Feature/Summer 2008

By Geoffrey Precourt

To understand the concept of “wellness” in health care, think about your car. You don’t wait for the engine to lock up before you visit a service station; instead, you regularly change your oil to ensure peak operating proficiency. Likewise, you replace your tires long before the treads wear down. And, to keep repair costs down, a savvy owner lets a mechanic check over the car at the time of purchase and at regular planned intervals throughout the ownership experience.

Similarly, wellness programs are all about preventive maintenance—specifically, companies partnering with health-care specialists to help individual employees identify immediate medical needs and long-term concerns. Just as a car runs more smoothly with regular maintenance, workers perform better when they are healthy.

Nearly 75 percent of all U.S. employers now offer some sort of wellness program. While wellness initiatives vary from organization to organization, common initiatives include health-risk assessments and education; preventive care services such as on-site flu shots; smoking cessation and weight management programs. More comprehensive wellness programs, which are far less common, include investments in on-site health clinics and workout facilities.

The automotive example is an easy way to understand the basics of wellness—with one important difference: “The car analogy limps,” insists Margaret Hogan, the McNerney-Hanson Professor of Ethics at the University of Portland. “A car is not a bearer of rights.”

Carrots and Sticks

Wellness is not an abstract piece of human-resource management. It is a mechanism that business managers use to oversee the health of their workers. But, as Professor Hogan insists, those workers all have rights. And wellness programs—even the most successful ones—often have to walk a fine ethical line between promoting healthy choices and intruding into the privacy and lifestyles of employees.

James J. Hummer (’76) is the founder, president and CEO of Whole Health Management, a large Cleveland-based wellness provider, which is currently being acquired by Walgreen Co. Hummer has been managing the wellness balance between managers and workers for more than 20 years. The Whole Health program has its roots in a company Hummer founded in the early 1980s to serve the health-care needs of the National Aeronautics and Space Administration. “At the time,” Hummer explains, “most on-site employee-health practices were work-related. But, for NASA, there was a real need for a preventive component as well. They needed an integrated program that took all the best ideas and worked with their scientists and astronauts on the mental, physical and medical aspects of health. That’s the practice we took to the private sector.

“And it turned the entire industry on its ear.”

Hummer insists that an employer needs a mixture of “carrots and sticks” to engage its workforce in wellness activities: An employee who enters a smoking cessation program, for instance, pays $40 a month less in insurance premiums than other employees who smoke. For the enrollee who is trying to stop smoking, that $40 reward is a carrot. For his co-worker, the monthly difference in insurance costs may seem like a penalty for not changing behavior.

“We put an iron policy in a velvet glove,” Hummer says. “When we come into many companies, we often face a reception that is skeptical and even boisterous. But once we’ve been in place for a while, the employees begin to believe that we’re the best thing that ever happened to them. We empower them to stay healthy and they learn to appreciate it. And, yes, we’re hitting people in the pocketbook. We’re giving notice to unhealthy lifestyles. You can either change or you can pay more.”

The “carrots and sticks” are the elements that put wellness on the cover of BusinessWeek last year in a story called, “Get Healthy—Or Else.” The piece told the tale of a part-time employee of Scotts Miracle-Gro Co. who failed a smoking test, was denied full-time employment, and sued the company. It’s a story that caught Hummer’s attention because Whole Health is the on-site wellness provider for Miracle-Gro.

“How do executives looking to cut medical costs persuade employees to take better care of themselves without killing morale and spawning lawsuits?” BusinessWeek asked. Hummer answers: “The big piece is education. If people understand more about their health, they can make better decisions. If we give them the tools to change their behavior—to have more energy and bring more life to their jobs—we’ve done our job. We educate them about how their health affects every aspect of their lives.”

At a company such as Miracle-Gro, Whole Health arrives with a variety of resources that includes doctors, nurses, guidance counselors and physical therapists. Its on-site facilities can offer everything from small fitness centers and pharmacies to the $5-million, 24,000-square-foot medical-and-fitness center across the street from Miracle-Gro headquarters.

