Healthy Living, Healthy Incentives
By Yvonne Ventresca
September 12, 2007
Ken felt out of shape but wasn't sure what to do about it. Then one day he noticed a flyer for his company's healthy rewards program. They were holding a kickoff walk next week. By joining the walk, he could start accumulating points for rewards. While staring at his microwave pizza dinner, he scanned the list of prizes he could earn with his points and decided to sign up. Six months later, he had a trimmer physique, a reduced LDL cholesterol level and was well on his way to earning enough points for the new bicycle he wanted.
While Ken is a fictional character, the number of employees joining company-sponsored health initiatives is very real. That's because thanks to some innovative incentive programs, healthy living isn't just a New Year's resolution anymore. Companies are motivating their employees to make healthy choices all year long. "There is no question that employers are turning to wellness programs as a viable strategy for health management and health cost savings," says Roger Reed, executive vice president of Gordian Health Solutions Inc., a health management company based in Nashville, Tenn.
A recent survey of about 450 major U.S. employers—conducted by Hewitt Associates, a global human resources consulting firm—confirms that incentive-based health programs are on the rise. Released in April, the results indicate that 48 percent of surveyed companies either already offer incentives, or plan to offer them to employees who take part in company-sponsored health programs. This represents a 10 percent increase from 2006.
"Historically, wellness programs were sort of encouragement communications programs," says Alan Townsend, associate partner at M2E Inc., an incentive marketing agency headquartered in Atlanta, Ga. "They didn't consist of a whole lot more than information that was sent out about what you should be doing, and encouragement for you to do that. But actually getting you to do it was never part of the equation. That's where the incentives come in."
Incentives are a key piece of the puzzle because they "encourage a positive feeling and measured results over a period of time," says Bob Switalla, vice president of advertising at Bennett Brothers Inc., a Chicago company whose business is implementing and fulfilling reward programs. Incentives "increase involvement and buy-in to the program with the anticipation of being rewarded."
Townsend agrees that incentives for these types of programs can be especially useful. "Improving your health and living longer is very deferred gratification. It's long-term and way off... You have to have that more immediate reinforcement," he says. An Award-Winnning Program
Pepsi Bottling Group (PBG), the world's largest Pepsi bottler, has been offering its Healthy Living Program since 2003. Headquartered in Somers, N.Y., PBG employs 70,400 people worldwide. It recently received a "Best Employers for Healthy Lifestyles" award from the Washington, D.C.–based National Business Group on Health for its efforts. "Improving health and wellness is a business imperative for us," says David Kasiarz, vice president of compensation and benefits at PBG. "Our goal is to create a culture of health and wellness. All of our programs reinforce that objective."
One key step to implementing PBG's Healthy Living Program was the collection of data from a variety of sources, such as the company's health claims information, and the use of an employee-completed questionnaire in January 2006 called a health risk appraisal (also known in the industry as an HRA or health risk assessment). PBG offered employees and their spouses a $75 gift card each for filling out the appraisal. The participation rate for this part of the program was in the 65 to 70
percent range for the past two years.
The data collected was then used to develop programs that would specifically benefit and be of interest to PBG employees. These programs were designed to educate employees about health-related topics and help them begin treatment (if applicable). Completion of a specific program, such as a diabetes-related initiative, results in a $100 reward. "This is a strategic investment for us," explains Kasiarz. "If we encourage employees to participate in programs . . . those incentives are more than offset by reduced claims in the future, and it results in a higher quality of life and a healthier employee."
To measure the success of the Healthy Living Program, PBG hired outside organizations to apply several metrics to their employees' health. Are employees healthier now? Yes, says Kasiarz. And PBG continues to expand the program. Last year, free flu shots were made available for the first time to employees worldwide. There are plans to multiply onsite medical clinics from 18 to 30 at PBG's larger locations; and onsite and traveling health screenings will also be increased.
Pepsi Bottling Group's strategy is to "make fewer big and impactful changes" rather than a lot of smaller ones. At PBG, "We think that improving [employee] health is the biggest bet an organization can make, and we challenge other companies and organizations to pursue that goal," Kasiarz says. Rising to the Challenge
Two pharmaceutical companies that are up for the challenge are AstraZeneca Pharmaceuticals and Quintiles Transnational Corp., both with programs based on the CEO Cancer Gold Standard. This standard requires employers to go beyond the scope of typical wellness efforts in a commitment to their employees' health. AstraZeneca also embraced the Start! Fit-Friendly Companies Program in January, an initiative sponsored by the American Heart Association that promotes physical activity of employees through walking.
