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September 16, 2013

Companies find payoffs in wellness programs

PHOTo / Courtesy The Jackson Laboratory
Employees exercise in The Jackson Laboratory fitness center. More than 80% of the labís employees have undergone biometric screening.

The Jackson Laboratory

Employees: 1,200 in Maine

Steps taken to reduce costs/improve health: Provides on-site medical care; recreation facilities and encouragement to use them; partners with a lower-cost hospital; imposes premium payment on employees who decline to join wellness program

Change in high-risk insurance pool (2007–2012): Reduced 83%

Change in low-risk insurance pool (2007–2012): Increased 50%

Blood pressure: Decreased by 35%

Weight: Decreased by 13%

Tobacco use: Decreased by: 33%

Norway Savings Bank

Employees: 270

Steps taken to reduce costs/improve health: Hired a third-party wellness coach; offered $200 incentive to participate in wellness screening

Change in high-risk insurance pool (2007–2012): Reduced 42%

Change in low-risk insurance pool (2007–2012): Increased 93%

Change in premium costs (2007–2012): Decreased 7%

Change in workers comp premiums (2005–2012): Reduced 45%

Weight: 118 employees lost an aggregate of 940 pounds

Duratherm Window Corp.

Employees: 69

Steps taken to reduce costs/improve health: Provides recreational facilities/activities and encouragement to use them; employees keep gratification journals; corporate focus on work/life balance

Indicator of success: 840 days without a lost-time accident

Change in health care costs: None, but fewer accidents have translated into a 35% credit on its accident insurance premiums

Wellness can be defined in many ways, but for several Maine businesses that have embraced employee wellness programs, the investment has paid off in reduced absenteeism, lower employee turnover and improved productivity.

Maine employers on the leading edge of the wellness trend agree that to do it right requires a strong commitment by upper management, including operational resources and substantial, ongoing financial support. Not all the employers Mainebiz spoke with for this story can document a clear return on investment in terms of dollars spent versus dollars saved on direct health care costs, but wellness programs were universally considered to be an economically sound business decision.

Jackson Lab sets the bar

With some 1,200 employees in Maine, The Jackson Laboratory is one of the state's largest private employers. As such, it can afford to self-insure its employees' health for claims up to $150,000. (For losses above that amount, it purchases stop-loss coverage from Aetna.) So improving its employees' health has a direct impact on the bottom line. With that in mind, Jackson Lab instituted a wide-ranging wellness program in 2006 that it calls JAXfit.

According to Wayne Gregersen, the lab's director of compensation, JAXfit has two major components of equal importance: "One is using health care services wisely. The other is the health promotion program."

On the health care services side, Jackson Lab teamed up with Aetna to identify physicians and other providers who have demonstrated superior outcomes for their patients. Employees pay a lower co-pay when using these providers.

Upon discovering that the cost for services at Mount Desert Island Hospital was far higher than the state average, the company issued an RFP and invited other nearby hospitals to compete for preferred supplier status. St. Joseph Hospital in Bangor won the competition, and Jackson Lab employees who are willing to make the trip are rewarded with 95% coverage of costs there, versus 80% elsewhere.

Acknowledging that Bangor is a long drive for many MDI-based employees, Gregersen explains that making the deal with St. Joseph provided a benefit that would otherwise be unavailable.

"Eighty percent is what they were getting before at the local hospitals anyway, so there's no penalty for continuing to use the local providers," he says. St. Joseph also set up a clinic right inside the Jackson Lab facility, enabling employees to see a doctor without taking significant time off work, an advantage to both company and patient.

Other aspects of the lab's efforts to encourage wise use of health care services include naming preferred providers for joint replacement and diagnostic services, and opportunities for employees and their families to manage chronic conditions like high blood pressure and cholesterol, heart disease and diabetes through free consultations with providers at several area hospitals and via telephone with Aetna-employed nurses.

But it is the health promotion aspects of the program that help Jackson Lab and its employees make the leap from disease care to wellness. And the centerpiece of that is biometric screening: measuring the individual's health and establishing baselines for improvement.

"Biometric screening is the most important thing we want people to do," says Gregersen. "That's the critical success factor, because our big effort is fighting chronic disease."

Once risk factors for chronic disease have been identified through screening, health care professionals work with individuals to identify specific actions to address those risks and establish goals for improvement.