But if employee education doesn’t catch on, how do organizations such as Whole Health get workers at a place like Miracle-Gro to cross the street and visit that elaborate new wellness facility? The process, Hummer asserts, begins at the top. “A CEO has to live it. That doesn’t mean he has to eat bark off of trees. That’s crazy. But he has to set an example of moderation, of exercising, of eating healthy food, of managing stress.”

Aiming to Cut Health-Care Costs

Companies are turning to wellness programs at a time when the economic stakes are high. In 2006, the $2 trillion cost of health care accounted for 16 percent of the United States’ gross domestic product. In that same year, each company paid, on average, $8,748 in health-care costs for each employee—a 62 percent increase in just five years from 2002 ($5,386).

One factor contributing to rising costs is the declining health of the U.S. population as a whole. Nearly two out of three adults are overweight or obese, and the number is rising. In fact, according to the Centers for Disease Control and Prevention (CDC), the percentage of America’s adults classified as obese doubled between 1980 and 2004, from 15 percent to 33 percent.

Americans are also inactive. Only 31 percent of adults report that they engage in regular leisure-time physical activity. In addition, although the number of smokers has declined slightly in recent years, the 2007 National Health Interview Survey found that one in five American adults continues to smoke.

Being overweight, inactive or a smoker increases the risk for chronic diseases, such as Type 2 diabetes, heart disease and cancer. The economic consequences for employers are substantial. A CDC study found that obesity drove 27 percent of medical cost increases between 1987 and 2001. Another put the annual cost of an adult smoker at $3,561 in excess medical costs and lost productivity. A third published by the American College of Sports Medicine placed the economic costs of inactivity between $670-$1,125 per person, per year.

Wellness programs seek to control those costs. The American Institute for Preventive Medicine, in fact, has a rich offering of success stories, for example:

• A Teamsters organization in Ohio distributed a Health at Home book to 1,140 families and, by doing so, eliminated 70 visits to doctors and emergency rooms—“a total savings of $10,865 or $119.40 per person;”

• A Pennsylvania fiber-optic manufacturer’s wellness education program realized a 5:1 return on investment for a 12-month period.

Initiating a wellness program doesn’t always mean a quick fix to the bottom line of health care. But recent studies have found that well-designed programs lead to lower health-service utilization and that the savings from such programs outweigh the administrative expenses. Such programs are cost-efficient, according to the Hay Group, a global human-resources consultancy that has made its health-care mark by taking long and regular looks at wellness programs. Additionally, a recent analysis of more than 200 employers by the American Journal of Health Promotion shows that the return on companies’ investment in medical costs is about $3.50 for every dollar invested in wellness.

There are no wellness cookie cutters, the Hay Group found—each enterprise needs a series of programs that best suit its specific workforce characteristics. What’s more, employee-focused programs do not work for every kind of organization. Small firms and decentralized organizations are not ideally suited for wellness programs, nor are companies with high employee turnover. And even for those that do embrace such employee-directed health initiatives, the five most common plans are reasonably modest: on-site flu shots; general education about staying healthy, such as using seat belts; smoking cessation; health-risk assessment—online or paper questionnaires of employees’ health status; and weight management.

What kinds of organizations are best suited for some kind of wellness project? In 2005, 2006 and 2007, Hay Group found that more than half of the participants came from the labor-intensive service sector. More than 80 percent of the wellness programs were in companies with 500-plus workers; almost a third had a workforce larger than 5,000 people.

A Healthy Start

No one wants a fast-lane blowout on the interstate of life, and the car-maintenance analogy does hold for wellness programs to the extent that they encourage participants to be pro-active—as opposed to reactive—about their medical care.

Two years ago, John Affleck-Graves, executive vice president at Notre Dame, took on the responsibility of introducing the preventive medical maintenance idea to the University workforce. The effort is still very much a work in progress.

