Fiscal and physical health Featured

8:00pm EDT September 25, 2007

As the cost of providing health care coverage continues to rise, many businesses have had to scale back the benefits that they offer. One way that companies are coping with escalating health care costs is by utilizing wellness plans.

“A wellness plan is a campaign designed to engage employees in taking preventive action to improve their health status,” explains Phil Gordon, area vice president of Arthur J. Gallagher & Co.

Smart Business spoke with Gordon about wellness plans and the benefits that they can provide.

What types of wellness plans are available?

The simplest types of wellness plans are basic communications. This may include a regular newsletter or flyer on eating better or exercising regularly. Along with information, a simple wellness plan may also include negotiated discounts at health clubs. An annual health fair where various stations are set up to educate employees about taking better care of their health is also a cornerstone to a simple wellness plan. This type of wellness plan can be organized at a very low cost and many of the elements are already integrated in the standard offering of most medical carriers. The employer's burden is communicating with the employees and utilizing the resources already available to them.

The most aggressive wellness plans may actually mandate participation and follow-up as a condition of participation in the health plan. Such programs identify employees with elevated risk and require that they take certain action, such as a comprehensive physical with a physician. Some large employers have set up health and wellness centers staffed by nurses and physicians to implement the process.

Of what specific components do wellness plans consist?

Typically, wellness plans will include health risk assessments (HRAs), which are detailed questionnaires designed to establish a baseline risk level for each employee. The questions cover areas such as height, weight, alcohol consumption, smoking, health of parents, cholesterol levels, blood pressure levels, etc. The results of the HRA are used to target specific education and coaching to employees with elevated risk. Sometimes a ‘health coach’ is assigned to the employee to help answer questions and hold the employee accountable to changes in his or her lifestyle.

Typically, financial incentives (usually around $50) are in place to promote utilization of the HRA and the follow-up programs. Other programs may include use of pedometers to measure baseline physical activity and set goals for improvement.

What types of savings and/or return on investment can a company expect by implementing a wellness plan?

The general objective of a wellness plan is to increase the productivity of the organization and lower health care costs. If these goals are met to a greater extent than the cost of implementing the program, then it will be beneficial to the bottom line of the employer. Most wellness programs have a projected ROI associated with them. It is important to note that not all employers will be able to generate a positive ROI, so arguably not all employers should look to implement a wellness program. If staff turnover is high and the average age is young, the odds of achieving ROI are greatly reduced. Employers who have stable, aging work forces, however, stand a much greater chance of achieving positive ROI.

How should a company go about implementing a wellness plan?

Companies should speak to an employee benefit consultant familiar with wellness plans before taking action. The consultant will be able to assess the potential ROI by looking at the size, turnover and demographics of the employer. If available, the benefit consultant can also review utilization statistics to further refine potential savings.

How should the benefits of a wellness plan be communicated to employees?

It will vary widely from organization to organization. A number of factors must be considered, such as the education level of the work force, its geographic distribution and its access to and familiarity with using the Internet. When communicating to employees about wellness, one certainty is that it must be done through multiple channels on multiple occasions in a simple, understandable way. If a company is committed to wellness, the philosophy should show itself throughout the organization’s culture. Managers and supervisors should set a good example by utilizing the programs and promoting them.

Once in place, how should a wellness program be evaluated?

One obvious measurement is simply participation. The more employees who actively participate in a wellness program, the more likely it is to achieve positive results. Other measurements could include comparing year-over-year aggregated results of HRA campaigns, comparing utilization of sick time and medical services. Realistically, it may take years for enough data to be available in order to measure a statistically valid ROI. In the meantime, much of the perceived success will lie in stories such as, ‘Joe found out he had a blockage in his artery and avoided a sure stroke.’ These stories will inevitably arise if the wellness plan is working.

PHIL GORDON is area vice president of Arthur J. Gallagher & Co. Reach him at (818) 539-1343 or