Wellness programs make cents for many employers
- October 1, 2012
As the economy makes a slow recovery and the commonwealth’s businesses finally are looking at healthier bottom lines, one problem remains chronic and debilitating for many: the cost of providing health care to employees. As a result, more employers are experimenting with wellness programs to help workers improve their health. Wellness programs can’t stop the escalation in health-care costs, but they do at least seem to flatten out the growth curve.
Guy Morrison, executive vice president of employee benefits for Virginia-based insurance broker Rutherfoord, says that health-care costs have risen so fast and so high that they are now the second- or third-largest budget item for most Virginia businesses. With federal mandates concerning coverage scheduled to start in 2014, clients are eager to try new approaches to controlling expenses.
“The trend is to step back and get a better understanding of what is driving specific costs,” Morrison says, and that means crunching the numbers.
For example, after an analysis of its claims data, one Rutherfoord client saw that the cost of treating employees’ diabetes and asthma had gone up significantly and abruptly. The cause was traced to an increase in their co-pay: When their share of costs went up, many employees simply stopped taking their meds, and the repercussions of that were expensive.
The client eliminated the co-pay, and the employees started taking their prescriptions again. The company realized a savings of 20 percent on costs related to those medical issues. Such “value-based insurance design,” Morrison says, is likely to become the new norm.
Bon Secours Virginia Health System is a case in point. Cindy Stutts, administrative director of employee wellness for the nonprofit health system’s Virginia operations, says that its health-care costs have been running about 11 percent above average. Claims analysis data revealed that the main cost driver was treatment of particular medical issues pervasive among employees at Bon Secours’ Richmond and Hampton Roads facilities. They included hypertension, diabetes, asthma, and muscular and skeletal issues, all of which could be attributable at least partially to the fact that nearly 70 percent of the employees were overweight.
Yet obesity is the No. 1 controllable risk factor for good health, Stutts says. So, two years ago, Bon Secours decided to try an ounce-of-prevention, pound-of-cure approach to managing its health-care costs and began a pilot wellness program. Bon Secours promised employees an $800 discount on their insurance premiums if they underwent an online health screening and assessment. Then, they would be paired with health coaches to learn about weight management, proper use of medications and sound health practices.
Ninety-four percent of those eligible for the voluntary program, or about 400 workers, opted in, Stutts says, and the results look promising. Next year, she hopes to offer additional financial incentives for employees who reduce their body mass index (BMI) to less than 27.5 percent. “We are in partnership with our employees on a wellness journey,” she says.
It’s a partnership that can produce a lot more than just monetary savings for an employer. “They get two to three times more reward,” says Alan Bayse of the Roanoke employee benefits consulting firm Bayse & Co.
Absenteeism and “presentee-ism” — which Bayse defines as “present but not working”— decrease. Productivity increases, and the workplace becomes a happier place. Younger workers in particular like initiatives that revolve around being healthy, and healthy employees are less likely to retire early. That is why, Bayse says, so many Virginia companies are looking at ways to incorporate wellness programs into their health-care benefits. “Total integration is the new thing,” he says, and it is the rare new thing that poses no real downside for employer or employee. It’s a healthy development for everyone.