data, as available, at every step to ensure that we continue to be able to compete for world-class faculty and staff.”

The committee will consult with many groups and departments during the next several months and leaves open the possibility of town hall meetings and forums.

Heidi Conway, senior director of benefits, said that once the committee makes its recommendations, some changes could be implemented immediately. However, she anticipates that any major changes would begin sometime in 2013.

The university last evaluated its benefits package in 2004. A primary recommendation of that effort was to develop for each employee an annual “total compensation” statement with specific details on all benefits, with corresponding dollar values, utilized in the past year. Another change was to offer more preventive services, such as breast exams and annual checkups, that would be exempt from required co-payments and deductibles.

In terms of existing benefits policies and programs, the 2004 committee recommended changes to the benefits dollars allocation with a goal of making it more equitable. To offset the rising cost of health care, employees enrolled in self-insured plans, such as EHP, saw an increase in their maximum out-of-pocket expenses, co-payments and deductibles in a manner consistent with rising costs, while maintaining cost-sharing levels at about 80 percent to 20 percent for the university and employees, respectively. HMO plans, such as Kaiser Permanente, also had increases in co-payments.

This current comprehensive benefits review falls on the heels of changes to the university’s retirement plan.

In 2009, under the direction of the board of trustees, the university undertook a comprehensive study of support staff retirement benefits. As a result of the support staff study, the university committed to a new defined contribution 403(b) plan and offered employees a one-time opportunity to choose how they wished to accrue future retirement benefits during a “Retirement Choice” period that concluded recently.

In addition to the co-chairs, the Benefits Advisory Committee members are Jonathan Bagger, vice provost for graduate and postdoctoral programs and a professor of physics and astronomy in the School of Arts and Sciences; Janice Clements, vice dean for faculty and a professor of comparative medicine in the School of Medicine; James Erickson, executive director of finance for the School of Medicine; Darrell Gaskin, associate professor in the School of Public Health’s Health Services Research Division; Douglas Hough, associate professor and chair of The Business of Health at the Carey Business School; Myron Kunka, senior associate dean for finance and administration at SAIS; Pablo Iglesias, professor in the School of Engineering’s Department of Electrical and Computer Engineering; Isabel Miles, senior administrative manager in the School of Engineering; Denise Montell, professor of biological chemistry in the School of Medicine; Julie Stanik Hutt, associate professor of acute and chronic care and master’s program director at the School of Nursing; Linda Tsantis, associate professor in the Department of Special Education at the School of Education; and Jonathan Wright, professor of economics in the School of Arts and Sciences.

Johns Hopkins has hired Mercer, a human resources consulting firm, to gather data from the survey and conduct the focus groups.