Human nature being what it is, however, there's a big gap between knowing what to do and actually doing it — especially when it comes to the difficulty of changing unhealthy habits. So Jackson Lab took a carrot-and-stick approach, the stick being the imposition of a health care deductible for the first time, and the carrot being a whole raft of incentives through which employees can reduce or eliminate the deductible and qualify for other rewards, the most notable being raffle tickets for cash prizes.

The first step toward earning incentive points and reducing the deductible is taking part in biometric screening; Gregersen is proud of the 83% rate of participation in that program among employees and their covered family members. Taking positive steps to reduce risk factors earns further points. These steps can be conventional health-related actions like regular exercise, participating in smoking-cessation clinics and diet changes, as well as a wide range of activities not typically associated with health care, like dance, Pilates and yoga classes, shopping for produce at local farmers' markets, attending healthy cooking demonstrations, food co-op membership, hobbies like gardening, knitting and woodworking, maintaining a family budget, home improvements that reduce energy usage, joining social organizations and taking college classes.

According to an article in the lab's magazine, instituting the deductible was "a huge wake-up call. For many employees it was a nudge, but some others saw it as a kind of slap in the face," says Gregersen.

Over time, though, that attitude has changed.

"After eight years, I think people are over having the most important thing being the earned credit toward the deductible," says Gregersen. For most people, he says, the enjoyment and fellowship associated with the activities are their own reward. A culture of wellness has taken hold, in which working out has taken the place of the cigarette break, and dancing is preferred to drinks after work.

Jackson Lab supports many of these activities directly. A well-equipped gym was installed onsite, and upper management works with production supervisors on scheduling so that hourly employees have opportunities to exercise while on the clock. The company cafeteria offers mostly healthy choices, and after hours the tables are cleared away to make room for dance, Zumba and other classes. Working with the National Parks Service and Friends of Acadia, the company helped restore a disused carriage path that runs between the town and the lab, creating an attractive setting for lunchtime strolls and making commuting by foot and bicycle safer and more appealing.

The success of a wellness program can be measured in two ways: in the health of the individuals and in the company's return on investment. According to Gregersen, cost savings were not the lab's primary objective.

"It was for the benefit of employees and their families, for the productivity and the morale of the employees, and to give them the tools to help them improve their lives," he says.

By that standard, Jackson Lab's wellness program is a success. From 2007 to 2012, the number of individuals in the high-risk insurance pool declined by 83%, while the number in the low-risk pool increased by 50%. Contributing to these figures were decreases of blood pressure by 35%, weight by 13%, and tobacco use by 33%.

But financial benefits were also part of the company's objectives, and on that standard, too, the program has proven its worth. In stark contrast to national trends, per-person medical expenses at the lab fell 10% from 2008 to 2011, and employees' insurance premiums have not increased in the past five years. Return on investment in the wellness program "far exceeds" a four-to-one ratio, says Gregersen.

Taking wellness to the bank

Occupational Medical Consulting in Leeds helps employers establish and manage wellness programs. OMC's clients range from construction firm Cianbro, with some 4,000 employees, to Duratherm Window Corp., with just 69. In between is Norway Savings Bank, with 270 employees spread out between 22 locations in western and southern Maine.

"I think wellness programs are ineffective if they're not primarily designed to change behavior of both the culture of the company in which they're started and health behaviors of the participants," says Larry Catlett, OMC's founder and chief medical officer. "They need to be outcomes-based."

Catlett, who is one of Maine's foremost proponents of business-based wellness programs, is particularly harsh on what he calls "programmatic" wellness efforts, in which the choice of a wellness-related activity or policy precedes the identification of wellness objectives and the means to reach them.

"It would be easy to invest in apples and T-shirts and to support your local race day," he says. "If your goal is to raise health awareness, that's fine. But if that's not translated into health behavior changes, that's not going to save you any money."

He adds that studies have not shown a correlation between awareness and changes in health behavior.

Following Catlett's advice, Norway Savings instituted a wellness program with goals to modify the health behaviors of its employees and thereby control health care costs. The bank engaged OMC to provide a full-time wellness coach to meet one-on-one with participants, conduct health risk assessments and set personalized goals. Employees are given incentives to meet with the coach annually, participate in the assessment and work toward risk reduction targets.

"One of the biggest factors in the success of this program was having an outside person help with the health coaching," says Richelle Wallace, Norway's senior vice president for human resources. "Employees feel more comfortable using a third party" than with a coach provided by an insurance company or under the employer's direct control, says Wallace.

