Could the answer to lower employer health care costs be found at places like Spectrum Athletic Clubs?
The El Segundo-based chain of health clubs is morphing its standard corporate membership program into a high-tech wellness program that will allow members to better monitor their health and provide data employers can use to negotiate lower health care premiums.
Spectrum, which has 20 clubs spread across Southern California and Texas, is now offering the HealthMiles program developed by Virgin Life Care Inc., part of Richard Branson’s Virgin Group Ltd.
Similar in concept to frequent flyer plans, HealthMiles members earn points by exercising, tracking results and improving key body metrics such as blood pressure, body fat, weight and body mass index (BMI). The points are converted to Virgin Life Care cash that can be redeemed for products from participating retailers. Members can check their health stats either at the health club or Spectrum staff can visit the work site a few times a year to perform health screenings.
Core to the program is a special pedometer that tracks a person’s movement and then uploads the information to a personal Web page. That means participating employees don’t even have to work out at the health club, which opens the program to a wider variety of people. And, key to lower health care premiums, the program’s software can analyze aggregate data for employers in a way that meets federal privacy standards while allowing them to present the results to insurers.
“We’re a natural fit to be the service provider for a preventative health care model if we can be sophisticated in how to work with the health care industry and corporations,” said Spectrum CEO Matthew Stevens.
Spectrum, which has an exclusive license to offer HealthMiles on the West Coast, began beta testing the program last year internally and at its Texas clubs. It is now gradually rolling out the program in Los Angeles, with several companies either signed up or engaged in trial programs.
Based on the data Spectrum was able to compile from its own 1,900 employees last year, Steven said he was able to negotiate a $250,000 reduction this year in insurance premiums, which in previous years had totaled $1.6 million. He plowed the savings back into a new health plan which covers 100 percent of employees’ costs after a $500 deductible.
Of course, such savings may not be possible for all companies. Not only is Spectrum’s business physical fitness, of course, but three quarters of its staff holds degrees in exercise physiology.
Hidden Costs
A new report by Santa Monica-based think tank Milken Institute should give more impetus for employers to take steps to improve the health of their employees.
The report attempts to better quantify the toll that chronic disease takes on the workplace and suggests steps employers can take to lower the physical and monetary costs.
The cost to the U.S. economy of treatment and lost productivity caused by chronic illnesses among U.S. residents is more than $1.3 trillion per year, and could rise to $6 trillion by 2050, according to the study, “An Unhealthy America: The Economic Burden of Chronic Disease.”
Though California is among the healthiest states in the nation, there were more than 16.3 million cases of seven common chronic diseases reported in 2003, the most recent period for which statistics are available, the study found.
Just those seven diseases cancers, diabetes, heart disease, hypertension, stroke, mental disorders, and pulmonary conditions cost California patients, their families and employers more than $133 billion annually. And close to 98 percent of those costs were from lost productivity as opposed to treatment.
A big chunk of those costs stem from what study author Ross DeVol calls “presenteeism” when employees come to work but aren’t able to give 100 percent because of their ailment.
DeVol, director of the Milken Center for Health Economics, said the report ought to motivate employers to insist employee benefit providers make health screenings, chronic disease management and wellness programs an affordable and accessible part of the options offered to their employees.
“It is in an employer’s best interests to play a key role in encouraging their employees to live healthier lives,” DeVol said.
The study estimates that programs that emphasize lifestyle changes, along with prevention and early detection of disease, could reduce the number of illnesses by 40 million cases nationally and save $1.6 trillion by the year 2023.
Staff reporter Deborah Crowe can be reached at (323) 549-5225, ext. 232, or at [email protected].
