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Wellness at Work Pays Off

But you must motivate employees to take part

(page 1 of 3)

Photo: istock.com

Health insurance is the second-biggest expense for most employers after payroll. And that cost keeps soaring: Hawaii companies have been paying an average 9 percent more in premiums each of the past 10 years – and that will likely continue.

But there is hope, says Max Botticelli, CEO of UHA. “Employers have a big stake in promoting a healthy workplace and that could mean lower health-insurance premiums and increased productivity,” he says. Botticelli speaks from experience on both fronts: UHA insures about 32,000 members in Hawaii and is also Hawaii Business’ 2010 Healthiest Workplace among medium-sized companies.

Hawaii has been slow to emphasize corporate wellness compared to Mainland companies, but local employers are catching on that wellness pays, says Deanna Moncrief, principal and founder of Benchmark Wellness, which helps businesses design wellness programs. “Employers need overwhelming proof that it works for them to make wellness a line item on their books,” she says.

Proof is the easy part. Many studies have shown the financial and health-related benefits. The real challenge is getting employees to participate in worksite wellness once the right programs are in place. The best way is to offer a variety of wellness options and then pair participants with coaches who can help them set and reach their health goals, experts say.

But the tough economy means many companies are cutting discretionary spending like worksite wellness, and that may cost more in the long run. “The problem that we have in America – the reason health costs are going up – is because the prevalence of chronic disease is growing too fast,” says Gary Allen, executive director of the Hawaii Business Health Council. “Fifteen percent of our population is consuming about 65 percent of the total healthcare budget. Depending on how much we pull back on wellness costs and programs, that prevalence could grow at a faster pace.”

In 2008, Hawaii employers paid an average of $3,380 a year for each full-time employee’s health insurance, according to a report by Ernst & Young and the Hawaii Health Information Corp. “Employers are paying the bill and in Hawaii, that’s more than 90 percent of the cost of healthcare,” Allen says. “If employers want any hope of managing those costs, they’re going to have to take steps for themselves.”

Max Botticelli, CEO of UHA, knows that wellness programs can pay
off in lower insurance premiums and increased productivity. UHA
spends more than $100,000 on wellness programs annually.
Photo: Olivier Koning

Allen says Hawaii employers could learn a lot from Mainland companies that use wellness as a business strategy. “If they can make their employees healthier, their total costs come down and their bottom line gets bigger,” he explains. “That means they don’t have to raise prices and that now gives them a competitive edge.” Employees also see health and wellness programs as an attractive benefit, which helps reduce turnover.

Proof That Wellness Pays

According to studies by the Wellness Council of America, a $1 investment in corporate wellness programs could save an employer $3 in healthcare costs. For example, if an employee has diabetes and the employer provides one-on-one coaching to help get that person healthy, the employee will likely require fewer doctor visits and treatments, and less medication. By lowering its employees’ claims, a company can lower its premiums.

Moncrief says worksite wellness can reduce “hard costs,” such as health-insurance premiums and absenteeism, but can also significantly improve “soft costs,” such as turnover, training and retention. The average time it takes for an employer to start seeing savings is from 12 to 18 months, while full ROI takes an average of three to five years, Moncrief says. “An employer needs to reflect on whether it is willing to spend a few dollars per employee now for the opportunity to reduce healthcare costs in the near future. It’s not a leap of faith, as I’ve heard some say. Wellness programs do work. They just have to be done right.”

In addition to better health and increased productivity, worksite wellness programs also bolster loyalty, says Caryn Ireland, vice president of Integrated Services Inc., an HMSA subsidiary that administers its HealthPass program. “The employer is really seen as caring for the employees, so that starts to build trust and loyalty, which often results in a lower turnover rate,” she says.

UHA, along with Castle Medical Center and Skyline Eco-Adventures, which were named Hawaii’s Healthiest Workplaces in the big- and small-company categories, all say their worksite wellness programs have produced favorable results. “I’d like to believe these types of programs have a positive impact on the morale within the organization,” says Beth Davidann, the director of Castle’s Wellness & Lifestyle Medicine Center. “We believe in something called sacred work, which means you can’t be helpful to others if you’re depleted. So the concept here is really to care for the caregiver.”

No Immediate Premium Cuts

Moncrief says companies are most successful when they study the needs of their workforce and create tailored wellness programs. “It’s proven – healthy employees are more productive employees,” she says. However, in terms of directly lowering health-insurance premiums, that’s one of the long-term ROIs. “You can’t call your insurance company and say, ‘Hey look, we have a wellness program,’ and think they’re going to drop your rates. They’re going to want to see fewer claims and a better experience rating before they make any changes.”

In Hawaii, rather than a reduction in premiums, employers might just see a leveling off of the increases, Moncrief says, which could still amount to a significant savings. But employers shouldn’t expect to see changes overnight. “Think of it like solar – you have to make the investment upfront but the payoff will definitely happen in the long run.”

Allen, of the Hawaii Business Health Council, says larger employers that are merit-rated by their insurance providers would see a shift in their premiums if their actual spending on healthcare decreased. Rather than the average 9 percent increase per year in Hawaii, he says, maybe they’d see a 2 percent or 4 percent increase.

UHA is currently looking into a rebate program that would reward healthy companies. If, for example, a group didn’t spend all of its premiums and had an aggressive worksite wellness program, UHA would consider giving it a rebate on its premiums.

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