Similar to PBG, AstraZeneca employees were asked to complete an annual health risk assessment. A different method, however, was used to motivate participation. Not completing the assessment resulted in a $50-per-month increase in benefit costs, resulting in a participation rate of about 97 percent.
AstraZeneca took this approach because the company pays such a large share of health care premiums for benefits. "The amount we contribute towards our employee health care costs is significantly higher than the general market," says Penny Stoker, vice president of human resources in Wilmington, Del. As part of the benefits they offer, for example, AstraZeneca employees have a zero co-pay for preventative care visits and a reduced co-pay for maintenance drugs, such as cholesterol or blood pressure medicines.
At larger locations such as their U.S. headquarters in Wilmington, the company also provides on-site health centers, screenings and indoor and outdoor tracks, as well as fitness centers. An on-site mammography machine has been in use since 1989, performing more than 6,500 employee mammograms and detecting more than 30 malignancies. The cafeteria offers healthy meals at a subsidized rate, so employees save money when they choose a salad over a hamburger and fries.
In January 2007, AstraZeneca kicked off its Get HIP! health incentive plan, with 4,000 employees enrolled to date. Employees earn points for healthy activities, such as using fitness centers and attending health screenings. Then they can spend their points on sneakers and fitness attire, and even work toward earning a treadmill.
Although it is too early to know the results of the incentive program, Stoker says, "Our current health costs within AstraZeneca U.S. are below the national trend. For us, this is significant because we have a strong top-tier benefits plan, so to be under trend is a very good indication of the effects of the kinds of programs we have."
Quintiles Transnational Corp., a global pharmaceutical services company headquartered in Research Triangle Park, N.C., implemented its "Healthy U Healthy Q" program for approximately 5,000 North American employees in 2006. Anne Skye, the Employee Wellness Program Manager for Quintiles, says she anticipates a 1-2X return-on-investment (ROI) from savings on health care costs and lost productivity per employee three to five years out. Skye feels the keys to success for Quintiles' program have been that it "has extraordinary support from our CEO,was designed with our unique employee demographics in mind, and has an evaluation/metric component that keeps us constantly striving to do better."
On-site program components include health screening events in several U.S. offices, with about a 40 percent participation rate, and on-site fitness centers at larger offices. In May, Quintiles used incentives to motivate employees to complete a month-long walking program. Approximately 500 employees participated, with about 200 receiving prizes, such as gift certificates, relaxation CDs, or workout bags. Investment in People
Pitney Bowes Inc., a global provider of mailstream solutions based in Stamford, Conn., rolled out its employee Health Care University (HCU) on a national level in 1999. Employees earn 75 HCU dollars for completing a health assessment, and can earn additional money (up to 150 HCU dollars) for completing progress reports. Like PBG, Pitney Bowes offers flu vaccinations as well as screening and educational programs.
According to Dr. J. Brent Pawlecki, corporate medical director, Pitney Bowes' health care costs have risen at a decreased rate (6 percent) compared to competitors' (10 percent). "The first step for a successful program," says Pawlecki, "is for corporate leaders to recognize that the programs are an investment in the company, and that it is important to invest in a healthy workforce. Just as companies invest in preventive maintenance for their assets of equipment and facilities, they must invest in their most important asset, their people."
The package delivery company UPS employs over 425,000 employees. Part of its investment in employees includes free health coaches and a free smoking cessation program. Close to 3,000 employees have enrolled to quit smoking since the program was launched in February.
By making the investment in people, employers can expect to gain other benefits besides lowered health costs. Increased loyalty to the company is expected, favorable press (such as inclusion on "best company to work for" lists) boosts morale, and healthier employees perform better and are more productive. "Some of the greatest ROI is in improved energy, morale, retention and recruitment," says Brad Cooper, founder and Chief Wellness Officer of US Corporate Wellness Inc. in Littleton, Colo. When employees are taking better care of themselves, he estimates that performance increases by 20 to 30 percent. "Multiply that by 1,000 (or 10,000) employees, and wow!" Cooper says. Pitfalls and Opportunities
Several pitfalls can dilute a healthy living program's effectiveness. Aaron Day, CEO of Tangerine Wellness, a Boston-based company that specializes in weight management incentive programs, points out that incentives should be aligned with health results, not just participation in a program. Also, he warns against programs that "target their incentives toward subsets of the population [and] leave other employees feeling alienated. Incentives must work for everyone, and reward them for improving their health as well as for maintaining already healthy states over the long term," he says.