“Father John [Jenkins, Notre Dame’s president] believes our University is as good as our people,” Affleck-Graves says, “and we wanted to do whatever we could to make Notre Dame a better place to work. We have a slightly older workforce than most organizations. With that group, we thought we may have some issues with diseases—matters that were predictable—that it made sense to address earlier rather than later.”

Of the University’s 4,500 employees, more than 2,500 completed a confidential online WebMD assessment and were given a $10 monthly discount on their health insurance premiums. Nearly 70 percent of the respondents said they wanted to lose weight as a primary wellness objective; 59 percent were concerned about their diets and 60 percent indicated they were interested in some sort of cardiovascular exercise program.

More importantly, the feedback in a number of categories such as stress, lifestyle, diet and nutrition, pointed different employees in a variety of healthy directions. “It’s all purely advisory,” says Affleck-Graves, “with nothing mandatory. WebMD suggested actions—more intense actions for higher-risk people—that included training and nutrition programs as well as exercise activity. ‘Here’s where you are at risk,’ WebMD was able to tell our people. ‘Here’s where you should be concerned.’”

The Notre Dame working population was divided into three groups—low risk, medium risk and high risk. The good news is that more than half the participants—1,400 people—fell into the healthy, low-risk category. Additionally, 515 employees were recorded as medium risk and a slightly larger group fell into the third high-risk bracket.

Affleck-Graves says that “with anecdotal evidence, we knew we had a lot of people who were high risk. But we didn’t know who they were or whether they knew they had a potential problem. Any time we can identify a possible health alert, that’s a positive for them. And, in the long run, it’s a positive for the University as well.”

Ahead of the Curve

The strength of a wellness program depends on how fully its employees embrace it. At Bon Secours, a $2.4 billion not-for-profit health system headquartered in Marriottsville, Md., employees can earn anywhere from $50 to $500 in rewards for practicing healthy lifestyles, but there’s no penalty for not participating or continuing bad habits. Cindy Stutts, who directs the Bon Secours program, acknowledges, “Health-care employees are knowledgeable about health and sickness, but not necessarily about wellness. As a result, we had a lot of work to do” when the program started in 1993. Today, 7,000 out of a national workforce of 20,000 have picked up the Bon Secours wellness message.

Bon Secours’ voluntary program offerings include smoking-cessation clinics, stress management, and disability-product distribution. “We are the employee’s health department,” Stutts says. “There’s a third-party vendor that keeps information confidential, but when our people need help, they come to us.”

To move the process constantly ahead—and to keep the wellness buzz active—there are blood pressure screenings once a week, conveniently located in workplace lobbies. Other offerings include Web-based health coaches, annual screenings, family programs, targeted newsletters, broadcast e-mails and child-care services. And, sometimes, even all that is not enough: “A nursing staff is difficult to take care of,” Stutts admits. “When they’re at work they’re always too busy tending to patients to take care of themselves. So, we’re reaching out to them in different ways, electronically and with Web cams.”

With such a mature program, there are some concrete indices of success. Independent evaluation showed that non-participants in the wellness program are four times more likely to file health claims than participants. But as Stutts points out, “Claims data gives you current risk; health assessments give you future risks ... You can’t talk just about your chronic folks, who cost money. To prevent risk from increasing, you have to keep addressing the needs and interests of healthy people.”

And the motives have to go deeper than cost reduction. “The reason Bon Secours went into this program 14 years ago wasn’t to make money; it was to keep people informed and then make sure that cost doesn’t happen.”

Employee Protections in an Electronic Age

The idea of incentivizing good behavior (or, as some would have it, discriminating against employees with unhealthy habits) is a sensitive topic.

“There are real dangers in employers collecting too much information,” says M. Cathleen Kaveny, the John P. Murphy Foundation Professor of Law and a specialist in the relationship between law and morality at the Notre Dame Law School. “Any time people collect information in this electronic age, there are privacy issues. Why does an employer need to know information? What else can be done with it? Who’s going to share it? Even something as simple as [an employer] knowing your cholesterol can raise difficult questions.”

