The knots of walkers stepping out from Western Extralite for a
lunchtime stroll through Kansas City’s West Bottoms are doing
something healthy for themselves.
The knots of walkers stepping out from Western Extralite for a lunchtime stroll through Kansas City’s West Bottoms are doing something healthy for themselves.
But it’s also hoped they’re doing something good for the company’s bottom line by holding down health care costs.
“I think we’re making a difference with employee health,” says Phil Levy, human resource manager at the family-owned company that distributes electrical and data-communication products. “But we’re soft on quantifiable measures yet for us to know the results.”
Hope.
Think.
Don’t yet know.
Those words pop up a lot when employers talk about employee benefits programs that include “wellness” initiatives.
Most employers that have begun the programs – offering financial carrots or sticks to encourage employees to exercise, eat healthier diets and do preventive health screening to catch problems before they become major – agree on this:
It’s hard to measure something that hasn’t happened.
“Trying to measure cost avoidance is hard,” said Melissa Campbell, benefits and human resource operations manager at American Century, which has encouraged employee wellness since the early 1990s. “It’s not what we saved, it’s what costs we didn’t incur.”
And there lies the wellness challenge.
In a business world focused on quantifiable returns on investment, it’s still hard to convince many employers that employee wellness programs are worth the cost, especially when startup costs exceed measurable savings at the outset.
At Cerner Corp., home to one of the most comprehensive employee wellness programs in the nation, health information technology is their stock in trade. As much as any employer anywhere, “We have the foundation to evaluate these health status measures,” said Christa Roberts, a registered nurse who leads the company’s health and wellness strategy.
The company has invested in an on-site health clinic, pharmacy, fitness center, in-house health screenings, health coaches, healthy cafeteria foods, weight loss and walking challenges.
Cerner says it sees a return on investment in the fact that over the last four years, its average premium increase for health insurance has been about 3.5 percent, well below the national average. And it has raised its deductible only once in the last five years.
“We’re moving the mark,” Roberts said about employee health. “We’ve been running the program since 2006. In the next couple of years we may be looking at savings.”
Renya Spak, a health and benefits consultant at Mercer’s Total Health Management business, said there’s no industry-wide guarantee that if an employer invests in an on-site gym or sponsors walking challenges or stocks the company the cafeteria with healthy food that there will be immediate savings in lower employee health costs.
“But over a three-year period,” she said, “we’re comfortable talking about a return on investment of three to one.”
The search for savings in the employee benefits neck of the woods is a high priority for any employer that continues to sponsor employee health insurance plans.
The PricewaterhouseCoopers Health Industries Group released its medical costs outlook on May 18, alerting companies to expect an 8.5 percent increase in their 2012 health care costs.
“We know if we can move people to a lower health risk category, we’re going to save money,” Clay said. “The question is whether you can measure it.”
That’s where the Kansas City Collaborative expects to make a difference.
The 3-year-old coalition of 17 of the area’s largest employers has dived into “evidence-based” health care – a discipline that intends to quantify the benefits of preventive efforts.
What that means is that they’re more closely tracking their health insurance and health-related programs, their employee incentives, and their costs to find out what works. They intend to pinpoint what strategies actually lower health care costs.
“It’s to use employers’ investments in health to get healthier employees … to get more productivity and, over time, to reduce costs,” said William Bruning, chief executive of the Mid-America Coalition on Health Care.
“It isn’t just the goal to lower insurance claims and pharmacy costs but to better manage absences, to have fewer illnesses and injuries. In general, it’s to get a more effective employee.”
Specific data have yet to come.
“There’s a long time between intervention and results,” Bruning acknowledged.
The recession caused a record drop in employment-based health insurance for working-age Americans, according to the nonprofit, nonpartisan Employee Benefit Research Institute.
The slide in work-based coverage has continued since 2000. In 2009, the most recent year in the institute’s study, 52 percent of workers received health benefits through their jobs.
Paul Fronstin, researcher at the institute, said fewer employers are offering coverage, which means fewer workers have access to employer-sponsored plans. Also, overall workers’ wages haven’t kept pace with rising health care premiums, which means that fewer workers are likely to enroll in health plans.
Add to that the evolution from full-time payroll jobs to self-employment, contract and temporary work, and even fewer workers have ties to employment-based health coverage.
All told, that means employers – whether by financial incentives or penalties – are able to influence an increasingly smaller share of workers’ health habits and expenses.
