Lack of CEO engagement in employee health

I have strongly believed that CEOs should make employee health a high priority and have been bewildered when they delegate that responsibility to their Benefits departments.  I successfully created a culture of health at Pitney Bowes, but relatively few CEOs have followed my path.

However, some smart and rational CEOs, whose scarcest resource is time, believe that they can deliver shareholder value by putting their priorities elsewhere.  Their reasoning may be as follows:

  • Traditional population health improvement programs have not worked in large organizations; and
  • The best path to reduced healthcare costs may be to reduce U.S. employee headcount.

Few employees use wellness, disease management, and care management programs. Since employers usually pay a vendor fee for these programs over their entire population, they generally fail to produce a population-level economic return. Why do so few employees use them? The most obvious reason is that the vendors have no incentive to maximize participation, since it increases their costs and reduces profitability.

However, these programs fail to draw widespread participation even when employers and vendors aggressively market them. Understanding why is critical to improving population health.

Most people only use wellness programs when they can be fit into their daily life routines.  Moreover, many employees consider mandatory wellness program participation to be an unwarranted intrusion on their private lives, and a bad example of the “nanny state.”  How can employers get buy-in from all those who should use the programs?

First, employers need to educate employees that increased healthcare spending reduces the amounts available for salary increases and other cash-based benefits.  They also need to explain that uncontrollable labor costs make a wide range of headcount reduction strategies more economically viable.  What are CEOs who do not attend to improving population health doing instead?

Unfortunately for already insecure employees, one answer is that they are aggressively looking for ways to reduce U.S. headcount.  How are they doing it?

  • They will substitute technology for labor wherever possible. Automated voice response systems replace human operators. Robots instead of people move physical items. Heavy equipment replaces construction workers in moving dirt.  We will also see an evolution toward the eventual penetration of self-driving automobiles, which will eliminate jobs for millions of truck, bus, taxicab and limousine drivers.
  • More tasks will be offloaded to offshore workers in low labor cost markets.
  • More tasks will be outsourced to more technologically efficient and enabled third party administrative services.
  • More tasks will be done by contract workers of short duration, employees who are being tested in a 30-90 days “probation” period, or even unpaid interns.  Companies also refer more work to teams of undergraduate or graduate students who will trade compensation for school credit.
  • Businesses create more customer self-service opportunities, as airlines have done for over two decades in creating automated reservations systems, and, more recently, automated systems for securing boarding passes.  Retailers will expand customer-managed checkout processes.  Even restaurants will move slowly, but surely, toward more automated ordering and food pick-up systems.
  • Big data analytic systems will replace highly skilled human tasks, such as Amazon.com and Netflix have employed in building recommendation systems for book and movie acquirers.  Even law firms are now authorized to use technology to sort documents for responding to certain government document production requests, saving client money and lawyer labor.
  • Healthcare will move from face-to-face human interactions to technology that automates physical examination, and non-invasive self-administered biometric monitoring will reduce the need for more skilled healthcare professionals.

However, CEOs are employing two other strategies as well for reducing healthcare cost burdens:

  • Companies locate facilities in areas with better-educated and healthier populations, and lower healthcare costs. They require higher levels of education for each job and benefit from the fact that higher educational attainment correlates with better health.
  • Finally, they substitute part-time employees for full-time employees to reduce the population for which they have healthcare benefit responsibility.

However, after they exhaust all low-hanging fruit that enables them to avoid having to improve employee health, they will realize that, for the core of their stable, mission-critical, full-time U.S. workforce, they will need a robust population health and healthcare cost management strategy.

For that population, they will need to reinforce a culture of health inside an organization by executing on strategies and tactics that improve health. They can change the daily environment in which employees function, either directly at work, or using their influence, indirectly in the community and at home.  Well-respected public health researchers like Sir Michael Marmot and Dr. Anthony Iton, (the author of a wonderful study called Death by Unnatural Causes, when he was the Public Health Director for Alameda County Californida) have demonstrated that 85-90% of what determines our health happens outside the healthcare system.  Our daily living environment drives our health outcomes much more than access to high quality healthcare.

The recently released State of Oregon study on its Medicaid population, demonstrated that while those citizens on Medicaid had easier access to healthcare and avoided financial ruin, they had no better health-related outcomes than those not participating in the Medicaid program and the total amounts spent on their healthcare were not lower.

How can an employer alter the daily working environment of employees to make it better?

  • Make healthier foods and beverages and lower portions of them more affordable and accessible than junk food, although employees are less likely to rebel if they retain the choice to eat less healthy foods.
  • Make all facilities tobacco free.
  • Create facility plans and work processes, which induce more walking during the day.  Eliminate desktop printers, reduce the number of private offices, and create attractive stairways in place of elevators to induce walking.
  • Have fewer meetings of shorter duration to reduce forced sitting down, since prolonged sitting is one of the least healthy activities in which we engage every day.
  • Have more ergonomically friendly furniture and furnishings and LED lighting in all workspaces.

Even if employers do not particularly care about the per-employee cost of healthcare, under ObamaCare, the non-deductible 40% excise tax, sometimes called the “Cadillac tax.” is based on the per-employee cost, not the total healthcare cost budget.  That tax will hit all employers who fail to manage their per employee healthcare costs below $10,200 in 2018.

ObamaCare has many conceptual flaws, but if it forces employers who have the best ability to influence employee health and healthcare cost management, to tackle the problem, it will have at least that as a positive, if unintended, outcome.

 

 

 

 

 

 

2 Responses to “Lack of CEO engagement in employee health”

  1. Alex Barrett says:

    You list 5 points towards the end of this article; Can they be ranked in order or significance?

  2. It is difficult to prioritize them because each work environment is different. However, as a general matter, the best thing the CEO can do to create a culture of health is to make employees feel valued and to adjust work processes and communications to reflect that.

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