American companies worried about the spiralling cost of healthcare are resorting to what appears at first to be a contradictory approach – paying workers to adopt healthier lifestyles.
A study of 285 employers by consultancy Watson Wyatt and not-for-profit body the National Business Group on Health found those employers that were best at controlling costs and increasing productivity were also those running a broad array of health management programmes.
Nearly half of the employers polled said they offered financial incentives to encourage workers to monitor and improve their health, or planned to do so next year.
By 2009, that number was expected to surpass seven out of 10, the survey forecast.
It also found that companies with effective health and productivity programmes demonstrated superior performance.
They achieved 20 per cent more revenue per employee, had 16.1 per cent higher market value and delivered 57 per cent higher shareholder returns (from 2004 to 2006).
Additionally, companies with highly effective health and productivity programmes had cost increases that were five times lower for sick leave, four and one-half times lower for long-term disability, four times lower for short-term disability and three and one-half times lower for general health coverage, said Watson Wyatt.
"With few options left, companies are putting significant emphasis on improving the health and productivity of their workforce" said Shelly Wolff, national practice leader for health and productivity at Watson Wyatt.
"Global competition and pressure for greater efficiency are causing employers to seek new ways to help manage benefit costs and increase worker output.
"Increasingly, companies are looking at the health of their workers as the new growth engine to stave off health care inflation and keep employees on the job and productive," she added.
The survey also found that more companies were planning to link employee health to company goals.
Almost a third of employers polled currently did so, or planned to in 2008. Another quarter planned to do so in 2009.
Employers were also implementing various programmes to engage employees in managing their own health, it found.
Although eight out of 10 companies thought employees should be held accountable for improving and maintaining their own health, just four per cent were actually taking action on this issue.
Similarly, two thirds believed managers should be responsible for workforce productivity, yet only 13 per cent were holding managers accountable.
Employers, the survey also found, spent an average of 21.2 per cent of payroll on direct and indirect costs of programmes for wellness, sick leave and disability, slightly less than the 22 per cent they spent in 2005.
The two most commonly cited barriers to effectively managing health and productivity were lack of data (45 per cent) and organisational structure (41 per cent), it added.