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, noted, is that "We are living longer, but we are not living healthier." 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. In addition, the costs of health-related productivity problems are, on average, 2.3 times greater than medical and pharmacy costs.
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 healthy 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.
The Continuum of a Healthy Enterprise
Based on investigations of best practices, our independent research and experience with clients, Sibson Consulting has identified three stages of healthy enterprises:
- Focus on Treatment - In the first stage of the continuum, the focus is reactive rather than preventive. The organization addresses behaviors and health issues after they occur. Many organizations in this stage become aware of issues through large claims increases or workplace incidents and concentrate on reducing costs rather than improving health and behavior. Enterprises that focus on treatment may overlook the costs associated with productivity losses caused by health-related absences or disruptive workplace behavior.
- Focus on Prevention/Management - In the second stage of the continuum, the focus is more proactive. The organization promotes better physical and mental health for employees and family members by helping them to identify health risks and conditions and then address them through supportive resources. Companies in this stage are increasingly proactive in sharing responsibility and encouraging safety, personal accountability and health risk and condition management through healthy personal and workplace behavior.
- Focus on Optimal Behavior and Health - In the third stage of the continuum, the focus moves beyond risks and conditions to a demonstrated commitment to improve the health and behavior of employees and the organization. This is imbued throughout the culture as a means to enable employees to engage fully in their work and their personal lives. (See the sidebar "Optimal Health.")
Evidence of a "healthy culture" is reflected in all aspects of organizational behavior, from encouraging a team-based environment with a climate of trust and respect 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.
Optimal Health
A number of organizations are taking a growing interest in the holistic health of their employees to promote complete health and fitness. Optimal health is defined as "a balance of physical, social, spiritual and intellectual health."*
Source: O'Donnell, American Journal of Health Promotion, 1989 3(3):5
Trying to achieve a healthy culture right out of the blocks can be a daunting task that is outside the scope of HR. A more realistic approach is to start by defining a strategy that clearly aligns with and supports the business strategy. Companies can then begin by making investments that optimize success within the current culture. Many organizations start promoting health and wellness by repackaging the programs and services they already have in place to support the strategy.
They then add resources (e.g., health-risk assessments and screenings) to help employees and their families 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 stages of a healthy enterprise. For example, where an organization in the first stage will primarily be reactive in treating conditions and dealing with unacceptable behavior, an organization in the second stage will focus on managing risks and conditions by shaping behavior. An organization in the third stage, however, will focus on optimizing health and behavior by maintaining a healthy culture that is evident at every level of the organization.
In addition to this strategic orientation, each stage of maturity is characterized by its approach to addressing the various elements of its programs/initiatives, such as health plans, time-off programs, workplace support, behavioral health programs, communications, organizational behavior and measurement and metrics. (See the table below, for a sample of key distinguishing features.)
Source: Sibson Consulting
While relatively few organizations have evolved into full-fledged healthy enterprises, their numbers are 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 at organizations in each of the three stages of a healthy enterprise, see the sidebar "Three Health-Focused Enterprises: One Hypothetical Employee's Experience.")
Three Health-Focused Enterprises: One Hypothetical Employee's Experience
One way to illustrate the differences in the three stages of a healthy enterprise is to look at what would happen to a key employee named D.K. (a 55-year-old male who is at risk for developing heart disease), depending on the kind of organization for which he works:
- Focus on Treatment D.K. is driven to develop risk factors for heart disease by years of eating unhealthful food coupled with increasing pressure in the workplace. His underlying risk factors go undetected for years and his heart disease is likely to be diagnosed as the result of a medical emergency. D.K. may need surgery, which will mean an extended absence from work and lost productivity. When he returns, he may find it hard to commit to healthier behavior due to stresses and temptations in the workplace. D.K. also will be challenged to get the mental and emotional support he needs to change his health-risk behavior.
- Focus on Prevention/Management D.K. receives strong support at work and may become aware of his risk for heart disease through a health-risk assessment, for which he receives an incentive to complete before he develops clear symptoms. He may also receive support from various programs to delay the onset of the condition, but he will still face challenges in the workplace and will probably revert to his previous behavior.
- Focus on Optimal Health and Behavior D.K. works in a strongly supportive environment that encourages and incentivizes healthy behavior, which makes him less likely to develop risk factors for heart disease. He learns the importance of personal renewal and taking care of his health for both personal and professional reasons. D.K. understands the organization's commitment to a healthy workforce. Moreover, he views the organization as a support system for a healthier lifestyle, with leadership serving as models of healthy behavior and an environment with limited temptations and potential pitfalls.
