In the grocery business, volume counts. Profit margins of mere pennies comprise the bottom line, and so health care costs rising at nearly double-digit inflation rates threaten to undermine the grocer’s business model.
Hence, one of the nation’s largest supermarket chief executive officers has his sights set on reducing rates of obesity among his 200,000 employees.
Safeway CEO Steve Burd looked at the numbers and concluded obesity is the root of a majority of his company’s health care costs. The way he sees it, chronic conditions, such as heart disease, diabetes and cancer, are his primary cost drivers. Obesity is behind them all.
Relying on his steadfast belief in the efficiency of markets, Burd led his self-insured company in 2005 to create a health plan that puts healthy behavior incentives squarely in front of his employees.
In the three years since, Safeway’s health costs increased only a half a percentage point, Burd told an audience of hundreds of health services and policy researchers last week in Washington D.C. In that time, most businesses have experienced about 16 percent increases in family premiums.