Benefits Column

Lowering Healthcare Costs

While wellness initiatives remain popular and continue to evolve, the question of whether such programs save money has never been convincingly answered. Experts, nonetheless, offer suggestions for HR leaders thinking about creating and implementing successful work-based programs.

Monday, March 15, 2010
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Worksite wellness programs are back in style. Title IV of President Barack Obama's healthcare proposal calls for the "prevention of chronic disease and improving public health" and contains within it a specific provision for "promoting prevention and wellness at small businesses."

The recurring question is whether wellness programs can lower healthcare costs.

Evidence may come from Johnson & Johnson, one of the prevention forerunners which, in 1979, introduced Live for Life, with the express goal of making "Johnson & Johnson employees the healthiest in the world."

In 1993, the company expanded the program into a shared-services concept, which integrated employee health, wellness, disability-management, employee-assistance and occupational-medicine programs.

J&J bases its confidence in its health-management approach on a Ron Ozminkowski study published by the Journal of Occupational and Environmental Medicine in 2002. The analysis looked at the long-term impact of what J&J then called its Health & Wellness Program, following employees up to five years before and four years after program implementation.

The results pointed to a $225 per-employee per-year reduction in medical-care expenditures over the study period, with the largest return realized in the third and fourth years. The reductions came in outpatient and mental-health visits as well as inpatient days.

Of note, however, is that J&J spent about $11 more per employee per year on emergency-department visits.

There were also a number of study limitations, including the implementation of managed care at the same time as the health-and-wellness program and the lack of a comparison group.

So, it seems we're still not 100 percent clear if wellness programs positively impact healthcare costs.

I then sought the thoughts of a group of experts who will be participating in a panel at the Human Resource Executive Forum® that I'm moderating on April 13.

David Lacey, vice president of human resource business development for VIST Insurance, focuses his HR consultancy on small and mid-sized employers, but his prior role at Technitrol gave him responsibility for 30,000 global employees.

"Small and medium-sized employers have met their operating limit in terms of cost-sharing on [healthcare premiums]," he says.

David believes the best way to impact healthcare costs is through early identification of diseases such as pre-diabetes and pre-hypertension. He says mandatory employee participation in annual health-risk assessments assists with risk-factor identification, but their use may be limited.

"Stand-alone HRAs are insufficient and build resentment with employees." He says employers achieve the best results when health coaches and nurses review HRA results with the employees and direct them to appropriate programs.

Andrew Gold, executive director of Global Benefits Planning at Pitney Bowes, recommends considering two things when setting up a health-management or wellness program: (1) What are you trying to do? and (2) Who are you targeting?

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"Are you trying to keep 80 percent of your employees up and walking?" Andrew asks. "Or are you focusing on the 20 percent of employees with chronic conditions?

"You need to target wellness programs through your healthcare plans to your most costly populations, but not forget about helping the general population from getting sicker."

Pitney Bowes' Project Living is an "action-based" approach to health management that simultaneously looks at how employees keep themselves well "financially, physically and emotionally." The program also considers the influence of the family and spouse on these three components.

Tom Emerick, president of Emerick Consulting and, most recently, of Wal-Mart where he was vice president of global benefit design, believes there are "good reasons to do (wellness and prevention), but as a device to control costs, most programs have been a disappointment."

Tom believes the next evolution of prevention is a three-part cascade where you first try to prevent illness. He thinks there's promise in encouraging prevention through a "home-care model where people take care of minor [illnesses] at home."

As some employees eventually become sick, "you have to make sure they have the right diagnosis and the right treatment plan." If the employee ultimately needs major surgery, "you make certain they get to the best place first and that the overall global cost is the lowest."

It seems that the health-management programs of today aren't your daddy's worksite-wellness programs. Employer-based interventions are evolving into holistic approaches that, ultimately, try to get employees to the right care at the best place for the lowest overall cost.

Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett.

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