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Value of employer wellness efforts tough to put a figure on

Western Extralite, an electrical and data communi­cations company, developed “Walking Works” to encourage fitness to bring down health care costs. In May, Jeanie Murff, from left, Anji Anderson and Ashley Schroeder walk near their West Bottoms business district office in Kansas City, Mo.

McClatchy Tribune

Western Extralite, an electrical and data communi­cations company, developed “Walking Works” to encourage fitness to bring down health care costs. In May, Jeanie Murff, from left, Anji Anderson and Ashley Schroeder walk near their West Bottoms business district office in Kansas City, Mo.

The knots of walkers stepping out from Western Extralite for a lunchtime stroll through a Kansas City, Mo., neighborhood are doing something healthy for themselves.

But it's also hoped they're doing something good for the company's bottom line by holding down health care costs.

"I think we're making a difference with employee health," said Phil Levy, human resource manager at the family-owned company that distributes electrical and data-communication products. "But we're soft on quantifiable measures yet for us to know the results."

Hope.

Think.

Don't yet know.

Those words pop up a lot when employers talk about employee benefits programs that include "wellness" initiatives.

Most employers that have begun the programs — offering financial carrots or sticks to encourage employees to exercise, eat healthier diets and do preventive health screening to catch problems before they become major — agree on this:

It's hard to measure something that hasn't happened.

"Trying to measure cost avoidance is hard," said Melissa Campbell, benefits and human resource operations manager at American Century, which has encouraged employee wellness since the early 1990s. "It's not what we saved, it's what costs we didn't incur."

And there lies the wellness challenge.

In a business world focused on quantifiable returns on investment, it's still hard to convince many employers that employee wellness programs are worth the cost, especially when startup costs exceed measurable savings at the outset.

At Cerner Corp., home to one of the most comprehensive employee wellness programs in the nation, health information technology is its stock in trade. As much as any employer anywhere, "We have the foundation to evaluate these health status measures," said Christa Roberts, a registered nurse who leads the company's health and wellness strategy.

The company has invested in an on-site health clinic, pharmacy, fitness center, in-house health screenings, health coaches, healthy cafeteria foods, weight loss and walking challenges.

Cerner says it sees a return on investment in the fact that over the last four years, its average premium increase for health insurance has been about 3.5 percent, well below the national average. And it has raised its deductible only once in the last five years.

"We're moving the mark," Roberts said about employee health. "We've been running the program since 2006. In the next couple of years we may be looking at savings."

Renya Spak, a health and benefits consultant at Mercer's Total Health Management business, said there's no industrywide guarantee that if an employer invests in an on-site gym or sponsors walking challenges or stocks the company cafeteria with healthy food that there will be immediate savings in lower employee health costs.

"But over a three-year period," she said, "we're comfortable talking about a return on investment of 3-to-1."

The search for savings in the employee benefits neck of the woods is a high priority for any employer that sponsors employee health insurance plans.

Flirtations with health maintenance organizations, with changing insurers, with different "consumer-driven" insurance plans that put more employee skin in the game haven't done enough to produce the sought-after savings.

"Unfortunately, most Kansas City area employers haven't established a strong enough economic base to work from," said Jim Clay, chief executive of SRA Benefits, a broker consultant that provides "integrated wellness management" advice to clients.

"This is very, very complicated stuff. It's hard to get to a number on savings from wellness programs, especially if (employers) are changing networks in an effort to find lower premium costs," Clay said.

Clay has been advising Western Extralite for several years. Since June 2007, he said, the company has lowered its per-employee claims costs by 7 percent.

That's a victory, given that the trend has been annual increases of 7 percent to 9 percent across companies, he said.

The PricewaterhouseCoopers Health Industries Group released its medical costs outlook on May 18, alerting companies to expect an 8.5 percent increase in their 2012 health care costs.

"We know if we can move people to a lower health risk category, we're going to save money," Clay said. "The question is whether you can measure it."

That's where the Kansas City Collaborative expects to make a difference.

The 3-year-old coalition of 17 of the area's largest employers has dived into "evidence-based" health care — a discipline that intends to quantify the benefits of preventive efforts.

What that means is that they're more closely tracking their health insurance and health-related programs, their employee incentives, and their costs to find out what works. They intend to pinpoint what strategies actually lower health care costs.

"It's to use employers' investments in health to get healthier employees … to get more productivity and, over time, to reduce costs," said William Bruning, chief executive of the Mid-America Coalition on Health Care.

"It isn't just the goal to lower insurance claims and pharmacy costs but to better manage absences, to have fewer illnesses and injuries. In general, it's to get a more effective employee."

Specific data have yet to come.

"There's a long time between intervention and results," Bruning acknowledged.

The recession caused a record drop in employment-based health insurance for working-age Americans, according to the nonprofit, nonpartisan Employee Benefit Research Institute.

The slide in work-based coverage has continued since 2000. In 2009, the most recent year in the institute's study, 52 percent of workers received health benefits through their jobs.

Paul Fronstin, researcher at the institute, said fewer employers are offering coverage, which means fewer workers have access to employer-sponsored plans. Also, overall workers' wages haven't kept pace with rising health care premiums, which means that fewer workers are likely to enroll in health plans.

Add to that the evolution from full-time payroll jobs to self-employment, contract and temporary work, and even fewer workers have ties to employment-based health coverage.

All told, that means employers — whether by financial incentives or penalties — are able to influence an increasingly smaller share of workers' health habits and expenses.

Sprint put its toe in the wellness waters in 2005, and soon found that "it's hard to make changes in the direction you're going when you're not getting timely information about your claims," said Collier Case, director of health and productivity.

Sprint did all the expected cost-control things — making changes in its employee health plan designs and increasing deductibles — as well as sponsoring smoking-cessation and exercise programs.

The company now is working with OptumHealth, its third-party wellness provider, to "capture the impact of our interventions on a real-time basis," Case said.

Based on an internal study, Sprint found that employee participants in its program actually cost more in their first year of use. As in other companies, a first-year program generally incurs higher costs because it captures employees who hadn't been getting preventive care checkups before.

Often, that amounts to one-fourth of the employee population, consultants say.

So in 2009, when Sprint really ramped up its program, its costs were higher than in 2008. "But the people who were participants in our wellness programs in 2009 had decreasing health care costs in 2010, while those who didn't participate in our wellness program didn't have decreasing costs in 2010," Case said.

National snapshot

• Two-thirds of organizations have some kind of wellness strategy.

• Employers spend anywhere from $10 to $3,000 a year per employee on incentives.

• Asking employees to fill out health-risk assessments is the most common incentive.

• Among organizations with programs, two-thirds don't measure outcomes to justify costs.

• Among organizations that have no program, one-fourth say it's not an employer's role.

Where the health care dollars go

15% of the population drives 85 percent of the cost.

5% of the population drives 60 percent of the cost.

25% of the population has no claims costs — which doesn't necessarily mean they're healthy. It could mean they're not getting cost-effective preventive care.

Value of employer wellness efforts tough to put a figure on 06/11/11 [Last modified: Friday, June 10, 2011 8:49pm]
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