Wellness Benefits

The American health care problem is quickly becoming a national tragedy. The cost for providing employee health care is rising at an average rate of 12% to 15% per year. For many companies, medical costs consume more than half of corporate profits. Employers for approximately thirty years have used a variety of methods to try to maintain the rising cost of medical care.These strategies include cost sharing, cost shifting, managed care plans, risk rating, and cash-based rebates or incentives.

These methods, however, merely shift costs and as many have found out, it has been like “shoveling sand against the tide”.

Presently, businesses take a more proactive stance and often, incorporate a comprehensive wellness program as a major strategy to combat the rising costs of medical care. More than 81% of America’s businesses with 50 or more employees now have some form of health promotion program. The National Business Group on Health, a Washington-based employer coalition, recently polled 84 U.S. companies and found that 77% had onsite fitness centers, 69% offered onsite fitness programs and 38% offered online information, including health risk appraisals and weight loss tracking systems. Many of these companies have developed comprehensive wellness programs designed to improve the health and well being of their employees.

The good news is healthcare costs can be substantially reduced by the implementation of a worksite health promotion program. The potential savings is based on the realization that at least 75% of all illnesses are attributed to modifiable lifestyle-related causes. Research studies have shown that medial costs are directly correlated with lifestyle. Thus, the more that a business helps employees avoid illness and disease through a comprehensive wellness program, the more savings that can be obtained in health care costs each year. Prevention, through a well-design health promotion, is the long-term answer for stabilizing the health care costs within any company.

The following results from some of America’s leading companies clearly demonstrate the positive impact that a comprehensive health promotion program can have on the corporate bottom line.

Reduced Health Care Costs

Average medical costs of high-risk Steelcase employees--Those whose lifestyles include two to four health risks such as smoking, little exercise, overweight--are 75% higher than those of low-risk employees. But high-risk employees at this Grand Rapids, Michigan-furniture manufacturing company who improved their health habits through the company’s health promotion program and became low risk cut their average medical claims in half thus lowering their medical insurance costs by an average of $618 per year. If all high-risk employees (20% of the total employee population) in one location changed their lifestyles to become low risk, the projected savings could total $20 million over three years.

Steelcase: Corporate medical claim cost distributions and factors associated with high-cost status. Louis Tze-chingYen, Dee W. Edington, Pamela Witting. Journal of Occupational Medicine, May 1994, vol. 36, no. 5, pp. 505-515.

Employees at Berk-Tec, a small manufacturing company in Lancaster County Pennsylvania, learned self-care techniques and reduced their company’s health care costs within one year. By using a self-care guide, the 938 employees and their family members made smart medical decisions and saved $21.67 per employee and dependents a nearly 18% reduction in costs. By combining reductions in doctor visits and emergency room use, the company saved $39.06 per employee a 24.3% decrease in costs over the previous year.

Berk-Tec: The effect of a medical self-care program on health care utilization. Don R. Powell, Stephanie L. Sharp, Shelley Farnell, P. Timothy Smith. 1996. In press

A medical claims-based study of 72,000 people insured through 285 Wisconsin school districts found a lower demand for medical services among those with access to disease prevention and self-care programs. Reductions in medical services results in savings for the Wisconsin Education Insurance Group of as much as $4.75 for each $1 spent, higher savings were found in the group receiving access to a 24-hour phone-based nurse advice line, a self-care reference book, and health education materials.

Wisconsin Education Insurance Group: Internal study conducted by the OPTUM division of United Healthcare Corporation, 1995.

With savings estimated to be as high as $8 million, the California Public Employees’ Retirement System sent its 55,000 retirees a health risk appraisal followed, in some cases, with individualized reports and letters and self-care materials to encourage change and help reduce health risks among retirees and at the same time reduce the health care claim costs. In another study, Bank of America retirees in California who chose the full health promotion and demand reduction program showed a decrease in total direct and indirect costs of 11% compared with an increase of 6.3% for those who completed only a simple health questionnaire.

California Public Employees’ Retirement System: Randomized controlled trial of cost reductions from a health education program: The California Public Employees’ Retirement System (PERS) Study. James F. Fries, Harry Harrington, Robert Edwards, Louis A. Kent, Nancy Richardson. American Journal of Health Promotion, vol. 8, no. 3, pp. 216-223.

