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As the cost to insure employees continues to rise, hospital executives may dream of an entire staff of triathletes who eat lunches of vegetables and lean meat every day and rarely visit the doctor. But the reality is that hospitals employ a lot of stressed-out caregivers who work long, unpredictable shifts and whose intense focus on others makes them lousy at caring for themselves.

Workplace wellness programs urging healthy lifestyles have been in place for years, and hospitals have struggled with making these programs pay off and with helping their employees stick with choices that stave off chronic illness.

But now, with the advent of more sophisticated ways to crunch data, more hospitals are seeing impressive returns on investment from wellness programs, as they find new and more relevant ways to reach out to their workers to help them live healthier, less stressful lives.

McLeod Health in Florence, S.C., for instance, launched its redesigned wellness initiative with an unlikely choice: a 13-week personal finance program. It's been a hit—500 employees participated, racking up $1.5 million in improvements in their financial lives. "We have countless anecdotal testimonials from employees how it's helped them get their hands around finances and that McLeod cares about them," says Tim Hess, associate vice president of human resources.

But what does personal finance have to do with wellness?

"Financial stress and distress take away from people's ability to focus on their work," Hess explains. "We have absenteeism/presenteeism issues. Research shows that they're not giving to their job what they could."

The organization's wellness program is continuing with more traditional biometric assessments, health questionnaires and incentives to participate. But starting out by giving employees some solid stress reduction and personal life improvement on the company's dime generated some serious good will, he says.

Meanwhile, Sentara Health System, Norfolk, Va., says it's saved $3.4 million in health care costs over three years with 80 percent of its 11,200 benefit-eligible employees participating. The program, which worked with Sentara's Optima Health insurance plan, saved $6 for every dollar spent. Employees filled out health assessments and those with low-risk factors got an immediate $500 per year discount on their health premiums; those with two or more risk factors could earn the incentive by working with a health coach.

The potential for savings like that has most hospitals joining the wellness bandwagon. According to a survey released last month by the American Hospital Association, 86 percent of hospitals have an employee health and wellness program.

The survey was commissioned as part of the AHA's Long-Range Policy Committee's choice of wellness as its issue for the year, explains Maulik Joshi, AHA senior vice president of research and president of the Health Research & Educational Trust. The goal meshed with AHA's work on its Health for Life campaign in health reform and also connects with federal Healthy People 2020 goals released in December and in provisions of the reform law. Closer to home, Joshi noted, "Many hospitals' missions are focused on the health of their communities, and they start with their own employees."

John Bluford, chairman of the AHA board of trustees and former chair of the Long-Range Policy Committee, notes that improving employee health is an essential goal for the association. "This is a call to action," Bluford says of the survey and its recommendations. "All our hospitals have a legitimate reason to participate and improve the health of their employees. You get a more productive workforce, less absenteeism. Hospitals need to read and understand the information and take action."

Bluford happens to be a big proponent of workplace wellness in his own hospital system, Truman Medical Centers in Kansas City, Mo., where he is CEO. He recently sent a memo to employees noting the $23 million per year the organization spends on medical care for employees and dependents, and challenged the workforce to reduce that by 20 percent. To assist employees, 70 percent of whom are considered overweight, Truman offers health-risk assessments and biometric screening with a medical plan premium discount for participants; free wellness coaching; special educational programs for employees with chronic illnesses; development of on-site fitness opportunities; and a paid time-off exchange to pay for health club memberships and other wellness activities.

"With some reasonable intervention on health and wellness, we expect to reduce [the amount spent on health care] by 20 percent in a short time frame," Bluford predicts. "Everybody needs to be involved. You have to make sure you get those people who are less motivated to participate."

Community Role Models

For hospital trustees, wellness initiatives connect with a number of strategic goals, Bluford notes. "It fits into two organizational strategies—chronic disease management and community health and wellness," he says. Truman, with a large constituency of low-income urban dwellers with poor access to fresh fruit and vegetables, is taking that commitment outside hospital walls by setting up a farmer's market in spring and summer that draws people from the neighborhood. The organization also is working on a plan to support the establishment of a grocery store in a neighborhood that lacks one.

Expanding that community health focus to employees—or starting there—is a simple connection for hospital boards to make. "We need to lead the community as health care organizations and, in fact, many of our employees represent the community," Bluford says.

Neil Douthat, a trustee on Truman's board and past chairman of its charitable foundation, says hospitals have an obligation to model healthful behaviors for patients and the community. "We need to set an example," he says. "Our own employees need to be living the life before they can counsel others to do it."

According to the AHA survey, the top motivator for adopting workplace wellness is reducing health care costs. Next are improving the health of employees and reducing absenteeism/presenteeism; improving employee morale and productivity; and providing an example to the community.

An organization's work on creating its own workplace wellness programs also could be translated into a new service line for Truman to offer to other organizations, Douthat says.