“It’s not a perfect world and some people may not be ethical,” Professor Kaveny continues. “There may be financial incentives to keep people who are healthy and to get rid of people who aren’t so healthy ... But in fact, eventually we’re all going to become unhealthy. We’re all going to get sick and die. If this turns out to be a gotcha-musical-chairs game—I don’t want to get caught with a sick employee—it’s a problem for the whole health-care system.”

Accounting Professor Sandra Vera-Muñoz concurs. In her cost accounting course, she addresses escalating costs, including health-care benefit costs, which make it difficult for U.S. manufacturers to compete with their foreign counterparts. But Vera-Muñoz also realizes how fragile legal and accounting controls can be, given sophisticated data mining techniques that quantify health-care risks so precisely. Her 9-year-old daughter Jenny was diagnosed with Type 1 (juvenile) diabetes at age four. While Jenny is now fully covered by Notre Dame’s health insurance, Vera-Muñoz estimates that without insurance they would pay at least $1,000 monthly for her primary care, including her insulin pump, supplies and quarterly diabetic clinic visits. She is concerned about what will happen when her daughter enters the workforce years from now: “My fear is that she may get discriminated against for having a precondition, which is not her fault.”

Professor Kaveny argues, “Employers can and should put conditions in place that encourage people to be healthy. But the idea that being healthy is part of your work performance is dangerous.” At the University of Portland, Professor Hogan voices another view. She believes that wellness programs “recognize the multi-faceted dimensions of an employee—that a person has a number of needs as well as serving a company. Within that context, it’s fair for a company to say, ‘We’re concerned about you and about whatever physical problems you may have.’”

Wellness programs serve as a mechanism for channeling that concern, says Hogan, which is well within the rights of the sponsoring enterprise: “The employer is providing some benefits—no benefits are free,” she says. The employee accepts the benefit and hence the obligations ... Once the employer pays the major share of this insurance most employees tend to view health care—visits to the doctor, treatments, injections, vaccines, etc.—as a bargain or free. Doesn’t the employee have an obligation to take prudent care of his or her health and to use medical resources with prudence?”

“There’s no question that healthy employees are more productive. And the thought behind wellness is that it allows employees to do the right things they need to do to take care of themselves,” adds Corey M. Angst, an assistant professor of management at Mendoza. “The companies that have done a good job with wellness have also done a good job of communicating that their intent is not to cherry-pick employees for good habits or to provide disincentives for people who are taking care of themselves.”

Professor Angst understands how technology can facilitate the implementation of wellness programs. He spent a decade working, researching and consulting in health care with such companies as Pfizer, Johnson & Johnson and AstraZeneca, as well as for several health offices of the federal government. Angst says employees can have confidence in company-sponsored health and wellness programs as long as they retain some control of where their personal data is routed electronically. And, he adds, one of the benefits of a massive electronic data repository is that such information can serve larger community—and even global—purposes.

Although “privacy fundamentalists” are concerned that information may end up in the wrong hands, Angst notes that many privacy protections are built into the U.S. legal system. Both the Health Insurance Portability and Accountability Act (HIPAA) and Americans With Disabilities Act (ADA) mandate that, with few exceptions, employers cannot review individual employees’ medical data. That’s why many organizations hire employee-authorized third-party program administrators to manage that data. And the U.S. Department of Labor is specific as to what an employer can and cannot do. (See box.)

As new technologies evolve to manage health-care information, one only can speculate what kinds of ethical questions will be debated in the years ahead. Angst believes that future wellness programs may provide participants with the kind of services that keep them pointed in a healthful direction: “If you have a GPS locator in your cell phone, and it knows you just walked into a McDonald’s, it can deliver a real-time message that says, ‘We know you are at McDonald’s, don’t get the Big Mac but instead get a salad.’ If you are really desperate about trying to lose weight and taking care of yourself, do things like that help? Maybe they do. Or maybe that feels like a huge invasion.”