Bank of America: Two-year results of a randomized controlled trial of a health promotion program in a retiree population: The Bank of America study. James F. Fries, D.A. Bloch, Harry Harrington, Nancy Richardson, Robert Beck. American Journal of Medicine, 1993, vol. 94, pp. 455-462.

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The Stay Alive & Well program at Reynolds Electrical & Engineering Company, based in Las Vegas, cost $76.24 per employee during the two years it has been in operation. Over half of the 1,600 employees participated (with up to 80% participation rates in the intervention program). Participants significantly lowered cholesterol levels, blood pressure, and weight and experienced 21% lower lifestyle-related claim costs than non-participant. Resulting savings: $127.89 per participant with a benefit to cost ratio of 1.68 to 1.

Reynolds Electrical & Engineering Co.: Anthem Health Systems, Inc., Indianapolis, Ind. Staying alive and well at Reynolds Electrical & Engineering Co., Inc., 1993.

With lower health care claims, medical costs decreased 16% for employees in the City of Mesa (Arizona) who participated in the comprehensive health promotion program. The city realized a return of $3.60 for every dollar invested in the health of city employees.

City of Mesa: Influence of a mobile worksite health promotion program on health care costs. S.G. Aldana, B.H. Jacobson, C.J. Harris, P.L. Kelley, W.J. Stone. American Journal of Preventive Medicine, 1994, vol. 9, no. 6, pp. 378-382.

Reduced Absenteeism

Du Pont saw that each dollar invested in workplace health promotion yielded $1.42 over two years in lower absenteeism costs at Du Pont Co. (Well Workplace Gold in Delaware). Absences from illness unrelated to the job among 45,000 blue-collar workers dropped 14% at 41 industrial sites where the health promotion program was offered, compared with a 5.8% decline at 19 sites where it was not.

Du Pont: The effects of workplace health promotion on absenteeism and employment costs in a large industrial population. Robert L. Bertera. American Journal of Public Health, September 1990, vol. 80, no. 9, pp. 1101-1105.

The Travelers Corporation claims a $3.40 return for every dollar invested in health promotion, yielding total corporate savings of $146 million in benefits costs. Sick leave was reduced 19% during the four-year study. In addition to improving the overall health of 36,000 employees and retirees by reducing poor health habits and increasing good ones, The Travelers realized cost savings by decreasing the number of unnecessary visits to a doctor and emergency rooms. In a similar but smaller study, members of a Travelers fitness center were absent from work significantly fewer days than nonmembers.

The Travelers: A benefit-to-cost analysis of a worksite health promotion program. Thomas Golaszewski, David Snow, Wendy Lynch, Louis Yen, Debra Solomita. Journal of Occupational Medicine, December 1992, vol. 34, no. 12, pp. 1164-1172. Impact of a facility-based corporate fitness program on the number of absences from work due to illness. Wendy Lynch, Thomas Golaszewski, Andrew Clearie, David Snow, Donald Vickery. Journal of Occupational Medicine, 1990, vol. 32, no. 1, pp. 9-12.

The effect of an employer-sponsored health promotion program on worker absenteeism is examined over a 4-year period in a group of 4972 University hourly employees. Program participants experienced an average of 4.6 fewer absentee hours in the third year of program availability than did non-participants, after controlling for baseline absenteeism, gender, race, education, and age. These results suggest that employer sponsored health promotion initiatives can have a favorable influence on absenteeism.

Knight, Kevin K et al, “An Evaluation of Duke University’s LIVE FOR LIFE Health Promotion Program on Changes in Worker Absenteeism”, JOM 1994; 36(5):533-536.

The effects of participation in an employee fitness program on reduction of absenteeism due to illness on three different worksites (police force, chemical industry, and banking) was studied. The study used a longitudinal pretest-posttest design. From 884 subjects, data were collected on absenteeism in the pre-intervention year of the fitness program. The subjects were divided into 3 groups: high participation, low participation, and no participation in the employee fitness program. The high risk participant group had a significant decline in sick days (4.8 days), while the low and no participation groups showed no change in sick days. Even when self selection in the participation in an employee fitness seems to be present, there is potential for a great deal to be gained.

Lechner, Lillian et al, “Effects of an Employee Fitness Program on Reduced Absenteeism” JOEM Sept,1997;39(9):827-831