Putting Wellness To Work
William Pomeroy is looking for answers. President and CEO of Syracuse, N.Y.-based CABLExpress Corp., a growing marketer of high-tech computer products to large businesses, Pomeroy is among that first wave of baby boomers just beginning to hit 50 years old. He's a member of the fitness industry's hottest demographic: A lifetime exerciser long since sold on its benefits, who has more leisure time than ever before and the disposable income to take advantage of it.
But he's also a businessperson, and he has what at the moment seems to him to be an intractable problem — he wants to build a corporate fitness center for his 190 employees, but can't find the hard data that would help him justify the necessary expense.
The company recently acquired a 66,000-square foot property near the Syracuse airport that can accommodate growth to about 500 employees, with room on the site for a 34,000-square-foot expansion that would accommodate growth to about 750 people. "We're thinking about putting in some type of fitness center for our employees, many of whom have telemarketing jobs," Pomeroy says. "Unfortunately, we have no idea what that would mean for us. We don't know how disruptive a fitness center could be to our work schedule, and we're having trouble quantifying how beneficial it could be to productivity and to our employees' health. We think that the benefits outweigh the downsides, but we don't know."
By contrast, further west in America's snow belt, General Motors and the Henry Ford Health System (HFHS) opened an $11 million corporate wellness center, FitnessWorks, in downtown Detroit last September. The 75,000-square-foot center accommodates GM employees with all the amenities associated with state-of-the-art health clubs: cardiovascular and strength-training areas, a gymnasium, a jogging track, racquet courts, swimming pools, an aerobics studio and extras such as a batting cage, a juice bar and saunas and steam rooms. But it also includes the Henry Ford LeVine Cardiac Wellness Center, the Henry Ford Occupational Health Center and the Henry Ford Center for Athletic Medicine — three facilities operated by HFHS, a $2 billion health-care organization that serves 20,000 employees in southern Michigan and northern Ohio. Both groups have high hopes for the center — HFHS, because it has a major financial stake in the health of its 500,000 HMO members, and GM, because it has made lopping 20 percent off its $5 billion annual health-care bill a priority.
Welcome to corporate wellness, 1997. Two decades after the worksite wellness movement began in earnest, professionals within the industry are looking to FitnessWorks to confirm what they say they already know — corporate wellness programs and on-site fitness centers have a direct financial benefit on the companies that institute and build them. However, while a growing body of research data and anecdotal evidence supports the concept, there is still a widespread feeling that corporations are so different in terms of philosophy, size, employee demographics and a host of other areas, that the success of a corporate wellness program is far from a given.
"We think that the payback for us is going to come through general employee satisfaction, an increase in productivity and in assistance with recruiting," Pomeroy says, "but our entire approach to this has been very soft. We just don't have the hard numbers we need."
Says Steven Schwartz, president and CEO of the Chicago-based Tennis Corporation of America (TCA), which has been selected to manage FitnessWorks, "I don't know how many corporations institute fitness centers strictly as a cost-reduction method. The actuarial tables are very clear that there's a savings over the long run, but most healthcare administrators look year to year, so it's hard to justify on paper. If your chief financial officer asked you, 'How much did we save this year?' you'd have to say that it's something you're going to save on over a 20year period. It takes a leap of faith. What it really takes is an enlightened CEO to say, 'My payback may be intangible, but I'm going to go for it.' "
To be sure, some tangible results have been cited in several studies of corporate wellness programs. One such study involved Steelcase Inc. in Grand Rapids, Mich., where average annual medical claims were found to have fallen from $1,155 to $537 among employees who were identified through health-risk appraisals as high risk in 1985, but who had shifted to a low-risk profile by 1988. The study, performed by the University of Michigan's Health Management Research Center and summarized in a January 1994 press release, covered the years 1985-87 and 1988-90, and was to have been updated for the period 1991-93. Several events have conspired to keep it encased in figurative glacial ice, however — the results are still being circulated among refereed journals prior to (one presumes) eventual publication and widespread acceptance by the industry, the HMRC's researchers are busy developing other areas of corporate wellness research, and other studies have subsequently duplicated the Steelcase findings, leading the HMRC to place its emphasis elsewhere.
"The Steelcase study proved that as risks change, health-care costs change reflecting those risk changes," says the HMRC's Elaine Schnueringer. "Other studies are coming up with the same findings, so it's getting redundant."
A case in point is the HMRC's study of an influenza vaccination program established by the health services department of the Cleveland-based Progressive Corporation, which attributed substantial reductions in medical claims and absenteeism to the program. Schnueringer says the surprise was that the numbers were so consistent, given that Steelcase's employees are overwhelmingly male and are, on average, almost nine years older than the Progressive's overwhelmingly female work force.
