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Mar. 2006
The Wal-Mart Effect: Why Corporate Wellness Could Be a Golden Opportunity for Hospitals
Maryland has passed the Fair Share Healthcare Act requiring companies that have more than 10,000 employees and are governed by Maryland law to spend at least 8 percent of their payroll on worker healthcare or pay the difference to a state medical assistance fund. Thirty other states are trying to follow suit.
Inevitably, the taxpayers will wind up footing the bill, either through higher retail prices, jobs lost to other states or by absorbing the medical costs of the uninsured or underinsured workers. But an important point is being missed. Healthcare leaders should realize that the current debate about employers’ responsibility for healthcare benefits is actually a ripe opportunity for organizations to benefit while fulfilling their mission and extending their brand.
The dilemma is two-fold. First, employers’ healthcare costs are not just about the percentage of the premium that they pick up. That premium is determined by the “experience” the employer has in terms of the actual use of healthcare services by its employees. The more resources consumed, the higher the premium. The less healthy the workforce, the more resources consumed.
Second, hospitals have a mission to keep the community well. Yet they are reimbursed for treating illnesses. To fulfill part of their wellness missions, many hospitals have opened health and wellness centers--large scale fitness facilities with a medical component. While they go after corporate accounts, many times the move is purely for membership recruitment to generate numbers for a break even operation. However, this situation can be a win-win opportunity for hospitals with the forethought to approach businesses more strategically and companies seeking to make their employees healthier.
The benefit for business is not about having employees join a gym; it is about the results achieved and their effect on the bottom line. A University of Michigan Fitness Research Study shows that overweight employees cost a company $200 a year more that the average employee; for employees with high blood pressure the number is $400. The Office of Disease Prevention and Health Promotion finds that 44 percent of companies offering health promotion activities report a reduction in healthcare costs. Fifty percent realize a decline in absenteeism, and 56 percent see an increase in productivity. Mercer Human Resource Consulting cites statistics showing that companies spend up to 15 percent of their payroll on absenteeism. For an employer with 5,000 employees and an average base pay of $40,000, that adds up to $30 million a year.
The message is simple but profound: “Dear CEO, our organization can help your company decrease healthcare spending, reduce absenteeism and increase productivity by bringing a systematic approach to wellness to your workforce.”
Who better to design corporate wellness programs than hospital or healthcare professionals? Still, many large companies that have built on-site fitness facilities or started in-house programs outsource this activity to the fitness industry not healthcare. Healthcare professionals know the health issues and chronic conditions that plague the workforce and know how to control them. You wouldn’t want your auto mechanic fixing the jet engine of the plane you are about to board. Showcase the team that is behind the wellness facility. Design on-site programs for business. Consult with businesses who want to provide in-house convenience for their employees.
Return on investment can only be established by first setting baselines on the wellness of the population. Use tools like risk assessments, examinations and blood analyses and lifestyle questionnaires to establish the baseline of the health of the workforce. Then work with the employer to establish baselines for the business side of a healthy workforce. These include current healthcare expenditures, employee absenteeism and worker productivity. Agree on quantifiable dollar figures associated with the parameters you set.
Track progress over specified intervals. Equate the healthier workforce to an economic benefit for the employer. Then agree on a formula for sharing in the cost savings. You’ll reap more than the initial economic gain from adding members. In fact, you might consider offering membership or class discounts in exchange for a risk-sharing agreement which would allow the hospital to share in the gains.
At the end of the day, hospitals are still reimbursed for making people well, not preventing illness. In time, members of the workforce you serve may need your inpatient or outpatient services. No better marketing can be done than satisfying potential patients now through wellness initiatives. Create solid programs and a rewarding experience. As a result, you will also create opportunities for people to have your facility and services top of mind when they need them.
Anthony Cirillo is president of Fast Forward Strategic Planning and Marketing Consulting LLC in Huntersville, N.C. He may be reached at anthony@4wardfast.com.
Kathy Cirillo is a human resources professional who works with companies to lower their healthcare spending and with hospitals to bring corporate wellness programs to business. She may be reached at kacirillo@bellsouth.net.
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