Is worksite wellness good business? - includes related article on evolution of employee wellness programs
Kathleen DohertyIs worksite wellness good business?
There's controversy about the payoffs. But some companies remain committed.
Remember all the hype about worksite wellness? In the mid-1980s, it was heralded as the panacea for many corporate woes. Wellness programs, many employers predicted, would help employees become healthier--and in the process, put a lid on soaring health care costs.
Much of that enthusiasm remains. But lately boos have begun to drown out some of the cheers.
Programs cost too much for what they return, say a growing number of skeptics. For employers, it's all pain and little gain, they argue.
Are wellness programs delivering on their promises to improve employee health and lower health care expenditures? Let's take a hard look at employers' experiences with wellness, as well as what researchers are finding out about the programs.
The cost of unhealthy workers
"Unhealthy workers cost time and money," says Bill Jose, evaluation consultant at Control Data in Minneapolis. "The unhealthier the lifestyle, the greater the drain on the company. And the older unhealthy workers get, the more they cost."
Control Data has spent more than 10 years studying the health of thousands of its employees. Researchers have looked at the cost of seven risk factors: smoking, obesity, alcohol use, hypertension, lack of exercise, cholesterol level, and failure to use seat belts.
Not surprisingly, they found that the unhealthiest workers have the biggest medical bills. But the extent of the bills is news: * Smokers have 18 percent higher medical costs and are 43 percent more likely than non-smokers to miss more than a week of work because of health reasons. * Inactive employees spend 30 percent more time in the hospital and call in sick more often than those who exercise. * Workers with severe weight problems are almost 50 percent more likely to have medical claims exceeding $5,000 in one year and 29 percent more likely to miss more than a week of work a year. * Employees who don't wear seat belts are more accident-prone, spending 54 percent more days in the hospital than those who buckle up.
Numerous risk factors
Few people have just one risk factor, which means even higher costs to the company, researchers found. Consider the employee who smokes, is sedentary and overweight, and doesn't buckle up. Control Data estimates that at age 25, he will cost $185 more a year in health care costs than a healthy employee. At age 45, his costs will be $561 more annually.
So far, the studies have evaluated only seven health risks. Future studies will look at other risks, such as poor nutrition and improper back care.
Nevertheless, these findings present a good case for wellness programs. "If employers could get employees to lead healthier lives, the reasoning goes, the number of risk factors would decrease and so would costs," says Jose. Control Data estimates it now pays $1.8 million less for health care each year because of its StayWell program.
Started in 1979, the comprehensive health promotion program offers employees in its Minneapolis headquarters everything from aerobics to classes in safe driving. To catch problems before they begin. Control Data offers free screening and health risk assessments.
Control Data and a number of other employers--AT&T and Johnson & Johnson among them--have calculated the high, often hidden, costs of an unhealthy workforce and recognize the critical role employers play in helping to turn health habits around.
Just installing exercise equipment or offering nutrition classes may not improve health, however. Bad habits and unhealthy lifestyles are not the only factors that cause poor health. Stress can be just as debilitating as disease and injury are.
Preventing illness
Take a company roiled by the biggest restructuring in its history. Throw it into a fiercely competitive marketplace. Cut out thousands of jobs. And what do you have? An anxiety-ridden, stomach-churning environment ripe for an increased number of heart attacks, ulcers, and many other stress-related illnesses.
That's what AT&T executives realized at the start of the breakup of the Bell System. Says Dorothea Johnson, M.D., and corporate vice president of AT&T in Basking Ridge, N.J., "These changes posed a great threat to employee morale and well-being. We felt something had to be done to make the transition easier and healthier." One answer was wellness.
In 1983, AT&T launched its comprehensive Total Life Concept wellness program. The goals: Create a corporate culture that encourages healthy behavior and find the best way to intervene when people have poor health habits.
Today AT&T employees are working out in the fitness center at corporate headquarters and numerous other sites; they're learning how to eat right, sit straight, quit smoking, and lose extra pounds.
The programs seem to work. A two-year study of participants at two AT&T sites reveals the following: * Those in weight control classes lost an average of 10 pounds each. * Ninety percent of those who tried to quit smoking did; more than half were still not smoking a year later. * Blood pressure of participants dropped significantly, with more than half reaching a normal blood pressure.
Lifestyles and behaviors take time to change and the dividends may be seen tomorrow, not today. AT&T projects that those who continue to participate in TLC will be at a lower risk of heart disease, cancer, high blood pressure, and cholesterol throughout their lifetimes. The payoff: AT&T estimates it will save more than $10 million in 10 years just from having a workforce whose risk of cancer and heart disease is reduced.
Analyzing success
Two other companies, Johnson & Johnson and Blue Cross-Blue Shield of Indiana, have put nearly all aspects of their wellness programs under the microscope to analyze their success.
In 1978, Johnson & Johnson committed itself to improving the health of employees and to controlling company health care costs. The method: the Live for Life program, which includes health screening and classes in weight control, nutrition, and stress management. Today, more than 50 divisions have an on-site program.
A five-year study of more than 11,000 employees in 18 states found: * In divisions with a program in place, 23 percent of all smokers quit during a two-year period. Levels of strenuous physical activity increased more than 100 percent among all employees. Also, absenteeism fell. * People who took part in the wellness program were hospitalized less than other employees. During this time, hospital costs increased four times for those who didn't join in the program, but only doubled for participants.
"We have all been surprised by the success of the program, except that is, for Jim Burke, the chairman of the board, who believed in the program from the start," says Mel Benjamin, director of the Live for Life program. "We spend about $200 per employee for the program, but we save close to that just in lower hospital costs."