The HMRC is continuing to look at available medical data, but as it believes this battle has been won, it is shifting its focus to the various types of wellness programs in an attempt to isolate the most cost-effective ones. Schnueringer says, "We want to find out where money should be spent and what kind of people should be targeted." They hope to be able to do even more than recommend a smoking cessation program, in other words — to actually help companies target older smokers, younger smokers or overweight smokers.
Of course, of all programs that have significant up-front costs, none involve higher costs than on-site fitness programs, which can require extensive capital outlay in fitness equipment, high-performance athletic surfaces, high-cost wet areas (locker rooms, showers, steam rooms and saunas, as well as therapy and lap pools), and infrastructure alterations involving electricity, plumbing and air circulation.
Schnueringer says the available data show that wellness programs don't have to be wide in scope to be effective. "It doesn't have to be a whirlwind program," she says.
But others say even the money spent on large-scale fitness centers can be justified — this in spite of studies that have shown decidedly mixed results. The "Benefit-to-Cost Analysis of a WorkSite Health Promotion Program," published by the American College of Occupational and Environmental Medicine in 1992, concluded that the Taking Care Program in place at The Travelers insurance company had produced a return on investment of $3.40 for every dollar spent on health promotion. The Taking Care Program includes Hartford, Conn.'s Taking Care Center (TCC), a 48,000-square-foot fitness center that currently serves slightly more than 2,500 of the company's 10,000 Hartford-based employees.
Each way the researchers sliced it, there'd been a benefit to the company — but how much was open to interpretation. For example, removing increased productivity from the equation dropped the benefit to $1.40 for every dollar spent, but valuing productivity at its highest estimate taken from the literature (25 percent) shot that figure to $14. The numbers included variables such as a predicted rise in pension costs to the company, since healthier workers would presumably live longer.
Yet, the study concluded that "despite substantial savings in healthcare costs attributable to improving health status, from a strict benefit-to-cost accounting, program costs do not justify expenses." Estimated health-care savings of $17.9 million over the duration of the program paled in comparison to the approximately $57.5 million in program costs.
On the other hand, the same study estimated the company's benefit from increased productivity of TCC members as more than $120 million over that time — just a 4 percent productivity factor, something the study's authors noted "does not appear excessive."
Gary Klencheski, president and founder of Boston-based Fitcorp, which creates health promotion and fitness programs for more than 150 corporate clients, says the difficulty in making sense of such conflicting data is the reason why so many CEOs find other, less tangible reasons to justify their programs.
"People aren't saying that you have to produce bottom-line results," Klencheski says. "They care more that they're passing on a benefit that's good for company morale, productivity, even recruiting — with a good program in place they're suddenly able to attract young, healthy people to their organization. Hardly any try to document healthcare cost reductions."
The TCA's Schwartz says FitnessWorks could face a shortfall of as much as $500,000 per year.
"It loses money, but then all corporate fitness centers lose money," he says. "They don't do it to make money. They do it to lower their health-care costs and improve morale."
But are the health-care savings quantifiable. Yes and no, Schwartz says.
"For some of your at-risk population, the ones most capable of running up huge health-care bills, you have a chance to influence them, and that's where you can probably save money on an annual basis," he says. "In other words, if one of your employees has a heart attack, you can set him up in the fitness center to try to avert a second heart attack. Of course, the problem with health-insurance savings is that if he doesn't have another heart attack, you don't know if he would have had one otherwise. You're saving money that you might not have to spend. But it seems to me that over time you will see your claims numbers go down, and there are studies that prove that it works."
Assuming there are benefits to opening an on-site fitness center, it remains for companies to ferret out their at-risk employees from the lifetime exercisers. Simply throwing open the doors to employees who are already healthy might help in recruiting or retention, but is unlikely to greatly impact productivity or health-care costs.
Targeting unhealthy employees isn't easy, though, primarily because of privacy issues. Companies that choose instead to saturate their entire work force with employee health newsletters or videos, hoping to draw the unfit to the fitness center, tend to waste a lot of money in the process, since most fitness centers are utilized by 20 to 30 percent of eligible corporate populations. Faced with these sorts of problems, even corporations that have built onsite fitness centers turn to professionals like Fitcorp and TCA to manage them.
One of Fitcorp's is the fitness center at John Hancock Insurance Co., a 10,000-square-foot center that serves about 22 percent of the eligible population — about 1,300 people. Janet Jimenez, the center's general manager, says difficulties in getting deconditioned employees to become members have led them to try some tactics favored by many for-profit health clubs and community centers, such as ballroom dancing classes. "There are also barriers as to how much and what type of marketing we can do," Jimenez says. "Management is very supportive, but they take a more 'Let them come to you' attitude."
