With no end to the rising costs in sight, companies have started to take matters into their own hands, focusing on managing and maintaining a healthy budget when it comes to health care.
Denman and Davis, Clifton, N.J., tries to control its health care costs by "selecting insurance programs that we feel offer the best benefit to our employees," says Phil Carnevale, CFO. "We look at our health care costs as part of our total employee compensation. We do surveys to find out what people in our industry are providing."
He says that after collecting this information, Denman and Davis provides it to the employees. "We've had a set policy in place for more than five years in which we share our annual increases or decreases." And any change in the company's annual premiums is passed on.
This strategy is serving both the company and its employees well. "Compared to the information we've been able to gather, we're way below the curve. We charge less to our employees than a lot of the companies in this area," says Carnevale. However, costs will continue to rise. Going forward, Carnevale thinks that the industry will move into a new phase where either employees make their health care selections based on the amount of coverage they need or companies will start setting up pools of money dedicated to health care coverage and then offer employees their choices.
As a result, "the employee is going to have a much greater selection to provide him with the insurance that he wants to have at a cost that he finds acceptable. More choices for the employee will allow him to be more involved in his coverage," Carnevale says.
Other service centers are managing their costs by implementing incentives for a healthier workforce. The cost of a sedentary employee is high. The Wellness Councils of America's president Dr. David Hunnicutt conducted an interview with Dr. Steve Aldana, a professor of lifestyle medicine in the Department of Exercise Sciences at Brigham Young University and adjunct faculty member of the University of Illinois School of Medicine, in which Aldana says, "In fact, 15 percent of all the health care costs that we pay in the United States is due to sedentary lifestyles. Now, if employers want to calculate what physical inactivity is costing their company, I would suggest that they take a look at their total health care expenditures for the year and take 15 percent of that."
These sedentary employees aren't getting the recommended 30 minutes of moderate, intensive physical activity every day, says Aldana. And they're not alone. He notes that approximately 78 percent to 80 percent of the population doesn't get enough activity to lower their risk of disease.
Take a closer look. Is that sedentary employee a smoker? Aldana says that approximately 20 percent of the population uses tobacco. "If you're a female and you're 24 years of age and a smoker, it's going to cost $106,000 for you over your lifetime to treat the diseases that you get from tobacco use. That's everything. That's private insurance, Medicare, Medicaid." For a 24-year-old man, "it's going to cost $220,000. This equates to about $40 in health care costs for every pack of cigarettes you smoke. So, if you spent $4.25 for a pack of smokes, the real cost of that purchase is about $44.25--$40 of which will be paid for by someone else."
To get employees up and moving, Heidtman Steel Products, Toledo, Ohio, currently provides several types of wellness programs. "Our health plan is self-funded," says Sandra Tosha, corporate human resources director. "We pay dollar for dollar for the claims that our employees incur, but we do use Aetna as a third-party administrator to process our claims. Through our contract with Aetna we have wellness programs that our people can access.
"One of those is called Simple Steps to a Healthier Life," Tosha notes. "It's a personalized online health and wellness program, and it's designed to help employees discover ways to achieve good health and balance in their lives. Through a health-assessment questionnaire, they're able to identify different health needs. Then employees receive a health report and an action plan with programs that they can access to improve or maintain their health." Tosha notes that to assist employees with their health plans, Aetna provides personal telephone support with wellness counselors that can help and encourage the employees to make positive health changes.
Heidtman also offers independent programs for its employees. Tosha says that the company will pay half (up to $210 per year) for its employees to enroll in a weight-loss program, smoking cessation program or health club of their choice. "We certainly try to encourage people into healthier lifestyles," she says. "We want to create a wellness culture and commitment to employee health."
And Southington, Conn.-based Yarde Metals designed its current facility around healthier associates. Sharon Provenzano, human resources director, says that Craig and Bruce Yarde built space into the facility's blueprints for amenities like a fitness center, nap room and game room, as well as rooms for associates to meet with massage therapists and nutritionists, which "the employees pay for but at reduced rates." The company even allows spouses to take advantage of these types of programs.
Provenzano says that many of the employees use these services and that "everyone is appreciative that these types of things are available to them." She notes that "the exercise room and the gym are used constantly. It's like a public Gold's Gym where many people are on the equipment and doing the free weights. It's available to all employees 24/7 on all shifts."