Blue Cross-Blue Shield of Indiana offers its Stay Alive & Well program to all employees, spouses, and retirees--all during business hours and at no cost. The company pushes prevention through risk identification, fitness classes, counseling, and other programs.
Two studies of persons who participated in these efforts in a 10-year period found: * Cholesterol, blood pressure level, and absenteeism dropped significantly. * They initially filed more claims than those who didn't join in, but their use of health care services leveled off after six months. * For every dollar spent on the wellness program, the company estimates it saved one dollar and 45 cents in health care costs.
"We improved people's health and identified problems earlier on. That's success," says Roger Reed, general manager of operations who directed the study. "However, we thought savings would be higher the longer the program was working--more time to improve health, lower overhead. Attrition and turnover prevented us from getting the returns we wanted. Still, the savings were significant."
Program limits
These studies suggest that wellness is smart business. But some experts don't agree with the financial returns. There are little data available that show wellness saves money, and the studies that have been done are inadequate.
Economist Louise Russell of Rutgers University, New Brunswick, N.J., contends many studies "only give pieces of the puzzle, not a complete evaluation. For example, they don't tell what is spent to get these results."
Hard data about the costs of these programs are difficult to come by. Most companies, it seems, don't like to reveal how much they invested in wellness. "One explanation may be that they don't know the costs of their own programs," says Russell.
Peter Conrad, a sociologist at Brandeis University, Waltham, Mass., who has studied wellness programs, believes current evaluations can't be generalized. "The big four studies looked at intensive programs backed by tremendous corporate support," he says. "Most garden-variety companies don't invest a lot of money in programs. You can't say that what applies to AT&T, Blue Cross-Blue Shield, Control Data, and Johnson & Johnson is true for all."
Data gathering bugs
The lack of data is a big problem, Conrad points out. During the next few years, the situation won't improve for a number of reasons: * The cost of extensive evaluations is high, beyond the price most employers will pay. * Evaluations take a long time, sometimes up to five years or more. Employers want quick answers. High turnover makes it difficult to do long-term studies. * Worksites are messy places to do research. Few employers keep track of absenteeism, sick leave, and use of medical services--information that is needed to evaluate wellness programs.
Inadequate data are a concern, but the real problem is with wellness itself, critics say. Wellness programs may not attract those who need it most, thus limiting any effect on improving health and on lowering medical costs.
Wellness "may be serving the already converted," says Conrad. "Programs attract people who are generally fitter and younger than others." Most are white-collar employees. Blue-collar workers are conspicuously absent from most worksite programs. "Because of this, programs make a minor, if any, contribution to employee health."
Another drawback: "Changing habits in the short term is easy; changing lifestyles is much more difficult," argues Conrad. Just look at how many people gain back pounds days after completing a weight-reducing program, he says.
One reason why: Their companies may foster poor health. Job insecurity, too much stress, limited chances to advance, poorly managed change--all can make employees seek solace in junk food, alcohol, and drugs. "Wellness programs do little if corporate cultures make people sick," says Conrad.
Wellness efforts may not make great strides in improving overall employee health and "they may affect health care costs even less," he maintains.
Another cost-producer: dependents. A huge chunk of the health care bill is for dependents. But most employers don't include them or spouses in wellness programs.
Wellness efforts may even back fire on companies. "There's also an ironic twist in all this for cost conscious companies. If employees are healthier and live longer, employers will have to pay higher retirement benefits," argues Russell of Rutgers University.
The payoffs
Despite their concerns, both Russell and Conrad say there's a place for wellness in today's companies. "Even if programs cost money rather than saving it, companies may want to go ahead with them," says Russell. "Programs may help to attract and keep good people. They are a benefit many employees want."
Wellness can cut down on turnover and absenteeism. Tenneco Inc., for example, found that those who used its fitness center were 13 percent less likely to leave than other employees. Workers who took part in the wellness program at Blue Cross-Blue Shield of Indiana had half as many hours of absenteeism as non-participants.
"Lower absenteeism can translate into significant savings," says John Riedel, a consultant who recently directed a study of four wellness programs of the Blue Cross-Blue Shield system. "Some studies suggest that for a 1 percent decrease in absenteeism, company profits increase 1 percent."
Conrad sees a link between wellness programs and positive attitudes and productivity. "Health promotion may be an effective use of the benefit dollar, not in terms of cost containment or improvement in health, but in terms of productivity," he says. "Companies shouldn't get into an accounting mode of thinking when it comes to wellness."
Programs send a strong message to employees: The company cares about their health and well-being, Conrad says. That can do more for morale and motivation than exercise equipment and nutrition education can do for health.
Says AT&T's Johnson: "You can't put a price tag on attitudes. Just six years ago, many employees characterized AT&T as rigid and arrogant. Today, those people who have taken advantage of our wellness program are more positive about themselves, their jobs, and AT&T in general."
Adds Benjamin of Johnson & Johnson: "Wellness is a tremendous morale booster. It has a big halo effect, making everyone feel good about the company. Wellness is so ingrained in our company that you would have to rip us apart to get rid of it."
Wellness can't be evaluated simply in terms of improved employee health or saved corporate health dollars. Morale, loyalty, and productivity--these may be far more important in today's competitive marketplace, say a growing number of employers.
"No matter how hard they try, companies will never get the numbers they want," says Reed of Indiana's Blue Cross-Blue Shield. "Employers must remember wellness is a benefit. No other employee benefit gives money back--or has such an effect on morale and productivity. Since you won't get the data, you have to believe, in your gut, that it works."
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