Feature Article - November/December 2009

All Is Well

Incentives Help Companies Boost Employee Health & the Bottom Line

By Rick Dandes


W
ith health care costs continuing to spiral out of control, and given the economic challenges facing most organizations and companies today, improving employee health and wellness has become an effort most simply can't afford to ignore.

First, a few hard, cold facts: Healthcare costs are expected to be more than $4 trillion by 2015. Employee health insurance premiums increased by 5 percent in 2008, twice the rate of inflation, and 119 percent since 1999. With healthcare premiums at a point where they far outpace wages, employers are now shouldering much of the burden.

Healthcare costs have eroded profitability to such an extent that some employers are now considering dropping healthcare coverage altogether, over the next three to five years, noted Mindy McGrath, division vice president, healthcare sector, Maritz Inc., a Fenton, Mo.-based company that helps others design and execute incentive and performance programs.

There is a growing concern about burned-out, stressed-out workforces. "Employers lose an estimated $125 billion annually to absenteeism and up to five times more due to 'presenteeism,' when employees come to work in spite of illness and perform poorly," McGrath said.

As a result of these pressures on employers and employees, McGrath explained, health and productivity (wellness) programs have developed as a promising solution to stem the erosion of corporate profitability from escalating healthcare costs. In some cases, it also is an issue of financial viability.

"Not much has worked in the past in terms of containing healthcare costs," McGrath said, "but wellness and the notion of prevention makes logical sense in terms of a smart risk mitigation strategy because it focuses employees on prevention activities, which stave off catastrophic illnesses and their associated costs."

Experts now believe that 60 percent to 80 percent of healthcare costs are from preventable chronic diseases. Smoking, high blood pressure and being overweight are the leading preventable risk factors for premature mortality in the United States, according to a recent study led by researchers at the Harvard School of Public Health.