Starting with a modest investment, companies can improve the health of their employees while cutting costs, boosting productivity and improving morale.
BY KATE PETERSON
A handful of employees at Engineered Products Co. is helping the Minnetonka company cut medical costs, increase productivity, improve safety, reduce absenteeism and limit workers' compensation costs. The group, EPCO's four-person health and wellness team, is working to create
a culture of healthy lifestyles at the 53-employee company, which manufactures electrical specialty products and power distribution cables.
In a blitz of activity since its creation in February, EPCO's health and wellness team has hosted weekly health-promotion events, conducted an employee survey to determine areas of health needs and interests, sponsored a six-week fitness challenge, swapped healthier items for
the junk food in the company's vending machines, distributed a monthly newsletter filled with information on preventable diseases and ideas for exercise and healthy eating, and attended local seminars to determine how to improve the program. EPCO's budget for the health and wellness
Workplace wellness experts say an approach like EPCO's -- one that begins with a communication campaign to educate employees about the benefits of good health -- is best. They add that the communications portion of the effort, as in EPCO's case, can be developed almost
entirely from free resources.
Once employees have embraced the wellness message, companies can take additional steps to help individuals assess their personal health risks and develop a plan to reduce them. That's when the benefits, including lower medical costs and reduced health care premiums, are likely
to begin flowing.
Addressing Medical Costs
Wellness programs have boomed in larger companies recently. Earlier this year, a Health Affairs article noted that in 2006, 19 percent of companies with 500 or more workers reported offering wellness programs. By 2008, 77 percent of large manufacturing employers offered some
kind of formal health and wellness program.
"A lot of employers found they needed to take a different approach to cost shifting and cutting benefits -- [by] trying to avoid costs in the first place by making people healthier," says Tom Ferraro, senior director of corporate accounts for population health management
programs at Mayo Clinic Health Solutions in Rochester.
"Once employers began to measure and see the results of health management programs, the programs began to migrate beyond only large employers. By these programs becoming a benefit and cost-reduction strategy versus being viewed only as a wellness program, they then moved to
smaller sized groups," Ferraro says. "Now we find ourselves working with 100, 200 or 300 employees -- all the way up to 150,000-plus employees."
Marc Manley, a physician and public health expert who is vice president and chief prevention officer for Blue Cross and Blue Shield of Minnesota in Eagan, comprehends the economics of workplace wellness, and why it makes sense for employers to lead their employees to healthier
choices. "The kinds of health problems employers see are chronic diseases -- diabetes, heart disease, cancer, chronic lung disease -- and they are causing the most health problems and costing the most money," he says.
Of all the money Americans spend on health care, about 75 percent can be tied to lifestyle choices, Manley says. He points out that for many employees, more than half their waking hours are spent at work, which gives employers a big window of opportunity to encourage healthy
Manley cites two glaring health problems related to lifestyle choices: smoking and obesity. "Blue Cross found obese individuals cost $1,100 more than those of normal weight, and the numbers for smokers are about the same," he says. "It makes sense, if employers are paying
for health care costs themselves, to make an investment to help employees change their lifestyles."
Blue Cross offers many work-site wellness programs, from consulting services to complimentary tools. "We offer stop-smoking programs that are telephone-based, and online coaching programs for weight management, physical activity, healthy eating and stress reduction," Manley
says. The company also offers its employer customers information on how to create effective wellness programs, as well as free consultations with work-site wellness experts.
Experts say a company's total potential savings in medical costs varies widely; savings depend heavily on how thoroughly a culture of wellness is adopted by its employees. However, recent research shows that the return on investment can be significant. In that recent issue of
Health Affairs, researchers reported that analysis of a large number of studies showed medical costs fall by about $3.27 for every dollar spent on workplace wellness programs.
Mayo Clinic's Ferraro says that's consistent with what his colleagues are finding. "We've begun to do some analysis of return on investment in highly engaged companies. By the second year, there's a two-to-one return on investment." By the third year, results are even
better: Every dollar spent on workplace wellness returns about $3.00 to $3.50 in savings.
CHS Inc. in Inver Grove Heights contracts with Mayo Clinic to provide online access to a health risk assessment for employees, as well as online and telephone-based lifestyle consulting. The diversified energy, grains and foods company has 5,600 employees eligible for
benefits. While 900 employees work at the company's headquarters in Inver Grove Heights, many others are located in rural locations, often with just two or three people working in an office, which complicates implementing a companywide program.
Still, adopting a wellness program, particularly one accessible by phone and Internet, made sense for CHS. "When you look at our employees and the claims data, our population is relatively older, in rural areas, and we felt like we needed to get something out there to help
our employees live healthier lifestyles," says Kevin Newton, director of benefits. The lifestyle coaching component of the Mayo program has been particularly useful, Newton says. He stresses that while privacy laws prevent tracking of individual health status, the company has seen
an improvement in the health of its workforce as a whole.
