More companies are toughening up their wellness programs to decrease insurance costs and improve the health and productivity of their employees.
In the past, many wellness programs focused mainly on basic nutrition and weight loss. Now employers are trying to help employees-especially those with high-risk lifestyles-take responsibility for their own well-being. More companies are experimenting with such methods as self care and disease management and are using both incentives and disincentives to gain results.
"Employers in greater numbers are coming to realize the need to focus their programs on high-risk employees, a message we have been communicating for some time to clients. This approach will yield far better payback," said Bruce Kelley, health management expert with William M. Mercer, a New York-based human resources management consulting firm.
A new Mercer study shows, however, that companies have a hard time enrolling unhealthy employees in workplace health management programs. Only 1% of 157 employers responding to the survey said they have complete success in getting workers with manageable diseases such as hypertension or obesity to join the programs. About 63% of respondents are experimenting with program incentives, such as cash and flexible benefits credits. Some 26% offer noncash awards, 22% offer discounts on insurance premiums, 15% offer cash, 6% give flex credits, and 5% impose financial penalties.
Management consulting firm Hewitt Associates, based in Lincolnshire, Ill., found that workers are being pushed to be more accountable for their poor health choices by employers who impose financial incentives or disincentives to encourage healthy lifestyles. About 70% of individuals with health risks, such as smokers, have to pay higher health insurance premiums, according to a report by Hewitt. A health risk is identified as a lifestyle habit that could lead to disease. The report includes data from 1,050 major companies.
According to Camille Haltom, practice leader for health promotion at Hewitt, "a company's overall health management strategy should include initiatives that help individuals better manage their own healthcare and disease." Haltom also believes disease management can help produce better outcomes and reduce healthcare costs over time. Organizations are achieving these outcomes by focusing on health issues such as smoking cessation or stress management, and the more advanced have opted to develop their own wellness centers.
Grand Rapids, Mich.-based office furniture designer and manufacturer Steelcase, with annual sales of $2.6 billion worldwide, has one of the longest-running wellness studies among U.S. corporations. Steelcase's wellness program was created in 1985 and has tracked medical-care costs and health risk factors for 4,000 of Steelcase's 8,400 Grand Rapids employees in a 10-year study. The study, a pilot program, is being conducted at the Grand Rapids location only. The average age of employees in the Steelcase study was 44; 75% of them were male.
The wellness and disability management program includes on-site health screenings and physical therapy.
In 1986, Steelcase created a return-to-work program that has saved the company more than $500,000 annually. It cut back on the outsourcing of some key services, such as sorting and washing of production gloves and towels, to create jobs for employees with medical restrictions. A redirected work center was created where those employees manufacture items such as safety aprons and shipping blankets that previously had been purchased by outside vendors.
According to Pam Witting, manager of wellness and medical services, Steelcase is developing a healthy lifestyles program that will have more direct incentives or disincentives for employees. Witting declined to offer details.
In addition to its smoking cessation, weight reduction and stress management programs, Steelcase renovated a racquetball club to create a 25,000-square-foot wellness center with swimming pool and fitness equipment for employees. It also provides an exclusive 1,170-acre campground 60 miles north of Grand Rapids. A biologist at the campsite's nature center oversees the campground and leads nature hikes and wildlife programs.
Sports equipment manufacturer Escalade Sports of Evansville, Ind., strongly encourages its 400 employees and their families to eliminate health risks. Workers and their families are able to use Escalade's fully equipped fitness center for free if they enroll in the company's health management plan. Approximately 350 employees are enrolled.
Escalade created the health management plan in 1984 and has reduced the percentage of participants who suffer from high blood pressure from 20% in 1984 to between 2% and 4% in 1996.
The company also has reduced its employees' average cholesterol levels to 172 in 1996, from an average of 215 in 1984. The percentage of employees with abnormal cholesterol levels has decreased to about 7% from 40%. Over a five-year period, 25.7% of smokers enrolled in the plan were able to quit smoking.
As an incentive, Escalade pays for a larger portion of the insurance premiums of employees with lower-risk lifestyles such as nonsmokers. According to Bob Griffin, Escalade's chairman and chief executive officer, the company pays about 75% of the premium for an employee with no health risks. Employees with risks pay $200 to $250 of their annual insurance premium per risk until they are able to meet specific health guidelines or goals. They could pay as much as $1,500 out of pocket if they have multiple risks.
"When challenged to improve the quality of their lives, results show that our employees have stepped up to the plate and made the necessary modifications," Griffin said.
Gib Riffle is the wellness coordinator for Acordia of Evansville and administers Escalade's health management plan. Acordia is Indianapolis-based insurer Anthem's health insurance brokerage subsidiary. Riffle suggests the risk-based wellness program to companies, which pay a flat percentage of insurance premiums for all employees, 75%, for example. Additionally, participants in the program can win premium credits, usually in increments of 2.5%, for satisfying requirements in specific categories, such as cholesterol screening, exercise, blood pressure, weight, tobacco usage, and wearing seat belts and helmets.
"Our most resistant area is weight management. We have not seen a real dramatic change in that area," Riffle said. Acordia charges a flat fee of $4 per employee, regardless of the company's size, to develop exercise programs and risk-based screening programs to set insurance premiums. The fee does not cover health-risk screenings, which are contracted out, Riffle said.
Recently Escalade saved $14,000 by launching a six-month experimental program in which it gave employees self-care guides. The guides provide information about common health problems, including their causes, symptoms and treatments. They also contain guidelines to help employees determine whether they need emergency care and self-care tips to help employees treat nonemergency problems themselves. Employees were to refrain as much as possible from using emergency rooms for complications.
Another Escalade program was tied to the recent Olympics and drew almost 50 employees. Employees could do 50 to 60 different exercises to accumulate points that were converted into miles. These miles were plotted on a map that followed the path of the Olympic torch relay across America. "They were trying to travel across the country this way. We set up different awards for several levels in the program," Riffle said. Escalade awarded certificates and merchandise to successful participants.
In 1989, Escalade's per-employee insurance premiums were $2,800-100% of the national average. In 1995, they fell to 75%, or $2,257 per employee. "You're not always going to see direct savings from year to year," Riffle said. "Some years you're going to have problems in overutilization of insurance. The effectiveness of wellness programs is seen over a long period of time where hopefully you will see gradual trends downward in absenteeism, turnover and insurance utilization."
Not everyone thinks the incentive-disincentive approach works.
Hershey Foods Corp. in Hershey, Pa., in 1991 launched a pilot program that financially rewarded its 2,000 participants for having healthy lifestyles and penalized those who didn't (Nov. 23, 1992, p. 23).
According to a spokeswoman who asked not to be identified, Hershey is revamping the pilot program and has phased out all its disincentives, including a $600 penalty for smokers. However, the company is retaining preferred life insurance rates for nonsmokers in the group. Hershey plans to gradually roll out the new plan over the next few years to all its 13,700 employees.
Anne Tuite, manager of employee wellness services at beverage giant Pepsi-Cola in Somers, N.Y., agrees that disincentives don't work. "When you put a price tag on wellness, it cheapens the effort," Tuite said.
She believes the key to wellness programs is fostering self-esteem through holistic programs that address the person's mind, body and soul.
"You can offer all the smoking cessation programs in the world; but if you don't address the self-esteem of the person, you won't be able to get the best out of the employee," Tuite said.