Tuesday, January 24, 2012

More On Wellness Programs To Improve Health and Reduce Costs

Since about 60% of the insured population has their insurance from their employer, there is a super opportunity for a win-win – to improve the employee’s (and spouse’s) health while lowering the costs of health insurance to the employer.

Some companies have used wellness programs to very good effect. General Mills has indicated their satisfaction with their programs. Safeway began a wellness program in 2005. As of the end of 2010, it total costs were about the same as 5 years before – a time period when most corporations were experiencing 30-40% increases.
Steven Burd, CEO of Safeway, in a Wall Street Journal Op-Ed explained that Safeway has made wellness programs available to all of its 30,000 nonunionized personnel. Its program is based on two insights: 70 percent of all medical costs result from adverse behaviors, such as smoking, overeating, and lack of exercise; and 74 percent of all costs are related to four chronic illnesses—cardiovascular, cancer, diabetes, and obesity—and that are, for the most part, preventable with behavior modifications.
An article in the Washington Post challenged Burd on his contention that incentives were a key to success. Safeway responded that it began a wide ranging program including aggressive use of generics drugs, etc plus a wellness program that included dollar incentives to its employees. Not all of the cost management resulted from financial incentives; indeed, those only began in 2008. As of the end of 2010 Safeway had held total all-inclusive per-employee health-care costs at 2005 levels, whereas most other large American companies have seen a cumulative increase of about 50 percent over the same time period. Safeway points out that had the company not actually expanded benefits, its costs would have fallen by 5 percent from 2005 to 2009. (Note that I discuss this in some detail in “The Future of Health Care Delivery.” See http://www.medicalmegatrends.com/ )
Orriant, a company that manages wellness programs for corporations, has amassed substantial data on how large an incentive is needed to drive action. They can closely predict the percentage of employees who will participate based on the level of the incentive.
They find that over time an increasing per cent of staff will become “healthy” based on objective measures. For example, at one large company that has used wellness programs for 7 years, the medical care costs have been flat, i.e., the same as 7 years ago. 31% of staff are now measured as “healthy” compared to only 11% eight years ago.
Orriant looked at the data for 4 years (2007-2010) of 4 client companies. Each company had about 800 staff. On average 64% of employees chose to participate while 36% did not. Although one might expect that only the healthiest would sign up, in fact some 68% of participants had at least one significant health issue or health risk. But they were likely healthier than the nonparticipants because in the first year the claims paid for the participants was about $1200 whereas it was about $3000 for the non participants. But the value was in the long term impact. By the fourth year, the claims paid for participants had risen to about $2000 compared to $6000 for the non participants. This relative difference held true for hospital claims paid, physician claims and pharmacy costs. The total claims paid by the 4 companies’ declined during the last of the four years by 1.3%; a time when the USA average rose by 6.9%

Wellness programs seem to work best when the incentive is connected to accountability, i.e., the participant needs to set goals with a health coach and then work toward them
The end results with wellness programs are healthier workers who are generally more productive and have less sick days and also report increased job satisfaction. At the same time the employee has a meaningful increase in take home pay while the company enjoys a significant savings as represented by lowered increase (or even flat or declining) in health care costs from year to year.

No comments:

Praise for Dr Schimpff

The craft of science writing requires skills that are arguably the most underestimated and misunderstood in the media world. Dumbing down all too often gets mistaken for clarity. Showmanship frequently masks a poor presentation of scientific issues. Factoids are paraded in lieu of ideas. Answers are marketed at the expense of searching questions. By contrast, Steve Schimpff provides a fine combination of enlightenment and reading satisfaction. As a medical scientist he brings his readers encyclopedic knowledge of his subject. As a teacher and as a medical ambassador to other disciplines he's learned how to explain medical breakthroughs without unnecessary jargon. As an advisor to policymakers he's acquired the knack of cutting directly to the practical effects, showing how advances in medical science affect the big lifestyle and economic questions that concern us all. But Schimpff's greatest strength as a writer is that he's a physician through and through, caring above all for the person. His engaging conversational style, insights and fascinating treasury of cutting-edge information leave both lay readers and medical professionals turning his pages. In his hands the impact of new medical technologies and discoveries becomes an engrossing story about what lies ahead for us in the 21st century: as healthy people, as patients of all ages, as children, as parents, as taxpayers, as both consumers and providers of health services. There can be few greater stories than the adventure of what awaits our minds, bodies, budgets, lifespans and societies as new technologies change our world. Schimpff tells it with passion, vision, sweep, intelligence and an urgency that none of us can ignore.

-- N.J. Slabbert, science writer, co-author of Innovation, The Key to Prosperity: Technology & America's Role in the 21st Century Global Economy (with Aris Melissaratos, director of technology enterprise at the John Hopkins University).