Five Companies that Walk the Walk (Literally!)
Minnesota companies large and small are confronting healthcare costs to win a healthier balance sheet and a healthier, happier work force.
BY ANDREA LAHOUZE
The rising cost of health care has long been a concern for employers, who have absorbed premium increases for decades. Those years of inflation-outpacing increases paired with tighter recessionary budgets now have many employers in an ever-tighter, ultimately unsustainable and
seemingly unbreakable bind.
But at five Minnesota companies, a very different scenario is playing out. Each armed with a custom-tailored approach yet a common resolve, Alexandria Extrusion Company, Bepex International, Medtronic, Ralco Nutrition and The Schwan Food Company are attacking rising
health-care costs from a diverse array of angles. And they are winning.
Tipping Points
For these companies, cost-saving efforts encompass both reactive and proactive responses to rising health-care expenses. Livestock feed manufacturer Ralco Nutrition had taken on double-digit premium increases for years. The call for change came when it was faced with an
estimated 21.6 percent increase for 2009 -- an increase that the Marshall company decided it could not absorb. In Minneapolis, custom food and chemical process equipment manufacturer Bepex International's cost-saving catalyst was also the threat of an unsustainable rise in premiums,
which inspired the company to spring into action in late 2007.
Medical device manufacturer Medtronic's cost-saving journey began in 2001 when it was one of the first companies to switch to a high-deductible health plan. For the Fridley-based business, which employs 8,000 people in Minnesota and 28,000 in the United States, health-care
consumerism was key to a long-term approach to efficient medical spending.
The Schwan Food Company and Alexandria Extrusion Company's self-insured statuses both require and motivate their company leaders to maintain continuously proactive approaches to employee health and medical spending.
"Being self-insured means that improvements that you make within your plan costs, you realize immediately, and additional expenses affect you immediately. We're our own best friend or worst enemy," says Michelle Warme, senior director of benefits at Schwan.
Prior to 2010, Schwan's business units offered fitness and nutrition programs at many facilities, but the programs lacked an even distribution and uniform structure, and did not tie into a larger wellness movement accessible to the company's geographically dispersed
population. Warme says a 2009 Gallup employee engagement survey prompted the company to develop a cohesive wellness campaign. The long-term goal was to improve the work force's collective health status by bringing consistent health related messaging, activities and opportunities to
employees across all locations. And earlier this year, Schwan entered into a partnership with RedBrick Health of Minneapolis, as an investment in health management programs for all its employees. The approach was holistic, treating wellness as an integral part of employee
engagement. It also was a way to realize benefits like better productivity and lower turnover, which can have significant, if difficult to quantify, bottom-line impacts.
"We started to link the whole wellness movement to our employee engagement. Obviously, if you feel better, you're going to feel more engaged, you're going to be more productive, you're going to enjoy doing what you do more. It reduces absenteeism and presenteeism," Warme
says. "At the end of the day, all of our employees are not enrolled in our medical plan, but all of our employees affect us in terms of their productivity when they are at work."
More Carrots
Though a handful of employer incentives are based on a desire to maintain the status quo, such as higher premiums for employees with more health risks, company leaders agree that investments in making the healthy choice the easy choice are key to achieving high employee
engagement in wellness efforts.
Free flu shots, biometric screenings, fitness center discounts, 24-hour nurse lines and online care rooms whereworkers can virtually connect with doctors are just some of the perks within wellness campaigns at Medtronic and Schwan.
Ralco Nutrition pays for the first three months of smoking cessation aid and offers free, telephone- based health coaching, a $200 incentive to employees who engage with a health coach for at least six months, and another $200 incentive for completion of a health risk
assessment. Multiple fitness challenges -- including a pedometerbased walking challenge in which teams compete for the most steps, and "Weight Loss By Eight," a challenge to lose a pound per week for eight weeks -- give workers opportunities to receive money in their HSAs. The
HSA incentive helped drive a 90 percent participation rate in the walking program this summer.
Incentives are important, but Shelly Gniffke, who works in human resources and leads Ralco's wellness efforts, adds that a gradual introduction of programs has helped Ralco to develop a culture of wellness. The company began with a health-risk assessment in 2008, and then
added new components to its wellness program over a period of years.
"I think part of the reason it has been successful is because we have stair stepped it," Gniffke says of Ralco's wellness program. "It's not something that you can just throw at your people and try to get them to understand all at once, because it's been a process."
Bepex International President Ralph Imholte agrees. "There are people [at Bepex International], especially people of my generation, who grew up with a different sort of understanding of the employer-employee relationship. They are kind of uncomfortable with the employer
channeling advice on health. ... I think you have to start slowly ... with our population," Imholte says.
Small changes helped to ease Bepex International's 45 employees into the concept of workplace wellness. Spearheaded by two employees, the company's commitment to health began by updating and reopening a long-abandoned workout room and replacing typical vending machine fare
with healthier options. Additional opportunities for employee engagement have since followed, including companywide golf and softball outings, free participation in Minneapolis's annual Get In Gear 10K race for workers and their spouses, and an optional and free "Lunch &
Learn" lunchtime speaker series on a variety of health topics, such as back pain and financial health.
In January, Bepex will kick off a premium reduction program to encourage employee participation in its menu of healthy activities. Employees will receive points for attending wellness events or setting and achieving personal health goals, which help workers earn additional
vacation days and up to a 10 percent discount on monthly premiums.
