PCRD: Healthcare

Ask manufacturing CFO's about the financial concerns that keep them up at night and they will tell you that the costs of energy and healthcare top the list. A recent Bank of America report (available here) outlines these and other findings related to corporate leaders' perceptions of the manufacturing industry. North Central Indiana, through its WIRED initiative has set its sites on becoming a region where these two costs of doing business are significantly less than they are in other regions. They will accomplish this by linking area small and medium-sized advanced manufacturing firms with innovations from Purdue University. Here's how.

Healthcare Cost - The inability of employers to control healthcare costs is well-documented and motivates the exporting of jobs and the reduction or elimination of employer healthcare insurance programs. To address this issue, Purdue University is developing and delivering a program for small and medium-sized advanced manufacturing firms to control and/or reduce expenses related to healthcare costs and, in turn, increase manufacturers’ competitiveness. The program involves training and technical assistance related to a broad range of factors affecting the cost of healthcare including:

Employee Health Improvement Programs
Employee Incentives
On-site clinics
Prescription Management
Disease Management
Dental/Vision correlation to health
Price Transparency
Consumer-Driven Plans
Wellness Incentives
Profit Sharing and how it relates to insurance claims
Supplemental insurance programs

A pilot program has been launched that includes 14 small to mid-size advanced manufacturing firms all within the same industry cluster. By focusing these efforts within a single cluster, the opportunities will emerge to identify and meet additional common needs and take advantage of common opportunities.

The program represents a great example of university-industry innovation transfer. Purdue resources engaged in this effort include the Technical Assistance Program, the Manufacturing Extension Partnership, School of Nursing, School of Pharmacy and Pharmaceutical Studies, and the Regenstrief Center for Healthcare Engineering at Discovery Park.

Energy Costs - Although this initiative has not been green-lighted yet, the concept is spot on and if successful, would be ground-breaking. Here's how this one would work. Like the healthcare cost effort, this initiative would again involve the transfer of university-developed innovations to area industry. This time the innovations involve technologies, technical assistance, and training related to increasing energy efficiency through a systematic approach to energy management. This initiative will involve a pilot group of 28 energy-intensive firms (again in the same industry cluster) that will receive on-site training, in-plant mentoring by industry experts, and off-site workshops instructed by U.S. Department of Energy-qualified instructors. Each employee who attends the off-site workshop will receive an Energy Efficiency Practitioner certification from Purdue University. Purdue resources in this effort include the Technical Assistance Program and the Energy Center at Discovery Park.

Here's the kicker on this energy project - the anticipated metrics. Over the eighteen months of this proposed initiative, it's estimated that on average, each company will identify $25,000 in potential energy savings by the end of the initiative. Additionally, those same companies will report energy savings in excess of $1,000,000 by December 2009 as well as an additional $2,000,000 in economic impact that they had not foreseen. If something like this works, industry will be waiting in line to do business in North Central Indiana. Less money spent on emergy means greater productivity, more jobs to keep pace, and regional economic growth.

Both of these initiatives illustrate great examples of innovation-based economic development that will lead to high-performance workers, high-perfomance firms, and a high-performance regional economy.