The board's role has been to support the wellness program as an investment in the organization's workforce as well as its role in the community, he says. Trustees get frequent reports on the status of the programs but don't get involved in the details.

Bill Butler, a board member for both Sentara and its health plan Optima, said his board supports wellness as a commonsense way to control health care costs and fulfill its community health mission. "In many respects, wellness touches nearly every strategic goal that our organization has," he says.

Both board members noted that hospital administrators must be personal role models as well, and that even extends to trustees. "We make those choices, we have healthy meals at our meetings," Butler says. "Most board members take the stairs."

Carrots Better Than Sticks

The survey shows a lot of participation in wellness, but that takes a different form at each hospital. The most common are flu shots (97 percent) and mental health services (81 percent); least typical are 24-hour nursing help lines (23 percent) and personal health coaching (37 percent).

Positive incentives are much more common than negative ones (60 percent versus 6 percent, while 37 percent of hospitals use none).

Incentives might include a discount on health premiums (which can be limited by federal law, though that limit is going up and could increase further), a cash bonus or credit toward a gym membership. About half of hospitals in the survey (47 percent) offer a discount between 5 and 20 percent of an employee's monthly premium for participation. About a third of hospitals surveyed offer cash incentives of between $100 and $300 per year, and another 41 percent award $100 or less.

Incentives usually are linked to specific types of participation such as completing a health-risk assessment, weight-management program, biometric screen or smoking-cessation program.

Hess says McLeod has maintained a positive approach to the program, focusing on incentives to participate (the carrot approach) rather than penalties for choosing risky health behaviors, such as smoking (the stick approach). The stick approach doesn't fit our culture, Hess says. "We want to do this because it's the right thing to do."

Penalties tend to be very unpopular, says Jenny Jones, director of human resources for Sentara. "We proposed charging tobacco users a premium on their health insurance. We took that idea to our CEO and he said, 'What do you think our employees will think about that?' So we did an online survey and within 36 hours we had 2,000 responses. Five hundred of them were nurses and while just 12 percent of them said they use tobacco, 40 percent of them opposed a penalty. So we went back to the drawing board and designed something that was more of a carrot approach than the stick."

Even when attempting to encourage behavior rather than enforce it, employers have to be careful, Hess says. If an employer offers a credit for healthy behavior, then those not receiving the credit can perceive it as a penalty because they pay more. Nevertheless, McLeod employees can get a tobacco-free incentive of $10 per paycheck against health premiums.

Health First, a 6,000-employee health system based in Rockledge, Fla., tried wellness incentives that offered a financial reward to anyone who completed a baseline health assessment and then showed improvement. Just 200 people participated. "It was not serving our population," says Bob Walters, corporate director for human resources operations.

So the organization switched to a more open-ended design, giving all employees free access to the system's fitness centers, which are located at or near each of the hospitals. It also sponsors contests for weight loss. Walters says his organization found the best results in a wellness program that gives employees as much choice as possible rather than prescribing what they need to do. "We really want something that everybody can participate in," he says. "The fitness membership seems to be working very well. The big question is, though, do they use the membership."

McLeod also has designed a program that is broad-based and intended to give all employees the opportunity to improve their health, not just the small percentage of people with chronic illnesses that eat up a lot of costs. "A broad-based wellness program where you try to touch everybody will give you a bigger impact than doing some of those focused, targeted initiatives," Hess says.

The health system eventually may use a more targeted approach with employees. But McLeod leaders want to be careful about maintaining trust and not seeming too intrusive.

"We've had a good bit of debate about that," he says. "We want to make sure our employees feel safe participating in the program." In fact, the system chose to work with an outside consulting firm so workers didn't worry that their medical information was being handled by the company's human resources department. "We have agreements with our claims provider to work within HIPAA rules. We only see the aggregate data, we don't want to get into the individual data."

Data Needed for ROI

All this talk of improving employee health is fine, but there's hardly a hospital or health system in the country that doesn't need to justify every program with its impact on the bottom line. And there's plenty of skepticism about wellness programs, given that their first wave in the 1990s was not well-documented with good data on return on investment. "It was a fad back in the 1990s," Hess notes. In fact, just 20 percent of health care employers offering wellness programs believe they reduce health care costs, according to a 2010 survey by the Kaiser Family Foundation and HRET.

Hess confirms that the renewed energy going into workplace wellness these days is motivated by "getting our hands around medical claims," but also benefits from improved data analysis methods. His organization had a well-designed, robust employee wellness program in the 1990s, but it withered when the ROI couldn't be demonstrated. So now McLeod leaders are diligent about data, tracking metrics from both health assessments and aggregated claims data to determine exactly what kind of bang they are getting from their bucks.

