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The staggering cost of employee health care has Corporate America increasingly turning to “wellness” programs as a panacea, ranging from company gyms to more intrusive efforts like smoking bans and weight loss programs.A recent Towers Watson survey of 588 companies with a total of 9.2 million full-time workers found 23 per cent currently provide on-site health services and an additional 12 per cent are planning to offer such services next year. Of those that already provide such programs, over the past two years, 11 per cent expanded their offerings and by next year an additional 11 per cent expect to do so, too. At the same time, 58 per cent of employers reported offering some type of cash or other incentives to encourage participation in healthy lifestyle activities, up from 52 per cent last year.
But while there’s no doubt that wellness programs are improving the health of employees who participate, are they really reducing ever-rising health-care costs and their impact on corporate bottom lines?
Health-care business costs have been rising 9 to 12 per cent annually since 2008, for an average of $10,000 per employee per year, and the average company now sinks about half its after-tax profits into health-care expenses.
Chesapeake Energy, the country’s second-largest producer of natural gas, has taken the aggressive approach, providing its more than 10,000 employees with a comprehensive set of preventive health strategies. Three years ago, it established an on-site health centre at its Oklahoma City headquarters, in partnership with St. Anthony’s Hospital. Open five days a week, the clinic offers employees and dependents primary care, urgent care, and chronic disease management–for a $5 co-pay. It also provides dental and dermatological care, and there is a registered dietitian.
Chesapeake launched its Living Well program in 2006, offering bonuses up to $1,500 to encourage workers to stay healthy. To participate, workers must complete health screenings to determine risk levels for certain diseases and medical conditions, exercise at least three days a week, and work toward losing or maintaining a healthy weight to earn the reward. The company built a 72,000 sq.-foot state-of-the-art gym that offers 70 different weekly exercise classes–from Pilates to rock climbing to meditation to bridal boot camps (intensive workouts to get brides in shape for their weddings). On-site restaurants serve up healthy cooking classes, and there is a garden with 65 plots where employees grow vegetables. Toni Parks Payne, the fitness centre’s director, says 85 per cent of its on-site employees use the facility. For employees working off-site, Chesapeake subsidizes gym memberships.
Bryan Ott, a 39-year-old executive accountant credits Chesapeake’s program with helping him shed 65 pounds, learn healthy eating habits, and exercise regularly. He now participates in 10k runs and half marathons. Enrolled in the program for the past three years, he says it was the initial medical screening that alerted him to potential health complications. “I definitely had a trigger moment in mind when I realised I needed to do something.”
Recently, Chesapeake rolled out a mental health program aimed at reducing the stigma surrounding psychiatric issues and steering employees to needed assistance. In September the company launched Chesapeake Care, a free program offering counseling to employees and their families.
Company officials say that for the past three years, Chesapeake’s health-care costs have risen just four per cent annually, and they estimate that its cost per employee is seven per cent less than the national average, including “most of” the cost of running the clinic. But officials decline to disclose how much the company has spent on the program or how much it is saving, saying that they are waiting until the clinic has been operating for five years before undertaking a complete assessment.
John Hansen, a consultant with HealthPartners’ Well @ Work program, which offers health-care options for companies, says that depending on the scope and size of the programs, an on-site clinic can cost anywhere from $200,000 to $1 million to operate. During its first year, 889 Chesapeake employees participated in Living Well. Last year 6,916 did. Of those, 73 per cent received partial bonuses and 21 per cent earned the full $1,500 benefit, at a cost to the company of more than $2 million. The gym has proved so popular that the company has expanded the site four times.
Curtis Smith, executive vice president of Medcor, a McHenry, Ill., company that runs on-site medical clinics in workplaces across the country, says Medcor clients with clinics and wellness programs have seen their annual health outlays jump just two to three per cent, far less than the national average. “Wellness services, screenings and programs can drive better behaviour and help prevent problems that turn into medical costs, earlier rather than later when it becomes costlier to treat,” he says.
And Chesapeake’s complement of benefits does not appear to have adversely affected its bottom line. Last year, its earnings before interest, taxes, and depreciation rose 11 per cent to $4.3 billion. While the country’s unemployment has hovered over 9 per cent nationally, last year the company reported a 10 per cent increase in full-time jobs.
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