Editor's note: This is the first article in a three-part series on the evolution of employee wellness programs. Future installments will be presented on Nov. 17 and Dec. 15.A midsize paper-supply company offers three extra vacation days to employees at whichever of its branches collectively loses the most weight in seven weeks. Workers at one branch in Scranton, Pa., take extreme measures to win the contest. One eats only grilled chicken breast and diet soda, another swallows what she thinks is a tapeworm, and a third replaces the vending machine junk food with fruits and vegetables, which quickly rot, attracting flies. Some workers rebel by sneaking a cheesecake into the supply room.
Midway through the contest, all branches are failing to lose weight, so the company boosts the reward to five extra vacation days. “If we stay fat long enough, we may actually get a whole month off,” remarks the human resources manager at the Scranton branch. Ultimately, the Utica, N.Y., branch wins the contest, but one Scranton employee decides he will reward himself by taking the week off anyway.
If this sounds like a farce of a workplace wellness program, you’re right. It’s the storyline of the season premiere of the NBC comedy “The Office.” But it illustrates what many say are the entrenched problems with workplace wellness programs—that they offer the wrong incentives, with inadequate coaching and guidance, and without clear goals to achieve better health outcomes and productivity.
The strong need to reduce soaring healthcare costs is driving employers to rethink wellness programs. It’s also leading to a complete overhaul of how these programs are structured, with more focus on individual counseling and even, in some cases, penalties for unhealthy workers.
“There are lots of programs out there but not a lot of results,” says Michael Thompson, a principal at PricewaterhouseCoopers, which advises major employers on wellness programs. “You need big cultural changes, so it becomes part of the way employers talk and act.”
Wellness programs have been around for decades. They can include everything from flu shots to gym membership discounts to weight management programs, healthy eating incentives, health risk questionnaires, online health monitoring tools and individual healthcare coaching sessions. Increasingly, employers are offering financial and other incentives to drive participation and results. Some 63% of employers surveyed by human resources consulting firm Hewitt Associates this year said that they do provide or plan to provide workers with incentives such as lower healthcare premiums in exchange for participation. And while most employees are on the honor system, more employers are requiring that workers prove they completed these programs.
Another 17% of employers surveyed by Hewitt said they already do or plan to charge higher premiums to workers engaging in negative health behaviors such as smoking, and 40% said that they are considering such measures.
“Right now, during annual open enrollment, employers are taking a hard look at participation rates in these programs and whether they are working,” says Becky Kujawski, senior clinical consultant for Hewitt, adding that if the employer offers a smoking-cessation program but no one quits, maybe those resources should be better used elsewhere. “It boils down to identifying individuals appropriate for participation and outreaching to them. Employers have to get pretty creative these days.”
Caterpillar, the large manufacturer of construction equipment based in Peoria, Ill., has offered wellness programs since 1998. The company has 45,000 employees in the U.S. and insures 150,000 people, including dependents and retirees. About 100,000 participate in wellness programs, but the company is recognizing that the programs aren’t as effective as they could be, says Michael Taylor, medical director for health promotion at Caterpillar.
Some incentives do work. A full 93% complete a risk-assessment questionnaire twice a year, mostly because the company offers those who do a $75 monthly discount on premiums and another $75 premium discount if their spouse completes the survey.
But Caterpillar is rethinking its programs. The average age of its employees is 40, most are male, and about 14% of those insured by the company have diabetes, compared with the national average of 6% to 8%. In the past year or so, Caterpillar started offering individual health coaching to employees. “It’s too soon to judge the outcomes, but we’ve seen early anecdotal successes,” Taylor says. “We’re trying to change the culture and figure out how to get people to embrace this.”
Changing the workplace culture from the C-suite on down is key to workplace wellness success, many agree. At Pleasanton, Calif.-based grocery chain Safeway, for instance, executive bonuses are tied to hitting personal wellness benchmarks.
The entire premise of workplace wellness so far is deeply flawed because it focuses on getting sick people well, not keeping well people from falling ill, says Dee Edington, director of the Health Management Research Center at the University of Michigan, who has studied wellness for the past 30 years.
“I’ve given up on Americans getting well,” Edington says.
While everyone is jumping on the workplace wellness bandwagon, few are rewarding healthy workers for their active lifestyles, such as biking to work or shopping organic, Edington says.
“Our public-health system has told Americans they are failures and losers,” Edington says. “My suggestion is for everyone to be a winner. So this month, how about not gaining any weight?”
More focus needs to be put on individual attention to all workers and low-cost interventions that empower people, Edington says. So instead of giving everyone gym memberships, which may not be practical for those with very busy lives, why not buy everyone a pair of walking shoes, he suggests. It’s cheaper, and probably would get more people moving.
At the University of Michigan, 20 companies participate in a consortium that meets annually to discuss the effectiveness of wellness programs. The Health Management Research Center operates data warehouses for each company, including claims and pharmacy data and answers to employees’ risk-assessment questionnaires. “With that data, we can determine the total value of health to the organization, and then look at the cost of health vs. profits,” Edington says. The idea is to tailor programs to a particular workforce and to each individual.
