Michael D. Klansek knew something was up with his company when he read Towers Watson statistics earlier this year that showed total health care costs per employee per year are at $11,176. His PEPY costs in 2011? $7,707. And they've been that way since 2006.
With 278 employees, if they were the "average" company Towers Watson refers to, they would be spending almost $1 million more on health care each year.
So he's holding his breath.
He was even reluctant to go public with their "success" because they've yet to see their 2012 numbers. Jinxes are powerful things.
"We need to be realistic. We have several large claims working this year, which will be a challenge to overcome in our effort to keep costs unchanged for a sixth straight year," says Klansek, CFO and publisher of DRG, which produces arts & crafts magazines, catalogs and materials with such titles as Creative Knitting and Quilter's World. Based on their initial feedback on the upcoming renewal, he expects to see an increase between 10% and 15%, which will push their costs closer to 28% below the national average. "That's good, but nobody likes increased costs. We'll keep looking for new ways to team up with our employees to get and stay healthier."
DRG is looking to employees to get healthy and stay that way, but because the company is split into two distinct workplaces - manufacturing plant and the office - the same strategy and solutions aren't same for each division.
But the piece that has resonated with most employees is the tiered deductible program. For an individual, the $2,800 deductible can be lowered to $400 if an employee participates in a health screening, takes a blood test, gets their cholesterol levels to normal and doesn't smoke. For each of these tests, the employee earns a deductible credit of $500 on an annual basis.
"Our approach has been to hold employee costs flat when our total costs were flat. If the total costs go up, we all share in that reality with the employees," Klansek says. DRG also pays for half of a Weight Watchers membership if employees attend 80% of sessions, and the company also conducts annual health fairs.
Jessi Butler, a DRG production artist and Web tech, has been a factor in their success - she looks forward to the walking competitions and annual biometric screenings. And she should look forward to them: at 5'7", she's dropped from 297 pounds to 145 in seven years.
"I knew enough that if I didn't change something, I was sure to have diabetes later," she says. The first steps were small: grilled chicken over fried chicken and salad instead of fries. She started taking daily walks around the block and finally broke down and bought an elliptical trainer. "I had to learn how to eat again." She says the wellness program, which she had never participated in before, started to appeal to her, and once she started, it kept her going. "Losing the weight is easy part; keeping it off is the hardest part."
DRG's 12-week wellness program, which involves nutrition and exercise, also involves a wellness screening. Butler keeps all her paperwork, year after year, so she can track her progress.
Medical expenses for obese employees are estimated to be 42% higher than for a person with a healthy weight, according to the Centers for Disease Control, and Butler says she's a testament to this fact.
She was diagnosed with a social anxiety disorder when she was obese and was placed on antidepressants, suffered from severe yeast infections associated with obesity and took frequent sick days for doctor's visits. She's now gone off the antidepressants and other than her monthly birth control prescription and annual checkups, she has no health costs.
"I don't mind going and spending $5 for a bag of apples knowing that I don't have to go to the doctor."
As Butler has seen her health care costs go down, she's raised her awareness about the cost of health care and how much DRG pays.
"More recently there's more understanding of what it costs," says Angie Wheeler, human resources manager. "There was a time when people didn't understand what insurance cost at all."
That engagement keeps health costs low, and as a result, they can offer benefits and hire more people. "It allows us to hire more people, have better benefits and better raises, and we can return a little more to the owners," Klansek says. "If we had a million-dollar increase in our costs, we'd have to pass more costs on just like anyone else would, and the owners would get less in return. Now, we can hire more, give more and return more."
And those new hires have become some of Butler's friends. They knew her before she lost the weight, and they know her now. She admits that during her weight loss and even today, her old friends and family haven't been the most supportive.
"I've had to ask them to not call me anorexic or scrawny," she says. She comes from a traditional Midwest family who likes heavy foods, and her past friends were also mostly unhealthy. They don't understand why she won't go out to dinner anymore, but she doesn't eat out often. Period. "The close friends I had before I don't really have anymore; they think I'm too good for them because I'm thin now. It's been difficult. I'm a different person."
She says it's hard to make new friends, but her coworkers have been the rock to sustain her weight loss. "It's because of them that I've been so successful. I wish I could be more inspiring to get others on board," she says about her hopes to get her work friends engaged in something that's become integral to her work life - her health.
Klansek says the investment in employees pays off. "We spend a fair amount on wellness. When you do all these things, you put money into it, and you can't easily measure the returns, but overall we've kept our costs down," he says. "Our population hasn't changed over the years, which reflects improved health."
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