For Some Workers, Exercise Pays Off--in Cash

What would it take to get you to exercise? How about cash? At a few companies around the country, working out is paying off for employees and employers. In an effort to cut health care costs, employers have launched innovative financial incentive programs to encourage workers to adopt healthy habits such as exercising regularly and not smoking. Employees can earn up to several hundred dollars, and employers stand to save millions.

For example, the Chicago-based Quaker Oats Co. estimates it is saving $2.8 million a year as a result of its health promotion programs, says wellness manager Joan Cantwell. One of its most popular programs is the "healthy lifestyle credits" plan, in which the company pays employees and eligible spouses who meet up to eight healthy lifestyle criteria, such as exercising regularly, wearing seat belts and filling out a health risk appraisal questionnaire. Each area is worth $40 to $50, and the top payoff for meeting all eight healthy lifestyle criteria is $600 per year, per family.

To receive this payoff, an employee or spouse must pledge to do at least 20 minutes of vigorous physical activity three days a week or do 30 minutes of moderate-intensity physical activity five days a week. The pledges are made on the honor system, so employees can do their workouts wherever they like. (Some Quaker plants have on-site fitness centers that are available to employees.)

Ninety-two percent of the company's 8,500 domestic employees pledged to exercise this year, up from 85% in 1995, Cantwell says. She estimates that the health benefits gained by employees' physical activity will save the company more than $900,000 this year.

"About 25% of overall health claims are lifestyle-related," notes Cantwell, who says the company launched the healthy lifestyle credits program in 1993, after participants in an employee focus group told management, "Our being healthy saves the company money, so you should give us credit for it."

This concept is called "gain sharing," says Larry Chapman, chairman and senior consultant at the Summex Corp., an Indianapolis-based firm that designs programs to help corporations manage health costs.

"Gain sharing takes the profitability of a program and divides it among employers and employees," Chapman says. "In effect, the employer is saying, 'We want you to be healthy and stabilize our costs, so we'll give you half the difference between the actual and expected health care costs.' "

To motivate employees to adopt healthy habits, payoffs should total at least several hundred dollars per employee, he says. A good example is the Wellness Challenge, a financial incentive program offered at Providence General Medical Center in Everett, Wash., in which employees can receive a $250 to $325 cash bonus per year for healthy behaviors such as exercising and not smoking.

"The incentive program resulted in a four-year average per capita health claims cost which was 27.1% lower than the average of [that] at nine other comparison hospitals," Chapman says. "This amounted to a total dollar savings of $2,167,743."

Programs with financial incentives are still relatively rare, notes Chapman, who says noncash incentives--such as merchandise or recognition plaques--are more common.

"About 40% of larger employers, with 250 employees or more, are using incentives around wellness," he says. "And some managed care organizations are looking to provide physical activity incentives too."

Among the more innovative:

* The Wellness Plan, a health maintenance organization in the Detroit area, offers free YMCA memberships. "Lots of people have joined [the plan] because of the gym memberships," says Tracy Allen, manager of wellness and marketing promotion. "And it's good for us because healthier members cost less."

* Oxford Health Plans Inc., a health care company based in Norwalk, Conn., offers discounts on gym memberships and fitness equipment to its nearly 2 million members.

* PacifiCare Health Systems Inc., a managed care organization based in Santa Ana, gives its 10,000 employees the chance to earn PacifiCare points for healthful behaviors such as being physically active for 10 minutes or more. Points can be redeemed for prizes ranging from blenders to bicycles.

More companies will be giving employees physical activity incentives in the near future as part of a nationwide initiative called Aim 2000, says Bruce Leonard of the U.S. Centers for Disease Control and Prevention in Atlanta. The program had a successful pilot run at the CDC, where employees set activity goals and were eligible for prizes such as free restaurant meals. And Aim 2000 will encourage institutions and communities to set up similar incentive plans.

"A great number of our employees got active as a result of our program [called David Satcher's Director's Challenge for the U.S. surgeon general], and many of them have stayed active," says Leonard, who goes by the novel title "physical activity interventionist" in the CDC's 2-year-old physical activity and health branch.

"We've found that physical activity is a gateway behavior. When people become active, they start eating better, and there's reduction in substance abuse," he says.

It's a "domino effect," Leonard says. "And physical activity appears to kick it off."

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