Do incentives for wellness and prevention services benefit businesses?

Do dark chocolate covered strawberries make your mouth water? You betcha. And they’re catching on faster than Lady Gaga’s hit singles. Cleveland Clinic and a number of others are helping companies like GE, LaFarge and Eaton to implement such benefits. Other major companies like IBM have joined this band wagon and are super pumped they did. Weight loss competitions, rebates for healthy-lifestyle choices for you and your family, discounted or free gym memberships (if you use it enough), cancer screenings, weight control, stress control, breathing free (tobacco cessation), flu shots -- the list goes on. These wellness and prevention services and incentives save businesses significant dough by decreasing costs and increasing productivity (ideal combo, no?) and they’re great for you and your family too. It’s a win-win situation. Plus, some involve reduced co-pays or premiums.

The health care costs (these are really disease care costs) are challenging the viability of many businesses and corporations. General Motors spends more on medical care for its employees than it does to buy steel. Howard Schultz, the founder and chairman of Starbucks, said that he spends more on health care for his employees than for coffee beans. As the population ages and health care costs continue to outpace inflation, many corporations project that they will reach a tipping point in only a few years in which health care costs exceed their entire profits. Clearly, this is not sustainable.

At Safeway, this has already happened. Profit margins are lower in the grocery business than in many others, so grocery stores are like the “canary in the coal mine” that sees trends before they affect other businesses. According to Steven Burd, the chief executive officer of Safeway, “In 2005, our health-care costs for our employees reached $1 billion and were exceeding our net income by about 20 percent.” Clearly, this was not sustainable. I consulted with him and his colleagues there (including Kenneth Shachmut and Michael Minasi) to help develop incentives for wellness and prevention services in their health plan. The following year, Safeway’s health care costs declined by 11 percent and remained flat in 2007.

What I especially like about this approach is that it is bringing together Democrats and Republicans and labor and management toward a common goal of lowering health care costs, providing universal coverage, and improving the quality of care