A major, but often unrecognized, factor underlying most employers’ health care problems is that the current system was designed to treat rather than prevent illnesses. The result, as Dr. Nancy Nielsen, the president of the American Medical Association, recently noted, is that "We are living longer, but we are not living healthier."¹ Moreover, the relatively poor health of Americans has the potential to undermine an organization’s ability to execute its strategy. For example, according to one study, employees who have three or more health risks have health care expenditures that are 38 percent higher and absence-related costs (i.e., short term disability, workers’ compensation and incidental absence) that are 30 percent higher than those for employees who have fewer risks.² In addition, the costs of health-related productivity problems are, on average, 2.3 times greater than medical and pharmacy costs.³ To build on this notion, the World Health Organization defines health as "a state of complete physical, mental and social well-being and not merely the absence of infirmity."

Recognizing these factors, some forward-thinking organizations — what we call health-focused enterprises — have taken steps to address both the health and the health care needs of their employees. They do so by partnering with their employees on not just health care problems, but also on preventive health care solutions that aim to optimize health and fitness, not just eliminate risks. This shift is evident in the orientation many organizations demonstrate as they strive to become a full-fledged healthy enterprise (see below).

The Evolution of a Health-Focused Enterprise

Based on investigations of best practices, our independent research⁴ and experience with clients, Sibson Consulting has identified three generations of health-focused enterprises:

1. The Treatment-Focused Enterprise  These first-generation organizations focus on addressing health care issues after they occur, rather than on prevention. They often become aware of issues through large claims increases and concentrate on reducing costs rather than improving health. Treatment-focused enterprises may overlook the costs associated with productivity losses caused by health-related absences.
2. The Management-Focused Enterprise  These second-generation organizations focus on promoting better health, both physical and mental, for employees and family members by helping them identify health risks and conditions and then address them through supportive resources. They are increasingly proactive in promoting the employer’s role in encouraging safety, personal accountability and health risk and condition management through healthy behavior.
3. The Healthy Enterprise  These third-generation organizations have a commitment to optimizing the health and fitness of employees. It is imbued throughout the culture as a means to enable employees to fully engage in their work and their personal lives. (See the sidebar "Holistic Health.") Evidence of a "culture of health" is reflected in all aspects of organizational behavior, from emphasizing leadership sponsorship to maintaining a smoke-free environment. Healthy behavior is encouraged, exhibited and rewarded. Some healthy enterprises also consider the financial wellbeing of their employees as part of the total picture.

Trying to achieve a culture of health right out of the blocks can be a daunting task that is outside the scope of HR. A more realistic strategy is for the organization to begin by determining how to optimize success within the current culture. Many organizations start promoting health and wellness by repackaging the programs and services they already have in place. They then add resources (e.g., health-risk assessments and screenings) to help employees understand their risks and conditions and to better manage them through behavior modification (e.g., using health coaches, education and other tools).

How Healthy Is Your Organization?

A number of factors differentiate the three generations of a health-focused enterprise. For example, where a first-generation enterprise will focus on treatment, a second-generation enterprise will focus on managing risks and conditions by changing behavior. A third-generation enterprise, however, will focus on optimizing health and fitness by maintaining a culture of health that is evident at every level of the organization.

In addition to this strategic orientation, each generation of a health-focused enterprise is characterized by its approach to health plans, time-off programs, workplace support, behavioral health programs, communications, measurement and metrics, and organizational behavior. (See the table below, for a sample of key distinguishing features.)

 

Source: Sibson Consulting

For a comprehensive version of this table — which includes information about workplace support, behavioral health programs and measurement and metrics — contact Steven Cyboran.

While relatively few organizations have evolved into full-fledged healthy enterprises, the number is increasing as more leaders recognize the strategic benefits of leveraging a strong health orientation into improved productivity in support of financial success. (For a look at how one employee might fare in the three types of health-focused enterprises, see the sidebar "Three Health-Focused Enterprises: One Hypothetical Employee’s Experience.")

How to Become a Healthy Enterprise

The first step to become a healthy enterprise is to identify opportunities for improvement. There are several activities that organizations can undertake:

• Develop a philosophy and strategy, a health and productivity mission and vision that supports the organization’s goals and fits its culture. The organization also needs to establish goals for the initiative. If it has not used metrics in the past, it should start with something simple and build from there. Wellness pioneer Dee Eddington⁵ promotes the idea that the first step is, "Don’t get worse" and then, "Let’s create winners, one step at a time." For example, if 50 percent of an organization’s workforce is currently overweight, the initial goal would be to ensure that this number does not increase.
• Take a wellness inventory to identify the existing wellness benefits and practices included in the organization’s health and welfare plans (i.e., medical, prescription drug, disability, dental and vision) as well as any supplemental wellness benefits (i.e., an employee assistance program, work/life programs, safety training, online resources and official/unofficial workplace programs and support). Assess the effectiveness with which wellness benefits and programs are branded, communicated and made accessible to employees.⁶ Look at whether current practice supports the organization’s vision and strategy and determine whether the health plan presents barriers to healthy behavior (e.g., no coverage for nutritional counseling).
• Conduct benchmarking studies of the organization’s health and welfare programs and practices to see how they compare to what the organization’s peers are offering.
• Perform an analytic review of the organization’s health and welfare programs and practices, including the outcomes they produce and their relative return on investment.
• Conduct a cultural assessment to review the behavior that affects the organization’s health. This evaluation needs to examine the relationships between the organization’s healthy enterprise investments and the employees’ sense of affiliation, work content, career opportunities, benefits and compensation.⁷

After an organization has defined its strategy, it needs to devise a plan to implement it. It is of utmost importance to keep things fresh and respond to new ideas and initiatives as they present themselves. (For a look at the outcomes achieved by one higher education institution, see the sidebar "Case Study.")

Conclusion

Most organizations seek to optimize their workforce by reevaluating all of their investments to determine what is essential to carry out their business strategy while maintaining and enhancing the current and desired culture of the organization. A well-thought-out healthy enterprise initiative can lead an organization to better control its health care and absence-related costs while helping its employees stay engaged, healthy and productive.

About the author:

Steven Cyboran is a vice president and consulting actuary in the Chicago office of Sibson Consulting. He has been actively involved in a variety of benefit strategy projects focusing on health care, disability and time off. He can be reached at 312.984.8558 or scyboran@sibson.com

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1 "America’s Health Checkup," Time, December 1, 2008.
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2 "Association of Health Risks With the Cost of Time Away From Work," Journal of Occupational and Environmental Medicine, Volume 44, Issue 12, December 2002.
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3 "Health and Productivity as a Business Strategy: A Multiemployer Study," Journal of Occupational and Environmental Medicine, Volume 51, Issue 4, April 2009.
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4 Sibson Consulting’s 2007 Healthy Campus Survey.
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5 Dee Edington is director of the University of Michigan Health Management and Research Center.
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6 For more information on conducting a wellness inventory, see the article "Is Your Wellness Program a Scattershot Effort…or on Target to Serve Employees and the Organization?" in the June 2008 issue of Perspectives.
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7 For more information on these five elements — sense of affiliation, work content, career opportunities, benefits and compensation — see Sibson Consulting’s Rewards of Work Study: First Report of 2006 Results. A first look at the results of Sibson's latest Rewards of Work Study can be found in this issue of Perspectives, in the article "How Do Employees Rate Their Rewards in 2009?"
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Copyright © 2009 by The Segal Group, Inc., the parent of The Segal Company. All rights reserved.