"What we didn't have the first time around was the ability to take participation data" and show people where they are now and engage them to improve, Hess observes. "From that we can better manage the results and see if we are really achieving better health claims and productivity. We didn't have a good way to do that in the past."

Sentara also has placed a high premium on data, even as it approached wellness from a different direction. For instance, Sentara keeps its program mostly internal rather than hiring a vendor, largely because of the tight connection among the hospitals, health plan and physicians in the system. "We've been great partners in designing this and setting goals with [the health plan]," says HR director Jones. "A lot of health care organizations have their insurance plans with another national carrier and can't get the kind of health information or metrics we're able to get very quickly," she says.

Measuring ROI is challenging, and the AHA survey indicates just a third of hospitals have attempted it. Seven percent have succeeded, and those tend to be urban hospitals, those with more than 200 beds or part of a health system. The good news: 82 percent of hospitals that measure ROI report their ratio was equal to or beat expectations.

There also is good news about ROI coming from business researchers looking at wellness programs as a whole. A report in Harvard Business Review that reviewed wellness programs at 10 large employers, including MD Anderson Cancer Center in Houston, concluded that wellness programs can be an effective way for employers to "chip away at their enormous health care costs, which are only rising with an aging workforce." MD Anderson, for instance, reported that its workers compensation and injury care unit within its employee health and well-being department reduced lost work days by 80 percent over six years; cost savings amounted to $1.5 million and workers compensation insurance premiums declined by half.

The AHA committee, in its survey and report on employee wellness, offers some observations and advice about measuring ROI. First, measurement likely will take several years, so make a long-term commitment to the effort. Hospitals also should take care to choose the most effective metrics. These might include savings in health care costs (medical claims) and savings from improved productivity, such as absenteeism and presenteeism. Involve employees by reporting on how the organization has benefited from their improved health. Also, consider boosting the validity of data by tracking employees with similar characteristics who participated with those who didn't.

For the new wave of wellness programs to survive, they'll need to prove their worth. But if it works, workplace wellness can be particularly effective in the health care setting because of the unique nature of the business. "If we're doing this right we show that we care about them," says Hess. "That helps employees care about McLeod and the work they do for our patients. It creates a win-win for the organization and the employees."

Most Common Wellness Programs Offered by Hospitals and Systems

The more comprehensive the program, the better.

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Most Commonly Used Measures to Assess Wellness-Program Impact

There is an opportunity for more hospitals to measure outcomes linked to participation.

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Source: "A Call to Action: Creating a Culture of Health," AHA, January 2011

Jan Greene is a freelance writer in Alameda, Calif.


Goal/Action Steps

Examples of How Hospitals Can Meet This Goal

Serve as a role model of health for the community.

As part of fulfilling their mission, hospitals are beacons of trust in the community. Hospitals must create robust health and wellness programs as examples to the communities they serve.

Hospitals can work with local employers to build an integrated, regional approach to health and wellness that shares both risks and rewards.

Create a culture of healthy living.

Improving employee health is more than implementing individual programs. Hospitals need to strive for a culture of healthy living for all employees, which starts at the top with the CEO and the board of trustees. Wellness should be a strategic priority for the hospital.

Health and wellness indicators can be included in dashboards, and executive compensation can be linked to meeting wellness program objectives. Hospitals can eliminate environmental inconsistencies (e.g., unhealthy foods at meetings).

Provide a variety of program offerings.

While health and wellness is more than a set of activities, it is important for hospitals to offer a variety of activities to promote health within their organizations.

Hospital wellness programs can include a health-risk assessment (HRA), a biometric screening and at least one intensive coaching activity, based on the risks and health status of its employees.

Provide positive and negative incentives.

Positive and negative incentives are effective in improving health and wellness program participation levels. Hospitals can use incentives to increase participation and to improve outcomes.

Hospitals can expand the use of incentives to improve participation levels. As participation levels increase, hospitals can begin to shift toward more outcomes-based incentives.

Track participation and outcomes.

To track the success of their health and wellness programs, hospitals first must measure and increase participation and then build systems to track outcomes.

Hospitals can track participation and outcome targets (e.g., overall participants, number completing an HRA, number enrolled in a smoking-cessation program, and number with cholesterol improvement).

Measure for ROI.

A strong financial case accompanies the strategic case of striving for robust health and wellness programs. To achieve ROI, hospitals first must commit to effectively measuring ROI over several years.

Hospitals can ensure a multiyear commitment to evaluation and improvement. Hospitals can use both health care cost savings and savings due to improvements in productivity (e.g., presenteeism and absenteeism).

Focus on sustainability.

For program effectiveness, hospitals must motivate employees over time, effectively communicate, and constantly reinforce wellness as a leadership priority.

Hospital boards, CEOs and full executive teams can communicate wellness as a long-term priority for the hospital and ensure that wellness programs have dedicated resources.