Alexandria Extrusion Company also appeals to workers' wallets with discounted premiums. Instead of a points system, the qualifying requirement for discounts is participation in company fitness and nutrition-oriented challenges held throughout the year. Employees must also take
biometric screenings to ensure that their participation goes beyond filling out the paperwork. To move even more workers off the couch, Alexandria Extrusion raises premiums 50 percent for non-participants, making the wellness program a no-brainer.
At Medtronic, a points system similar to Bepex International's translates into up to $150 annually. Employees can earn points by completing activities like a health-risk questionnaire or participating in Medtronic-sponsored fitness events like the Heart Walk and Medtronic Twin
Cities Marathon.
Schwan also is taking the points and rewards route, with a twist. To make getting and staying healthy appealing to employees across all locations, Warme teamed up with BI Worldwide Inc. in Bloomington to develop Living Well, a web-based employee wellness rewards and
recognition incentive program. The program is an extension of an existing platform that Schwan uses for its sales team incentive programs and was rolled out to all employees in January. It awards points for completing a menu of accomplishments and activities, which can be exchanged
for BI online store items, which number in the thousands and range from pens to TVs. Sales team members now can combine points earned from both sales and wellness-related accomplishments, and all other employees now are included as part of the all-employee rewards and recognition
program.
Healthy Rewards
Success has come in many forms throughout each company's wellness journey. Gniffke says Ralco Nutrition's annual premium increases have begun to decrease thanks to a new insurance company that values its wellness program enough to cut its premium increase from the projected
21.6 percent to 15 percent. Gniffke hopes that future increases will shrink to single digits.
"Our goal is a single-digit increase, but we also have this unknown factor out there with healthcare reform," she says. "We will definitely be committed to our wellness program no matter what happens with health-care reform, but we'll just have to take each year as it
comes."
Medtronic does not release specific numbers regarding year-over-year health-care costs. But Roger Chizek, director of U.S. benefits for Medtronic, does reveal that Medtronic's cultivation of healthy and cost-savvy health-care consumers is also driving a cost-saving trend that
is directly attributable to many of its health-care initiatives.
"The end result is that [the employees] become better consumers of health care and much more knowledgeable about the kinds of things that can affect their health and, ultimately, their out-of-pocket costs," Chizek says.
To date, Schwan's months-old wellness movement has not yet affected its premiums. But Warme is proud of the strides it has made in setting the stage for benefits in 2011 and beyond, and describes expected future benefits as a "balancing act" of tangible and intangible
savings.
"You can't minimize the impact of being able to leave money on the bottom line because you're not paying it out for claims," she says. "On the other hand, I think that from an engagement viewpoint, you also really need to look at productivity and at reducing
absenteeism."
For leadership, Warme believes understanding wellness as a business initiative is crucial. "Employee wellness affects how people perform and what they bring to work with them. In that respect it isn't a benefits initiative; it isn't an HR initiative: It is a business
initiative," she says. "If you can get leadership able to understand, motivate and influence their employee base to be on board with that, you will see very positive results and certainly an opportunity for success."
Following a five-year run of increasing premiums, Bepex International's wellness efforts were recently rewarded with a 1 percent decrease in premium costs. Savings for Bepex also reach beyond the tangible. Imholte credits his company's commitment to wellness with helping it to
overcome recessionary woes in 2009 without falling apart at the seams.
"We all took pay cuts, we had a reduction in force -- all the things that would usually start to be a problem from a motivation and morale point of view. But I think the [wellness] program helped us get through that and still feel like we're a functional group. In that
sense, it's more [about asking] how bad would it have been if we didn't have that program. But ... many of the people responded positively, knowing that the company cares about them, and internalizing that to the point where they're feeling more a part of something, as opposed to
the old paradigm, where I put in my eight hours, you give me a paycheck, and that's the extent of our relationship. I sense that people are more involved [now]."
Now that business is coming back, Imholte also sees a difference in efficiency around the office. "From a business point of view, I think it's had an impact on commitment to meeting objectives and meeting deadlines where people have taken more ownership and said, 'Okay, the
deadline is Friday. That means we have to get this done,' as opposed to, 'Well, if it's not done Friday, we'll get it done next week.' That commitment to goals has changed," he says.
Alexandria Extrusion Company's wellness program has kept recent premium increases under 10 percent. This year, Lynette Kluver, director of organizational development, is proud to say that the company has reached a new milestone in its cost-saving journey: a 0 percent premium
increase for 2011. Employees also will enjoy the added benefit of a health advocate service, which can make calls and conduct research on behalf of employees to resolve billing issues, locate the best value for specific medical treatments or procedures, and even research care
options for employees with elderly parents.
Perhaps the greatest long-term savings for Alexandria Extrusion Company comes from its healthier employee population. The 189 employees who have participated in the company's wellness program since its 2006 inception give evidence of promising trends. In 2006, for example, 128
of those employees needed to lower their blood pressure, and 122 needed to improve their glucose levels. This year's screenings show that 108 of those employees have achieved lower blood pressure, and 93 have improved their blood glucose levels. While 71 employees had more than one
health risk factor in 2006, that number has dropped to 53 this year. Kluver expects it will only decrease in future months and years.
"We have low employee turnover, we have happy customers, we have healthy employees and we have a thriving business," Kluver says. "That's what I consider success."
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