Beyond Medical Benefits
Cutting medical costs is a good start. In addition, research-based and anecdotal evidence points to other key benefits of workplace wellness programs. Health Affairs reported an average drop of $2.73 in absenteeism costs for every dollar spent on wellness programs, for
For smaller employers, absenteeism is a particularly thorny issue. "Think about a company with 500 employees, and what it would mean if five don't show up one day. Then think about the company with 50 employees. Those five employees who don't show up can make a huge
difference," says Traci Kubisiak, workplace wellness consultant with David Martin Agency, a benefits brokerage firm in Edina.
"A small employer ... is absolutely dependent on every employee showing up every day, being productive and being fully present," Kubisiak says. "If there are fewer employees to pick up the slack, if some are gone, productivity and morale falls and that spreads through the
company very fast."
When employees are at work, the healthier they are, the better the quality of their work. "It's pretty generally accepted now that healthier people are more productive," says Ferraro. "If we can get people healthy, [then] when they are on the job, they are going to be
more productive, be more accurate, with fewer mistakes, fewer accidents, and they'll be on the job more often. There's a strong correlation between productivity and healthy populations."
At CHS, the wellness program was implemented to reduce medical costs, but the benefits have been broader. "Primarily, we started this from a cost standpoint, strictly on the medical side," Newton says. "While we haven't tracked absenteeism or presenteeism issues, we do
feel that these programs are helping to reduce those problems."
In addition to reducing costs and improving work quality and efficiency, Ferraro says wellness programs can serve as effective recruiting and retention tools. "Within small and midsized companies, wellness programs are still not prevalent," he says. "In larger companies,
though, if you don't have a program, it can work against you; it's expected. In smaller companies, it may give you an edge."
Offering a wellness program also can improve employee morale. "We're in an environment where many employers have cut and cut and cut benefits," says Ferraro. So, he adds, when employees find out their employer is offering them tools to help them get healthier, and to
improve the health of the company financially over the long term, they feel very fortunate.
Small Investment, Big Impact
While larger companies generally have been the trailblazers in developing wellness programs, small and mid-sized firms can reap similar if not greater benefits, often at a lower cost. Even small investments can make a notable difference in small firms. "In small companies,
the leadership is typically in touch with all the employees," Kubisiak says. "If you have the support of the leadership, you have a greater capacity to impact wellness within small businesses."
This is true, Kubisiak says, because even though small businesses tend to offer less programming in their wellness programs, compared with larger work sites, a higher percentage of employees tend to participate. One reason is that, in addition to the visibility of the
company's leadership, smaller firms often enjoy a stronger sense of community.
In other words, if the two people who sit in your area stopped going out for a cigarette with you during break, and instead started walking the bike path that goes behind the building, you might be inclined to snuff your cigarette and join them. Also, in smaller companies,
word about other coworkers' successes can travel fast. If Joe in accounting has shed 25 pounds, word will get around and others may start asking Joe how he did it -- and try to do the same.
Wellness champion networks, a growing trend in workplace wellness programs, are particularly well-suited to smaller-sized companies. "Wellness champion networks find people in the organization with a passion for wellness," Ferraro says, "maybe someone who's had a heart
attack and can speak about how he changed his life because he didn't want to miss the chance to play with his grandkids."
While leadership support is a key ingredient for a successful workplace wellness program, Ferraro says these internal teams can very effectively remove some of the burden from top managers in a company. "We are finding that wellness champion networks can do even more to
influence their coworkers than top executives, and often they are more effective in smaller than larger companies," he says.
In addition, because lifestyle choices are such a driver of medical spending across all populations, many government entities and nonprofits have developed programs to help smaller employers get workplace wellness programs up and running, often free of charge.
EPCO's health and wellness team has attended seminars sponsored by Hennepin County to help them improve their program. Amanda Sackett, EPCO's marketing coordinator, handles the day-to-day duties of the company's wellness program. She relies heavily on information provided by
nonprofit groups for her monthly newsletter. In addition, Sackett has found there are grants available for companies like EPCO to help pay for larger one-time expenses related to wellness. She plans to apply for one to cover the cost of installing a bike rack.
Kubisiak encourages companies that are just getting started in work-site wellness to look first at the many free resources available to them. "You can tap into offerings from health care plans, benefits consultants and other community resources."
Ultimately, a wellness program's sustained success stems from changing the culture and the habits of a workforce. Fortunately, to that end, Manley says some of the most critical changes are also the simplest.
At Manley's own Blue Cross, for example, one of the easiest steps was changing some of the standard procedures in the cafeteria, such as giving handful of carrots instead of a bag of chips with each sandwich purchase. He says: "You have to make the healthy choice the easy