The power of prevention: making a case for private corporate healthcare and wellness programs.

The escalating costs of healthcare, as well as the dearth of providers in many places across Canada, is a well-documented trend. Health benefit premiums are rising at a pace that is outstripping many employers' ability to afford them. This is driving many financial decision makers and their representative insurance consultants into crisis mode. Most solutions offered to the financial decision makers are designed to divert the financial burden of the increased costs to employees. Solutions include: shifting or increasing co-payments to the employees, increasing deductibles, restricting allowable drugs, consumer-driven health care spending accounts and even the elimination of benefits for retirees.

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This trend negatively affects individuals and can become a drain on company healthcare plans. The costs to companies include the hard costs associated with absenteeism, health and drug plans, and the soft costs of reduced productivity and low employee morale.

The key question is, why are costs rising? In one word, drugs. Canadian employers pay 30% of total healthcare expenditures and prescription drugs represent 70-90% of that cost. The insurance industry realizes that spiraling drug costs are largely responsible for these escalating health premiums.

While many have attributed this problem to the aging population, actuarial data suggest that aging has a minor impact. Apart from the last six months of life, older individuals haven't traditionally been more costly healthcare consumers.

Lifestyle and chronic conditions such as hypertension, diabetes, obesity, heart disease, depression and stress are growing, and their treatment relies on greater drug use. This is made worse by the recent phenomenon of direct-to-consumer drug advertising and the promotion of costly new drugs and high-technology therapies.

So what lies at the 'real' core of escalating health benefits? Quite simply, employee health. The benefits of having healthy employees is viewed by many corporations as a sort of luxurious happenstance, with few or negligible bottom-line repercussions. The argument of the number-crunching brain trust is that the numbers are too soft or too unpredictable to support a legitimate business model.

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But exhaustive literature reviews of worksite wellness programs paint a different picture, one in which employee health is directly correlated to both productivity and future healthcare expenditures.

Keeping the pulse

In the ever-unpredictable landscape of health benefit expenditures, controlling and minimizing future prescriptive drug use provides a unique and unprecedented opportunity for controlling future healthcare costs. Considering that most prescriptions are written for modifiable lifestyle diseases, diagnosing these diseases in their earliest stages becomes critical to long-term program success. Prevention, as a consequence, becomes the ultimate solution.

The challenge is finding a source to provide preventive care. The Sarjeant Company thinks it may have found the answer. Headquartered in Barrie, Ont., a city where an estimated 35,000 residents have no access to a family doctor, lack of quality healthcare, not surprisingly, is a key concern for many of the company's employees. It was this concern that led management to introduce the Healthscore wellness program. Healthscore is a private, for-profit network of doctors and healthcare practitioners focusing their efforts on preventive healthcare.

The Healthscore wellness program was launched at the Sarjeant Company in early 2004. A steering committee was established to help implement the program and consisted of key personnel in various areas of the company's demographic including management, union representatives, financial controllers and administrative staffing. The steering committee, under the guidance of both Healthscore and Sarjeant's executives, established five clear goals:

1. To more accurately quantify individual health and risk of disease.

2. To substantially improve population health.

3. To fundamentally reduce the need and demand for prescription drugs.

4. To support management in the development of better health promotion.

5. To establish a clear return on investment.

In developing the Sarjeant program, four key characteristics (identified as critical in successful worksite health promotion programs) were used. These included: comprehensive health assessments, individual feedback from the team of health professionals, the opportunity to participate in a structured program, and repeat assessments and evaluation.

The health assessment began with a detailed health risk appraisal (HRA), which examined certain disease risk factors, lifestyle habits and readiness to change. Following the HRA, physical assessments were carried out by a team of health professionals, which included biometric and lab tests for important research-based risk markers.

Each participant then received a comprehensive medical dossier disclosing all of their information presented in an easily digestible fashion. All the results (including those from the HRA) were computed and graded along a sliding health scale, denoting levels of risk and health from optimal to high risk. Comprehensive health tutorials were also provided, outlining the importance of each test, how it was calculated and how to improve it. The participants were equipped with better knowledge of their present level of health, along with an outline to begin making change happen in their lives.

Taking control

What made the program blossom, however, was the addition of biweekly follow-ups, which allowed individuals the opportunity for one-on-one coaching and therapies specific to their individual needs. The impact on corporate culture was almost immediate. From more visible water coolers, to proposed healthy vending machines, employees began taking responsibility for their health. A small but poignant example included the staff-maintained fruit bowl that appeared after an evening nutrition seminar presented by the Healthscore staff. By taking a more active role in their health, employees began exemplifying the values espoused by the program.

The introduction of this program was largely a reaction to lack of suitable healthcare in the region, combined with a genuine concern for the employees and their families' health. The Sarjeant Company, like most large corporations in Canada, is on an administrative services only plan. This means that the actual cost of the health plan (plus the provider's administrative cost) are directly paid for by the company.

The entire cost of the program was borne by the company and, with one year of data in, the financial results speak for themselves--a surprisingly large surplus in the healthcare account. This surplus represented the difference between actual and expected healthcare costs and was enough to offset the entire cost of the program.

In addition to reduced absenteeism and improved employee morale, another surprising benefit is the ability of the program to act as a recruitment tool. As word of the program grew in the community, applicants began seeking employment based on their perceived image of the Sarjeant Company as a supportive and pro-active work environment.

It is no secret that healthy employees add more to the bottom line. Medical and disability costs typically account for only 24% of actual health and productivity costs, with decreased productivity representing as much as 76% of actual costs. The economic windfall, therefore, lies not only in managing future expenses but in avoiding lost productivity.

As the cost of healthcare continues to come under financial pressures in Canada, programs that focus on prevention are being cut or withdrawn entirely. It will be left up to the employers to pick up the slack. Since this issue is on the minds of most Canadian employees, it should be addressed initially by progressive corporations. A financial case can be made for private corporate healthcare and wellness programs. An ounce of prevention can work wonders.

Patrick Robbenhaar, CMA, HB Comm. is the controller at the Sarjeant Company and is the District Chair for CMA Ontario Georgian Bay Chapter. Dr. Steve Rallis, B Sc., DC is one of the founding partners and co-developer of the Healthscore program for corporations. Dr. Rallis also maintains his private practice of chiropractic in Barrie, Ont.