Creating, for example, a possible scenario in which 21st century executives will tell bankers that their company deserves a higher line of credit than its competitors do, given that the organization has a higher well-being index score, demonstrating that it’s more productive and most likely has a lower heath care cost.
“The degree HR can achieve cost and operational gains is relevant to a business case for more favorable loan terms,” says Bob Braddick, a partner in Mercer’s private equity and M&A consulting group. “HR groups that can articulate a clear strategy and deliver greater liquidity that contributes to cash flow and servicing debt will position their enterprise to likely have an advantage with lenders, given capital constraints and competition,” he explains.
Currently, well-being indices and similar indicators represent random survey data that gauges workers health status, attitudes on wellness and workplace health programs.
The collected data helps employers make the link between wellness and corporate performance and allows them to benchmark their wellness programs against their goals and peers.
Also, consider that the economic stimulus package allocates about $19 billion to health information technology, which will streamline accessing aggregate medical data on the nation’s population.
As communities begin to link their health care system networks and exchange data, health and wellness researchers will be able to aggregate larger data sets, such as lab results and diagnoses, says Fred Goldstein, president and COO of U.S. Preventive Medicine.
The well-being indices have the ability to morph into numerical indicators that statistically capture the state of the health and well-being of the American workforce, according to some wellness experts. Such indices will have the potential to influence other corporate decisions.
Wall Street gaze
Healthways, a health management firm, teamed up with Gallup, the polling outfit, to create a well-being index that represents survey data examining the direct and indirect key drivers of wellness and health issues that affect Americans.
The index aims to capture a random sample of people’s well-being at the close of every day by gauging how places where people work and the communities in which they live affect their well being. It also hopes to shed light on how those factors impact the financial health of corporations and communities.
“As the data becomes deeper and we understand more about it, I can honestly see the day where we might pick stock in a company based, in part, on how that company scores on this index,” John Harris, senior vice president and chief wellness office at Healthways, told attendees at the 4th Annual Employer Health and Human Capital Congress. The three-day event, held in Washington, D.C., focused on health care benefits and corporate performance.
“If you are in the low ranking, then the organization is not going in the right direction in terms of their productivity and people,” he added.
So far, Wall Street investors are not factoring in corporate well-being indices as part of their investment strategies. “That said, a well-being index is the kind of data that you need out there, because there are so many variables tied to wellness and corporate performance that you cannot narrow it down to one thing,” Harris added.
Some executives and investors are saying this wellness idea is just too complicated, and that we really cannot substantively connect a healthier workforce with a healthier bottom line, Harris explained. A well-being index may start to undo some misconceptions about measuring ROI on wellness and health improvement programs.
Harris uses a quote from the former Director of the Centers for Disease Control Dr. Julie Gerberding to sharpen his point: “Imagine what it would be like if your community knew what its health index was like, and you knew that the neighboring community had a better health index. Well, that would become an issue for the mayor, civic leaders. Soon things will start to happen and health in that community will change.”
Harris, a 30-plus year veteran of the wellness industry, recalls a meeting with an employer who wanted to open up new locations, but was having a hard time measuring the effectiveness of wellness initiatives. The employer eventually decided to study the obesity statistics in various communities, hoping to build plants where the obesity rates are low. The employer pointed to the impact obesity has on health care costs.
“But when you think about it, that’s an inexact science because the company is only using one indicator,” Harris said.
Since 2000, the Principal Financial Group has released a quarterly well-being index that identifies and tracks changes in the workplace of small and mid-sized businesses, focusing on health insurance, wellness programs and retirement plans.
With this index, HR/benefits executives are able to communicate from a position of strength, because they have current information, says Dan Houston, president of retirement and investor services at Principal. “In the future, we see the index capturing wellness outcomes and profiling subgroups within an employee population, thus combing the survey data with health outcomes.”
The company once considered redesigning the index to mirror an economic index, providing a single-digit indicator, but concluded such an index may not serve its purpose as a tool to help small and mid-size employers.
In today’s society, “everyone wants to get everything down to a sound bite, but the real work comes down to ingesting the data, so that you can provide meaningful and actionable steps,” says Houston. “An index in of itself is not as powerful as our summary analysis that augments the index, which can provide an in-depth look into health and wellness policies. You don’t want the index to turn into some sort of misery index.”
Going forward
The next step in this discussion is how a change on a well-being index will affect the bottom line of the business. If our employees get healthier, does that translate into a more profitable company? That is how Thomas Parry, president of The Integrated Benefits Institute, frames the issue.
“One challenge confronted by people who manage health programs and health benefits, especially during this economic climate, is to show why a healthier workforce is an important business strategy,” Parry says. Well-being indices can connect benefits to corporate performance. If we continue to keep benefits in the benefits silo, it’s always going to be seen as just one more place to cut costs, experts agree.
Parry further explains that a well-being index can bring health and wellness onto the balance sheet as a way for senior executives to understand the value of human capital as a corporate asset.
“If Wall Street starts to value the employee health status of a corporation, then that has the potential to change how corporate American operates,” he adds.
The industry is still in the early stages when it comes to a well-being index that captures a single number that represents multiple measures, which everyone can understand and relate to, says LuAnn Heinen, health vice president at the National Business Group on Health and director of its Institute on the Costs and Health Effects of Obesity.
But rolling up, on a daily basis, national health and wellness data into one valid indicator is a great concept, because everyone who works in benefits and wellness wants to reach the C-suite, and anything that helps put employee health on the radar is a good thing, Heinen says.
“When you think about employers and their ability to measure the effectiveness of today’s work environment, they really don’t have that many sophisticated tools,” says Shelly Wolff, a consultant in the health and productivity group at Watson Wyatt. Many elements affect wellness, such as work environment and psychological make-up, but for so long, we have been focusing on the health portion of the wellness equation, overlooking other elements that influence a person well-being, according to Wolff.
