Just what on earth are businesses thinking? Companies pay too much for poor quality health care coverage. If this were any other business expense, this wouldn’t be tolerated. Yet, expensive, sub-standard healthcare is something U.S. companies roll over and accept. There are many reasons why, all unacceptable.
Fortunately, there’s a path that companies can take now to address healthcare costs: fostering healthier employee lifestyles. This is perhaps the only avenue for immediate action that can lower healthcare costs for both employers and employees while cultivating a healthier, more productive workforce. Your cynical side laughs? Consider this:
“Only private business, not the federal government, can solve America’s epidemic of obesity, chronic disease, and runaway healthcare costs by investing in the health and fitness of their employees,” said Cleveland Clinic CEO Toby Cosgrove in an Affordable Care Act debate panel, a sentiment increasingly echoed inside and outside of healthcare.
Employers must move away from the adversarial, zero sum approach of increasing employees’ share of the cost of coverage to a more partnership-centered model of forging employer/workforce partnerships where both companies and employees support each other’s goals, not just in lowering coverage costs, but by improving health.
Increasing coverage in this day and age? Unheard of! But this is not a pipe dream. If companies are willing to make the investment, on the condition that employees undertake required behavior modifications and achieve positive outcomes, it truly can happen. And though may have heard this before, up to now we’ve not done it right.
Re-Imagining Workplace Wellness
Workplace Wellness programs were designed to encourage employees (and, sometimes, their families) to adopt behaviors that reduced health risks, improve the quality of life, and benefit the organization’s bottom line. Although popular and while there were exceptions, research shows that most wellness programs didn’t work.
This approach, which I’ll call Wellness 1.0, hasn’t worked, in part, because wellness programs wimped out and avoided mandating results-based outcomes in favor of rewarding ‘reasonable efforts’ to lose weight or quit smoking. Employees may be happy to receive gym memberships or enjoy nutritional foods in the company cafeteria, but this does not equate to following professionally designed wellness plans or making needed lifestyle changes.
Moreover, according to a recent Harvard Business Review article, “What’s the Hard Return on Employee Wellness Programs?,” wellness programs must move beyond diet and exercise toward a more fundamental (don’t you hate the word “holistic”?) approach that addresses often overlooked health factors such as depression, stress, and financial and family issues that contribute to employee wellness and premium costs.
This requires a total program approach with strong data analytics, focused communications, and strong incentives that encourage employees to make quantifiable health and lifestyle changes. Because employers cannot be privy to needed confidential healthcare information, a third party must use such data to intervene and obtain outcomes.
Just showing up cannot enough. Employees and their families must agree to participate in wellness programs, commit to achieving outcomes as fully as possible, and make needed lifestyle changes. This is the way to challenge today’s healthcare spending spree (and divisive negotiations) by helping employees take better care of themselves.
Wellness programs must be designed to make non-compliance (a taboo subject, up to now) an undesirable state. Under proposed federal regulations, wellness program incentives can institute rewards or penalties of no more than 30% of the cost of health insurance for a single worker (up to $1,800), a not inconsiderable sum.
Companies must put significant skin in the game. In exchange for employees assuming more personal responsibility, and participating in aggressive wellness programs, employers might promise to maintain existing coverage (no further increases in copays, deductibles, or employee shares) for 3-5 years to give the program a chance to work.
By stabilizing and perhaps even reducing employee out of pocket healthcare costs over time, management can earn a moral and financial high ground to attract and retain the best employees and bolster future labor negotiations. These types of strong, outcome-based programs have been shown to reduce coverage costs and improve employee health, productivity, morale and retention and can dramatically lower company health costs.
Johnson & Johnson’s Health and Wellness Solutions takes a comprehensive approach that focuses on employees’ “social, mental, and physical health.” To date, the program has achieved measurable results: according to the company, 58 percent of participants in a stress management program saw improvement in six months; 42 percent of employees in a smoking-cessation program quit within six months; and 55 percent of those in a weight-loss program had success.
According to J&J, its comprehensive investment in employee wellness delivered $250 million in savings over a single decade; the return was $2.71 for every dollar spent. “Our focus on health and wellness among our U.S. workforce has helped reduce per-capita health-plan costs by $400 per employee per year … and significantly improved overall employee health and productivity.”
Similar results were achieved at Houston-based MD Anderson Cancer Center, an 18,000 employee hospital with the mission “to eliminate cancer in Texas, the nation, and the world.” The organization fosters a total wellness culture, relying on internal staff to teach, facilitate support groups, and coach.
“We work to set up a wellness culture within each department,” said Bill Baun, manager of Employee Wellness Programs. “Departmental leadership accepts responsibility for their staff members’ wellness and we encourage the whole team to acquire the same knowledge, skills, and commitment. Everybody makes changes together.” Within six years, lost work days fell by 80% and workers’ compensation insurance premiums declined by 50%.
Making the Case, Winning Support
So how do we make the case for a paradigm shift in the fundamental healthcare relationship between employer and employee? How do we persuade employees to do something that they should have done but have not? In short, both employers and employees will have to give to get.
It starts by creating a new Employer/Employee Compact on Health.
The strongest determinant of success (besides good design) is passionate, persistent, and persuasive leadership by the CEO. Workplace health has to become personal to CEOs who must lead by example. It must be part of virtually every CEO speech to employees. Companies must create a team atmosphere that makes participation desirable.
Workplace health has to become personal to CEOs who must lead by example. It must be part of virtually every CEO speech to employees. Companies must create a team atmosphere that makes participation desirable. Believe me, I know.
CEOs send the message that workplace health is worthy of employees’ attention by presenting and leading the program, and not delegating to HR Departments (that lack authority to affect major changes and usually maintain the status quo) or insurance brokers (who usually lack access to the C-suite, which limits their ability to make significant change).
There will be widespread skepticism. The idea that companies can attack spiraling health costs may sound naive or unrealistic. Indeed, many CEOs focus on the short-term and feel they’ve already given too much. And the prospect of a company-led initiative requiring employees to change lifestyles might seem politically incorrect or invasive. But, do we have a better option?
Employees are truly baffled by what’s happened to their coverage. CEOs must show them where the money is going and what must be done to change that and reduce employee premium shares and deductibles. CEOs must be brutally honest. Absent significant employee lifestyle changes, coverage costs to the company and to employees will only increase with no end in sight. Even true healthcare delivery reform won’t change that.
Walking down this road requires a mindset largely missing in today’s corporate America. This is not just “short-term,” although short-term wins are achievable. This cannot be about denying needed care. Just the opposite. And if properly approached, it will help employees become quantifiably healthier and more productive. Best of all, it provides an opportunity to preserve, and even enhance, existing coverage over time.
I challenge cynics to offer a better alternative. Why is Toby Cosgrove wrong? Can you deny that the single biggest driver of our out of control healthcare costs is the failure of America to live healthier lifestyles? Can suggest a better place to start than the work site? If you agree, I welcome your ideas about design and execution to make Wellness 2.0 a reality.
Jim Purcell is the former CEO of Blue Cross & Blue Shield of RI. He now helps large employers cultivate workplace wellness strategies that reduce premiums and increase productivity. Learn more at jamesepurcell.com.