Among the Kansas City area’s largest employers though, subsidized health coverage remains the norm for their full-time employees, whether the company is self-insured or not.
Sprint put its toe in the wellness waters in 2005, and soon found that “it’s hard to make changes in the direction you’re going when you’re not getting timely information about your claims,” said Collier Case, director of health and productivity.
Sprint did all the expected cost-control things – making changes in its employee health plan designs and increasing deductibles – as well as sponsoring smoking-cessation and exercise programs.
The company now is working with OptumHealth, its third-party wellness provider, to “capture the impact of our interventions on a real-time basis,” Case said.
For example, Sprint is aiming to put a dollar value on an employee who goes through a quit-smoking program and remains smoke free for six months. Some studies peg that kind of annual savings at $1,800 in lower medical costs and increased productivity, he said.
Based on an internal study, Sprint found that employee participants in its program actually cost more in their first year of use. As in other companies, a first-year program generally incurs higher costs because it captures employees who hadn’t been getting preventive care checkups before.
Often, that amounts to one-fourth of the employee population, consultants say.
So in 2009, when Sprint really ramped up its program, its costs were higher than in 2008. “But the people who were participants in our wellness programs in 2009 had decreasing health care costs in 2010, while those who didn’t participate in our wellness program didn’t have decreasing costs in 2010,” Case said.
Spak, the Mercer consultant, said there’s rarely anything harder than getting someone to change behavior – unless there’s a solid answer to the “What’s in it for me?” question.
That’s why most employers who launch successful preventive programs have found they need to appeal to employees’ emotions as well as pocketbooks.
At American Century, an employee can take $120 off a single-coverage premium cost (or $240 off for spouse or family coverage) for taking health risk assessments.
At Cerner, workers can earn up to $700 in premium reductions for earning points for weight loss, getting a flu shot, exercising and completing lab work to measure their body mass index, blood sugar, cholesterol and blood pressure.
At Sprint, a nonsmoker gets roughly $20 a pay period off his insurance premium share.
But wellness managers emphasize that dollars alone aren’t the end-all to gain employee participation.
“We’re beginning to see rethinking about financial incentives,” said Spak. “Many employers are spending a lot of money on incentives, with some costs approaching the cost of the intervention. That’s bad. They need to know what intrinsically makes a difference to people.”
Even the best-laid wellness plans may still encounter some resistance. For instance, some employers trying to help control health care costs by improving the diet of their employees have found that it’s tough going.
In corporate cafeterias where healthy food is subsidized, sources said some workplaces are throwing away more of the good stuff, uneaten because employees continue to choose chicken fingers, burgers and other fried foods.
And, managers report, it’s not easy to simply remove the less healthy items. Employees may complain so much that it becomes a morale issue, or they stop patronizing the company food service and go “off campus” for lunch.
One perceived resistance that hasn’t actually amounted to much was employee fear of “big brother” employers peering too deeply into personal health.
That’s because most programs have done a good job of helping employees understand that their health screening information – often the kickoff part of the strategy – is handled by a third-party vendor or separate company.
The company gets only aggregate information about, say, the medical expenses of its smokers, to help shape its strategy. It doesn’t get specific information about individuals.
At Sprint, Case said, employees long ago understood that “they have the same level of privacy they do with their private physicians” and that their health information “doesn’t get back to their boss.”
Over time, he believes, the corporate culture also has moved “to the point where it’s wellness for wellness’ sake” rather than something the company pushes.
Still, Spak said, there always are some employees who don’t want the employer involved in their health in any way.
“There always will be some people who have barriers and won’t play along,” Spak said. “But if key managers support it, it’s fun, and it’s collective, most employees will support the idea that they’re accountable for results. … It all comes down to money and competitiveness.”
A NATIONAL SNAPSHOT
– Two-thirds of organizations have some kind of wellness strategy.
– Employers spend anywhere from $10 to $3,000 a year per employee on incentives.
– Asking employees to fill out health-risk assessments is the most common incentive.
– Among organizations with programs, two-thirds don’t measure outcomes to justify costs.
– Among organizations that have no program, one-fourth say it’s not an employer’s role.
WHERE HEALTH CARE DOLLARS GO
– 15 percent of the population drives 85 percent of the cost
– 5 percent of the population drives 60 percent of the cost
– 25 percent of the population has no claims costs – which doesn’t necessarily mean they’re healthy. It could mean they’re not getting cost-effective preventive care.