How to Become a Healthy Enterprise
The first step to becoming a healthy enterprise is to develop a healthy enterprise strategy and identify opportunities for improvement. (For a look at the outcomes achieved by one organization, see the sidebar "Research University and Health System Case Study.") Some of the steps that may be part of the strategy development include
- Develop a philosophy and strategy, a health and productivity mission and vision that supports the organization's goals and fits its culture. Establish clear guiding principles that become the foundation for testing each current and future investment made. The strategy statement will shape the focus of the initiative.
- Conduct 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. 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).
- Establish a metrics scorecard to measure the progress of achieving the strategy. Although there may be thousands of items an organization may track and measure, an organization needs to be selective and identify those key metrics that will track progress toward achieving the stated strategy. Metrics need to include markers that lead to success (e.g., participation, satisfaction and behavior change) as well as the outcomes themselves. This requires looking beyond utilization and biometric statistics that just measure physical health. Research indicates that there are actually five dimensions to our health (physical, intellectual/mental, emotional, social and spiritual) that need to be measured. In addition, organizational measures need to be included (e.g., a climate of trust and respect).
- 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.
- Establish a communication strategy to get leadership and the workforce to embrace the initiative and shape the desired behaviors.
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.
Research University and Health System Case Study
A large research institution with extensive investments in various health initiatives aimed at controlling costs, requested assistance to:
- Facilitate discussions between its faculty, staff and leadership to define the desired state of health care on campus, and
- Identify the metrics and stages of maturity across the different dimensions of a healthy campus so it could measure and communicate progress.
The Solution
Sibson Consulting helped conduct literature research to identify state-of-the art practices in both higher education and business. Sibson worked in partnership with the institution to develop a "straw man" of the desired state that was used in focus groups with key clinical and administrative leaders to finalize the desired state and profile of a healthy campus. Metrics were developed to measure the current state along with the institution's progress along the stages of maturity toward its desired state.
Result
The institution's health care costs have increased only 1 percent per year for the past four years. There has been significant improvement in participation, compliance rates, rates of absence and outcomes for targeted programs addressing prevention, diabetes, cardiovascular disease and pediatrics. Annual savings are conservatively estimated to be approximately $18 million. Specific documented outcomes include:
- Reduced rates of hospital admissions, emergency room visits and average lengths of stay for those admitted to the hospital,
- Lower health risks with large percentages of participants becoming risk-free (e.g., over five years, 69 percent of participants who were at risk for cholesterol and 59 percent for blood pressure became risk-free); the institution's smoking rate is almost 70 percent lower than the national average.
- A 17 percent decrease in the use of sick leave over a four-year period for the non-exempt staff.
- 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.
- Establish a communication strategy to get leadership and the workforce to embrace the initiative and shape the desired behaviors.
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.
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, turnover and absence-related costs while helping its employees stay engaged, healthy and productive. Perspectives readers are invited to participate in Sibson Consulting's online Healthy Enterprise Survey.
About the Author
Steven Cyboran is a vice president and consulting actuary in the Chicago office of Sibson Consulting. He leads Sibson's Healthy Enterprise Initiative and has been actively involved in a variety of projects focusing on cultural transformation. He can be reached at 312.984.8558 or scyboran@sibson.com
This is an updated version of an article that originally appeared in the July 2009 issue of Perspectives, Sibson Consulting's e-magazine. It is available on the following page of Sibson's Web site: http://www.sibson.com/publications/perspectives/volume_17_issue_2/healthy.html.
Sibson Consulting, a Division of Segal, provides strategic human resources solutions to corporate and non-profit employers. Sibson's services include benefits, compensation, talent and performance management, communications, sales force effectiveness and change management. For more information, visit www.sibson.com.
Resources
[1] America's Health Checkup Time, December 1, 2008.
[2] Association of Health Risks With the Cost of Time Away From Work Journal of Occupational and Environmental Medicine, Volume 44, Issue 12, 2002.
[3] “Health and Productivity as a Business Strategy: A Multiemployer Study” Journal of Occupational and Environmental Medicine, Volume 51, Issue 4, April 2009.
[4] Sibson Consulting's 2007 Healthy Campus Survey .
[5] See Is Your Wellness Program a Scattershot Effort or on Target to Serve Employees and the OrganizationPerspectives, June 2008.
[6] Source: O'Donnell, American Journal of Health Promotion, 1989 3(3):5
[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 .
[8] See Reaching Employees in the Right Place at the Right Time: Four Steps to Successfully Communicating Your Organization’s Wellness Program, Perspectives October 2008.