Well-being isn't just measured in physical fitness, and both Heidtman and Yarde know this. For instance, Heidtman offers annual flu vaccines, which have a high level of participation, and an employee assistance program. "Through the EAP there are work/life counseling services available to employees. This confidential program can help our employees and their families balance the demands of work, life and personal issues," says Tosha. "Part of your health is stress. If there are issues in our employees' personal lives or at work that they want to talk to somebody about, there are a number of counseling sessions that they can have by phone, and it's at no cost to them."
Yarde's amenities include the aforementioned nap room, game room, a basketball court and a bocce court. Inside the nap room there is a "leather lounge chair that people can use on breaks, during their lunch hour, or even in some cases if a person doesn't feel well and they just need a few minutes of rest and privacy in lieu of going home," Provenzano says. If an employee so chooses, the nap-room chair is equipped with a screen so that particular visuals can be simulated. "So you could actually be on a beach watching and listening to the waves," she says. "You can either go in there and rest and relax without that type of stimulus or you can choose to run a program."
In addition, "the game room is popular with our second shift," says Provenzano. Many of the associates come in early to play pool and enjoy the camaraderie, and "people are there and ready to go to work on time. It's convenient for them to have something to do a few minutes before work and still be here on time," she says.
Just like a personal weight-loss program, employees and employers don't lose their collective pounds immediately. "When you put in a wellness-type program, you're not going to see immediate results," Tosha says. "Wellness initiatives are more of a long-term solution to control costs. On average your return on investment will take three to five years. We started the disease management and the Simple Steps about two years ago. We are now beginning to see a return on our investment."
But once those results start rolling in, they can be significant. According to Regence Blue Shield of Idaho, Lewiston, Idaho, "an often-quoted figure for return on investment in wellness programs is $3 to $1. Others say as high as $5 to $1. Regence?(with 7,000 employees) has quantified its own savings this way: Each of the past three years health care trends (based on claim cost increases) have been at least 20 percent lower than in 2002. Our workers compensation mod factor, upon which premium is based, was reduced from 1.45 to 1.12 between 2005 and 2007 because of the decline in frequency and severity of claims."
Provenzano says that Yarde has done so well with the rising cost of health care that "it's unbelievable." For the 2005 to 2006 benefit year, the company's costs went down "by 0.36 percent. Our premiums reduced by about $100,000. We were able to do that just by making minor changes in the program, like deductibles going up $5 or $10 for specialists. The plan is still very comprehensive and did not change much at all. And that was connected to our utilization." Provenzano says that "for this past 2006 to 2007 plan year, it's been up a quarter of a percent on our premium. So it's virtually no change at all.
"Our carrier is great," she says. "They are very proactive when it comes to wellness. They've come in and done health and wellness fairs for us. They coordinated with us last year to have people come in on site to do cholesterol screenings, blood pressure screenings and information on nutrition. So during lunch hours or before or after work, associates could go and visit these tables and get information that might help them improve their health."
A program won't be successful, however, if the whole company doesn't buy in to it. Rod Hart, Regence human resource wellness spokesman says, "The key to the success of any wellness program is changing the workplace culture, switching from donuts to fruit at meetings, from elevators to stairs, from smoke breaks to stretch breaks. It's an opportunity to engage employees in a conversation about the effects of our personal choices on our coworkers, from illness-related absence to group health costs."
Providing wellness programs is a win-win situation for both employer and employee. In addition, as more people focus on health, wellness programs can be a way to get and keep qualified employees. "Wellness programs not only help reduce health plan costs, they can generate a positive perception of Heidtman to our employees and potential candidates. Employees are complimentary about the programs available, and when I explain our benefits to candidates, they are impressed with the overall benefit package that we offer," says Tosha.
Provenzano also says that many of the candidates she interviews have heard about the programs Yarde offers. "Locally, it's definitely a good thing."
Slimmer, healthier employees allow companies to trim the fat in the budget. And since long-term stress can increase the risk of health problems like depression and heart disease, a strategy for managing health costs keeps the CEOs healthy, too. MM
By Lauren Duensing, from the December 2007 issue of Modern Metals.