Another important factor was the structure of the incentive. Even though the bank's health plan pays for 100% of preventive care and screening visits, many employees and their dependents were not participating. After some testing, the bank found $200 to be the critical threshold for many, and recently made an extra contribution in that amount to its employees' health care premium payments, dependent upon their participation in the screening process. The tweak seems to have been effective, and 98% of covered employees have committed to participate in the following year.

That incentive, combined with others meant to motivate employees and their families to adopt healthy behaviors, has helped the bank reduce the number of covered individuals in high-risk categories by 42% and increase those in the low-risk group by a whopping 93%. Over half of employees saw improvements in blood pressure and body mass index, and 118 employees lost an aggregate of 940 pounds.

From a corporate point of view, the results were equally advantageous. Medical claims fell 30% between 2007 and 2012, resulting in a 7% decrease in health insurance premiums during a period when premiums rose about 8% annually nationwide. Also impressive was a 45% decrease in workers' compensation premiums from 2005 to 2012.

"We spend about $1.2 million on health insurance," says Wallace. Compared to that, the $150,000 that Norway Savings spends annually on its wellness program, including incentives and the health coach, looks like a good investment, she says.

Looking beyond premiums

"It's very difficult for small companies to see significant changes in their health insurance" based on wellness programs, says OMC's Catlett. Even with excellent overall employee health, he notes, a small company's rates can be hammered by a single bad cancer case or neonatal complication.

Instead, Catlett urges companies of all sizes to look beyond insurance premiums to the effects of wellness on the overall cost of doing business.

"Johnson & Johnson has just refocused its entire wellness effort on productivity," he says, adding that studies indicate that "focusing on wellness-related productivity is anywhere from 3-to-1 to 10-to-1 more of a money-saver than worrying about medical plans."

Among the biggest productivity issues related to wellness are absenteeism and "presenteeism." "Absenteeism means you are not there and you are not doing your job. Presenteeism means you are there and you're not doing your job," he says, adding that presenteeism often causes people to lose one to one and a half hours of productivity per day.

Presenteeism, says Catlett, is "often due to a mental or life balance program." In other words, employee worries about social, family and financial issues can affect their work performance. That's surely no surprise to employers, but the takeaway is that wellness programs can address the root causes and thereby contribute to the bottom line.

Timothy Downing, president of Duratherm Window Corp. in Vassalboro, is a firm believer in a holistic approach to wellness. OMC's smallest Maine-based client, Duratherm, has woven wellness into its business model, with benefits to the company that include excellent employee retention.

Taking a leaf from the book "One Thousand Gifts: A Dare to Live Fully Right Where You Are," by Ann Voskamp, Downing created an iPad-based "gratification journal," in which employees are encouraged to record, either in writing or photographically, things at the company for which they are thankful. The objective isn't some kind of corporate brainwashing, but to remind employees to pay attention to the good things around them and counter the influence of the inevitable complainers and critics, of which every company has its share.

Among the good things that Duratherm provides on its rural, 20-acre facility are a walking path through woods, disc golf, croquet and a stream, complete with a kayak that employees are welcome to use. In a piece of significant but intentional irony, the company converted its old smoking room into a fitness center. Employees and their families grow vegetables in a company garden while the company itself keeps laying hens and makes hard-boiled eggs available in the break room. It also raises cattle on-site, distributing hundreds of pounds of grass-fed beef annually to employees through a lottery.

"It's a morale boost," says Downing, "We have fun with it. The animals look good, and people come on weekends to visit them." Regarding these and other wellness offerings, he says, "It really has enhanced the culture of the company."

While all this seems to make Duratherm a pleasant place to work, it has solid implications for productivity and corporate health. Because employees are satisfied with their jobs, they pay more attention to the job at hand, and that includes following safety procedures, says Downing. In what is a possible indicator of increased presenteeism, the company has gone 840 days without a lost-time accident (which in itself has a direct impact on absenteeism). And while health insurance premiums haven't dropped, Duratherm has received a 35% credit on its accident insurance.

"I just wish that more companies would consider a wellness program," says Downing. "Business owners struggle to have the numbers to justify it, but I think people have to broaden their horizons a little bit. I know a lot of business owners struggle with (employee) retention, but they focus on that problem and they don't look at the contributing factors."

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