Expanded Workplace Benefits Javon Bea, president and CEO of Mercy Health System, says the organization has seen its absenteeism rate drop in the two years since its board formally wrote a health initiative into the company culture. Simultaneously, Mercy’s turnover rate has dropped from 15 percent to 7.4 percent.

At Mercy, a vertically integrated health system in Janesville, Wis., there are meal clubs, personal-safety sessions and employee-assistance programs. Teamwork is an important component of the company’s wellness vision: Mercy’s President’s Challenge calls for all workers to wear a pedometer and reach a 100-mile walk week. As many as 35 teams of 10 employees bond together in various weight-loss programs. Membership in athletic clubs is reimbursed by as much as $200 a year.

Bea and his wellness team also believe that stress-reduction is an important ingredient of a full wellness program. Employees get sabbaticals, and schedules are regularly re-evaluated to reduce stress. Workers in Mercy’s headquarters office can drop off their dry cleaning at a company concierge and leave their car for an oil change or service. “It’s a different kind of benefit,” Bea explains. “But it saves our people a couple of hours on a Saturday when they need to have time for themselves.”

Retaining an employee is an important part of the wellness mix. In very practical terms, the investment in a worker’s fitness pays off only if the employee stays with the company for an extended period of time.

And absenteeism and turnover are just two tools that help assess the success of wellness activity. Some organizations track the efficacy of health-care programs through the number of medical-claim filings. Others prefer short-term disability data. “Presenteeism”—a 21st century term that describes the negative consequences of an unwell employee who shows up for work—also is giving human-resource directors another way to evaluate wellness offerings.

And, of course, financial standards provide a measuring stick.

“Certainly, we were concerned about the high cost of health care and the effect that expenditure has on the University,” explains Notre Dame’s Affleck-Graves. “When people have preventive care, medical costs go down. It’s that simple. We mutually insure each other. God willing, I keep my good health and subsidize someone else. If something happens to me, they subsidize me; it’s their gift to me.

“I’m very much a quantitative guy,” Affleck-Graves says. “But it’s just about impossible to express the benefit of a wellness program in any definitive set of numbers. We’ll take a look at the cost and savings three or four years down the line. I’m reasonably convinced that there will be a fiscal benefit. But the main reason that we’re doing this is, simply, that it’s a good thing to do.”

Wellness Must be an Option: Not an Order
The U.S. Department of Labor has outlined what an employer can and cannot do when establishing a wellness program. Specifically:

• “A group health plan may not require an individual to pass a physical exam for enrollment, even if the individual is a late enrollee.”

• A health-care program can require an individual to complete a questionnaire “provided that the health information is not used to deny, restrict or delay eligibility or benefits, or to determine individual premiums.”

• “Group health plans cannot charge an individual more for coverage than other similarly situated individuals based on any health factor.”

• “If none of the conditions for obtaining a reward under a wellness program is based on an individual satisfying a standard related to health factor, or if no reward is offered, the program complies with the nondiscrimination requirements (assuming participation in the program is made available to all similarly situated individuals).”

That means that a company’s wellness program meets the Labor Department’s standards when it offers reimbursement for fitness-center membership, when it provides a reward for participating in a health evaluation (not for the outcome of the test), or when it subsidizes an employee’s participating in a stop-smoking program (even if the employee continues to smoke).

The Labor Department also is specific about what kinds of rewards an organization can offer: It must not total more than 20 percent of the cost of the total coverage, it must be designed to prevent disease and promote health, and it must be offered to all employees at least once a year.

Editor’s note: At press time, the U.S. Congress had passed the Genetic Information Nondiscrimination Act to further protect employees from discrimination by insurance companies and employers. It is expected to be passed into law.


— Geoffrey Precourt is a freelance writer and editor who lives in Western Massachusetts. He is the co-author of Always On: Advertising, Marketing, and Media in an Era of Consumer Control (McGraw-Hill, 2008).




© 2008 University of Notre Dame • Last Updated: May 28, 2008