The incentives are just a small part of the cost of administering the program, which runs $2.3 million annually. “Every year we are scrutinized” by senior leadership, says Barbara Eischen, director of health and benefits services at Fairview. To obtain continued funding, the administrator must provide good data on the return on investment. So far, the results have been encouraging. In 1996, employees averaged 4 health risks each. By 2003, that number had dropped to 3.1, says Eischen. The improvement translates into an average cost saving of $464 per employee—$282 in medical-plan expenses, $75 in reduced absenteeism, and $107 in workers’ compensation costs—or $5.6 million for the entire company.
Most of those savings come from keeping health-premium hikes to a minimum. Over the past 30 months, health-care premiums jumped an average of 10.9 percent at other Minneapolis-area companies, while the premium increased just 5.6 percent at Fairview. The positive results earned Fairview a C. Everett Koop National Health Award, which is given annually to organizations that document the fiscal and physical results of improved corporate wellness. (The 2004 winners were General Motors Corp. and the International UnionUAW.)
Go It Alone
Florida Power & Light Co., a $9 billion power company in Juno Beach, Florida, has enjoyed an even better rate of return on its health-management program. Andrew Scibelli, who runs the program, says the company achieved a 325 percent rate of return over five years because Scibelli, a former adjunct professor of exercise science at Florida Atlantic University, created the program himself. “There’s no question that we save by not having a primary vendor,” he says.
FP&L boasts an 84 percent participation rate despite nominal incentives. “We give participants gym bags, T-shirts, and pen and pencil sets,” says Scibelli. He attributes the participation largely to a lead-by-example company culture in which senior executives can be spotted working out at the gym or standing in line at health screenings. CEO Lewis Hay and CFO Moray Dewhurst are visible participants in the program. “Employees feel comfortable devoting part of their workday to exercise when [senior managers] are regularly seen jogging or lifting weights,” says Scibelli.
FP&L does rely on vendors—Jupiter Medical Center in Jupiter, Florida, and Whole Health Management in Cleveland—to provide health-management services so that employees feel assured of their privacy. WebMD provides an Internet interface that gives employees options for dieting and behavioral-change programs.
Despite these claims, quantifying the savings from a wellness program can be difficult. If their programs don’t show a positive return, companies rarely own up to it, says Ron Goetzel, vice president of Medstat, a health-care information and research firm in Ann Arbor, Michigan. And most reported that results are anecdotal rather than based on scientific studies. “Today there still is no standardized method that’s accepted for measuring the ROI across the health continuum,” says Sue Willette of Mercer Human Resource Consulting.
Another problem is that “employees represent only 50 percent of your health-care costs,” observes Dee Eddington, director of the Health Management Resource Center at the University of Michigan. “Spouses and dependents are covered by plans, too,” although they don’t participate in the health-management programs, Eddington says.