Beth Hurley, general director of employee relations at John Hancock, believes that targeting the unhealthy "crosses the line of confidentiality. Our approach is that people can self-select. If you open the center to the world, people who feel they want to start addressing health problems can do so."
Make no mistake, John Hancock has a huge stake in getting the deconditioned through those doors. As Hurley says, "We're not a manufacturing company that makes pens. Our employees are our only asset." In addition, as an insurer, John Hancock's employees are its clients, and its other corporate clients look to John Hancock to set an example for maintaining good health in the workplace. "Health and wellness are very consistent with our business goals," Hurley says.
As an insurer, John Hancock has ready access to claims data that would help target at-risk employees, and the company has performed regular, although confidential, evaluations. In 1995, the company found that the three areas of highest health-care cost were high-risk pregnancies, gastrointestinal problems and heart problems. Since two of the three were probably influenced by stress, the company put a yearlong stress reduction program in place — although all employees, not just those submitting claims, were invited to attend.
The HMRC's Schnueringer contends that at-risk employees can be targeted, albeit carefully. "You have to approach people in such a way that it looks like a blanket marketing campaign," she says. "You're sharing the program with everyone, but the ones you're targeting get more letters. It has to be sort of indirect."
The greatest justification for an onsite center, even a bare-bones model, is that at-risk populations are more likely to join a center if they don't have to make too much of an effort. Says Schwartz, "Of the population that uses the center, some will use it as a substitute for an outside health club, and they would have been healthy regardless. Borderline exercisers may use it because it's more convenient than an outside health club, so the company will pick up some savings on those people.The people in the at-risk population who wouldn't otherwise use a health club because of the effort involved or the cost — that's where the big pickup is."
Klencheski believes even the first group is more likely to see improved health benefits from an onsite center.
"We're finding people are spending so many hours at work that by the time they get home in the evening they don't have time to go to the local health club," says Klencheski. "If they can fit it in as part of their work day, they'll use it more."
If there is a downside to all of this, it's that the business environment is changing to a more short-term profile. That's the view of Sue Liebenow, president of L&T Health and Fitness, a longtime corporate health promoter and management consultant. (Liebenow founded a fitness management and consulting company in 1984, sold it to PKI Worksite Wellness Solutions, and then, as Liebenow & Torok Inc., last fall purchased back its fitness management and wellness services divisions.)
"There certainly is an up-front cost to identify and treat, through preventive means, certain conditions before they reach serious disease stage," Liebenow says. "Unfortunately, people aren't looking as far ahead as they once did. People don't stay with the same company for 30 years — turnover may now be in the three- to five-year range. If the corporation is putting money up front for preventive programs and targeting a long-range health behavior change that may take 10 years before seeing any results, they may not benefit from the change. Some other company down the street will see the benefits."
William Pomeroy has another fear — that a new fitness center will be another snowmobile to his Syracuse employees, something that gets a lot of use the first winter and then sits in the garage.
Some on-site corporate fitness centers do experience a drop in usage, particularly those centers that are not actively managed by someone in the fitness business. At that point, chief financial officers begin to view the fitness center as wasted space.
The study of The Travelers' Taking Care Program used five years of raw data through 1990, but projected continued savings through 2000. While a skeptic might imagine that corporate fitness center usage would spike in the first year and then gradually slide downward thereafter, Schnueringer says a steady climb in productivity levels and a corresponding drop in absenteeism is the reality in most well-managed facilities.
"The reason the numbers go up is that there's more enthusiasm, and more and more people know about it. The percentage of employees who we've been able to actually acquire data from has gone up every year," she says of the Travelers study. "The fitness center gets testimonials internally, so there's reinforcement among employees, which leads to more involvement by upper management, including such things as a reward system within the management of each division. Now involvement is company-wide, because they continued to market it and got more and more champions within the system."
With all that, it probably still takes an enlightened CEO — or at least, someone willing to look beyond the bottom line. John Hancock's fitness center sits in a first-floor space in a prime real estate market. "We want to break even with our fitness center because we're under a lot of pressure, like every other part of the company, to run a tight operation," says Hurley. "The commitment that the company makes to us every year is this space. They could rent it in a nanosecond to anyone."
The question is, is an on-site center worth the price, no matter how steep?
"The human resources department can be persuaded by morale issues and potential health-care cost reduction, but the accounting department will never be persuaded because there are very few hard numbers," Schwartz says. "Is it worth it? I don't know. Senior management has to make that call."
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