Accurate ROI calculations are critical for gauging program results. Day says Tangerine is experiencing 50-85 percent sustained participation levels and up to 5X return-on-investment in the first year. "The [ROI] measurement should look at the reduction in medical claims and values around reduced absenteeism over time, and then compare the calculated savings with actual program costs, including the incentives used to drive the results," Day explains.
Another possible pitfall concerns the private nature of employee health infor-mation. One mistake companies can make is "not emphasizing the confidentiality of personal health information," says Jack Bastable, National Practice Leader for CBIZ Benefits and Insurance Services, headquartered in Cleveland, Ohio.
A recent business alliance between Chicago's Hinda Incentives and Atlanta's Healthbux Investment Systems alleviates that problem for their clients. While Healthbux, a wellness program design company, captures data about healthy employee behavior in a secure, HIPAA-compliant platform, Hinda supplies the incentive selection and delivery to reward that behavior.
Having a wide array of incentive rewards from electronics to home goods, helps eliminate what Alison Earles, founder and CEO of Healthbux, calls a "classic mistake of not paying enough attention to what the people really want [with regard to incentive reward prizes]." She cites the example of rewarding employees who exercise at a fitness center with a free month of membership. "These kinds of incentives have very little pull for someone who doesn't want to go to the gym in the first place," she says. It's important that employees are excited about the rewards if they are expected to work hard at adopting healthy behaviors.
As with other incentive programs, effective incentives vary by company. "We have seen very high participation rates with incentives of as little as $2 per employee per month and terrible participation rates at $20 per month," says Reed of Gordian Health Solutions.
As health care costs rise, motivating healthy employee behavior becomes increasingly important, and incentives can make a difference. "Health care is certainly on a lot of people's agendas across America... It's a growing concern," says Jennifer Rosenzweig, senior director of employee engagement at Minneapolis-based Carlson Marketing, "There's a lot of untapped opportunity to help resolve the problems, especially if business and industry can partner with the medical community and the government, in some instances, to start to rethink what has been done historically and to try to redefine what it means to be healthy in this country." Incentive planners have a role to play in this redefinition as well.Sidebar: Creating Successful Programs
In many respects, creating a health-related incentive program is similar to devising other types of incentive programs. "You establish a baseline—where is the individual now in terms of health and activity? You set goals, and you measure their performance and achievement toward those goals," says Alan Townsend, associate partner at M2E Inc., an incentive marketing agency in Atlanta, Ga. "Then you reinforce both their behavior and accomplishment."
A behavior-based end goal is critical, and so is choosing appealing rewards. Carlson Marketing has been providing incentives and participating in the design of healthy behavior programs for about a year. "We like to offer incentives that are health-related, so that the rewards themselves are representative of the larger vision of healthy living," says Jennifer Rosenzweig, senior director of employee engagement for Minneapolis-based Carlson. "It can be anything from a digital scale, to a spa gift certificate, to discounts on other services or contributions to your health savings account." More challenging goals are paired with more significant rewards. For example, the completion of a smoking cessation program might result in a travel or spa gift certificate.
Some important differences, however, do separate health incentive programs from other motivational initiatives. "It is important that incentives are structured to reward for maintaining improved health for the long term," states Aaron Day, CEO of Boston-based Tangerine Wellness, which runs weight-management incentive programs. "When incentive programs offer an upfront bang, but no follow-through for an extended period of time, people inevitably drop out of the program."
The long-term nature of these programs adds a layer of complexity to their design. Often the program has several stages, in which "you achieve your definition of success over three years or five years or more," says Rosenzweig.
Companies are catching on to the long-term dimension necessary for success. According to a recent Hewitt Associates study, 63 percent of the 450 U.S. companies surveyed plan to step up their efforts to implement multiyear health and productivity improvement programs.
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