Florida Power & Light Co. is a member of the consortium. In 1991, the Juno Beach-based power company launched its wellness program, FPL-Well, including health promotion, fitness centers, health centers, and employee-assistance and mental-health services. In 2006, nearly 90% of the company’s 14,000 eligible employees took part in at least one program. Specific spending figures weren’t available.
In recent years, the company has embedded wellness into its corporate culture, Edington says, by using multiple and diverse tools and incentives. These include 42 fitness facilities at its office locations, discounts on healthy food options at company cafeterias, health screenings, stress management programs and breaks on healthcare premiums for participation. Power-line specialists are taught yoga and stretching exercises to help prevent on-the-job strains and sprains.
“These programs have reduced our employees’ health risks and have allowed us to mitigate double-digit healthcare costs,” says FPL spokeswoman Heather Kirkendall in an e-mail. “In fact, our health plan has experienced single-digit increases in the last few years and will do so again next year. Through our programs we have been able to maintain our healthcare costs per employee at levels comparable to the national average and below the utility average.”
What Florida Power & Light has done is create a “culture of health,” Edington says—a process that takes major corporate investment and a strong commitment from top executives to carry out that vision of a well workforce. Last year, the company won one of the Innovation in Prevention awards announced by HHS.
Employers have said that they plan to look more at health outcomes in the future. “To be perfectly frank, I think there is a transformation going on,” says Thomas Parry, president of the Integrated Benefits Institute, which advises employers on the business value of health.
Nearly two-thirds of large and midsize employers provide incentive programs to promote health and productivity, but the vast majority focus only on participation, not results, according to an Integrated Benefits survey released on Oct. 14 of 500 employers, representing about 5 million workers.
Employers use cash-based incentives and reduced health premiums to drive participation, but improved outcomes were not the priority, leading to confusion about the best ways to measure and reward outcomes.
“They are focused on incentives, but they are all over the map on experimenting with what works,” Parry says.
Measuring productivity, for instance, can be very difficult. Lost productivity includes time employees are out sick, and “presenteeism,” meaning people show up for work but aren’t productive because of chronic illnesses such as cardiovascular disease or depression.
“From an employer standpoint, we know that when people are healthier, they work better,” Parry says. Until recently, employers were looking at a return on their wellness investment in terms of lower healthcare costs, but now they are looking more at overall productivity. “Coming up with a single return on investment is tricky and too easy to manipulate.”
Caterpillar’s Taylor agrees that measuring productivity is the next frontier in wellness. The company knows it is doing something right because its healthcare costs are climbing only 1.5% for the past five years—compared with the national average of between 6% and 8%. But it doesn’t crunch data on sick days. Like many companies today, Caterpillar bundles sick days and vacation days together into “paid time off,” making absences attributable to illness difficult to determine.
There’s also a clear apprehension among employers to delve too far into employees’ personal habits. In December 2006, HHS, along with the Treasury and Labor departments, jointly issued final rules on discrimination and wellness programs under the Health Insurance Portability and Accountability Act of 1996. Privacy rules apply only when a health-plan-related reward depends on meeting a health outcome. If a reward is based only on participation in a wellness program, the privacy rules don’t apply. Employers could face legal action under federal civil rights laws and other anti-discrimination statutes if they use health outcomes to reward or punish workers.
So employers are eager to provide incentives for employees to do one-on-one coaching, but rewarding them based on their performance in those coaching sessions is something they still shy away from.
Some companies are moving ahead with penalties regardless of the HIPAA risk. This past April, 39 employees at an Evansville, Ind., Whirlpool factory were suspended from work after they were seen smoking or chewing tobacco on company property after signing health insurance forms saying they did not use tobacco products. Whirlpool declined to comment for this article.
Despite the economic downturn, experts agree that wellness programs will continue to grow. That’s because there’s even more pressure to tamp down healthcare costs and make sure existing employees are as productive as possible. Some 42% of employers say they plan to increase the dollar value of their incentives, according to the Integrated Benefits survey.
Some 21% of employers said they spend $100 or less per participant per year on incentives, while 21% spend $400 or more per participant. But only about 12% of those surveyed said they plan to spend $100 or less per participant per year on incentives in the near future, while 64% said they will spend between $100 and $399 per person, and 25% said they plan to spend $400 or more per person per year on incentives in the near future. Only 8% of employers surveyed said their plans were working fine and they would not change their design, incentive amounts or other features, according to the Integrated Benefits survey.
The benefits in terms of companies’ bottom lines are tantalizing to many employers, Parry says. “Now employers have become far more demanding on program design and impact,” he says.
For instance, if about 55% of employees diagnosed with rheumatoid arthritis fail to take at least one medication to alleviate their symptoms, lost productivity of those employees would cost a company $17.2 million annually, according to a 2007 study by Integrated Benefits of about 5,000 workers with the disease.
Employees, too, want to see their healthcare costs drop.
“If there was ever a time for wellness,” Edington says. “It’s now.”
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