StreetTalk: Corporate Wellness Programs

Will the wellness trend prove to be a friend or foe to the biopharm sector?
Oct 01, 2004

Humor me, readers, as I try to make sense of the corporate wellness trend. Getting a grip on the impact that corporate wellness programs could have on the biopharm industry and their potential to cut into industry profits is my goal this month. You be the judge of how far I get.

Wellness programs are based on the idea that we sometimes let our doctors do our thinking for us. I'm reminded of the great British poet Alfred Tennyson who, when asked on his deathbed "Do you feel any better?" replied, "My doctor says I do." A good line with much truth to it.

By and large, focusing on "wellness" doesn't mean telling your doctor to take a hike — you're going to need him or her to provide a professional medical opinion when you do have medical issues. My doctor, by the way, is a great guy. He can't stress enough the importance of people taking greater control over their own health.

Further, advocates say that wellness programs don't mean you'll stop taking prescription drugs, but living a more proactive, healthier life likely means that you won't need them as much. And it's not that you can never have a cheeseburger again... you just can't have one on every day of the week that ends with the letter "y." To wellness program enthusiasts, such programs allow you to become the CEO of your lifestyle.

It's hard to argue with the theory that taking control over our own health can make us healthier and, to the dismay of the biopharm industry, possibly reduce our dependency on prescription drugs. Right now, there's a tremendous imbalance between what we pay for treatment-based medical care and prevention-based medical care. According to J. Michael McGinnis, Pamela Williams-Russo, and James R. Knickman, whose "The Case For More Active Policy Attention To Health Promotion" appeared in Health Affairs, approximately 95% of the trillion dollars we spend as a nation on health goes to direct medical care services, while just 5% is allocated to population-wide health improvement measures. The authors also state that roughly 40% of all US deaths are caused by behavior patterns that could be modified by preventive interventions. They add that 10 to 15% of all deaths could be avoided by increasing the availability and quality of medical care. "Thus," the authors conclude, "one could question a funding scheme that places so much emphasis on medical care and not on prevention." Hence the trend toward corporate wellness programs.

Increasingly, hospitals, healthcare providers, and even employers, are turning to wellness programs designed to help us lead healthier lives. Once we do that, wellness advocates maintain, the business side of the health care equation — the need to reduce the high cost of healthcare — will take care of itself.

Corporate wellness programs have gone way beyond the days when corporate America's idea of a healthy outing was a company softball game complete with a keg of beer and grilled hot dogs. Now, corporate wellness campaigns offer a vast menu of services geared toward helping employees embrace healthy lifestyles. Such programs include massage therapy, smoking cessation classes, stress management meetings, diet and nutrition counseling, and image consultations.

GETTING RESULTS From what I've seen on the topic, it's good business for companies to turn to wellness programs, too. Wellness programs send a positive message to employees that management cares about them as individuals and wants to see them live healthier lives and prosper. Nothing wrong with that, right? The same goes for community service organizations and healthcare companies who are also getting into the wellness game in a big way.

Consequently, examples of officially organized wellness programs are popping up all over. Consider these examples:

  • At Georgetown University, employees "brown bag it" at weekly lunchtime seminars as part of the university's "Take a Flight into Health Wellness Series." The sessions, held every two weeks, provide faculty, staff, and community members an opportunity to learn more about a wide variety of wellness topics, including parenting, stress reduction, communication, physical health, and workplace issues. The seminars are usually led by Georgetown University faculty or staff who share their expertise through presentations and question-and-answer sessions.
  • At $30 per person, the Bank of America recently held a health promotion program for retirees. The bank says insurance claims fell an average of $164 per year for seminar participants.
  • Coca Cola saw a decline in healthcare claims, saving $500 annually for each employee who joined the company's HealthWorks fitness program.
  • Prudential Insurance Company says that its healthcare liability dropped from $574 to $312 for each employee enrolled in its corporate wellness program.
  • A study by DuPont on the effect of its comprehensive health promotion program on employee absences found that workers in its wellness program demonstrated a 14% decline in disability days, compared to a 5.8% decline for employees who didn't take advantage of the program.

Companies were first introduced to the concept of investing in health promotion programs in the 1970s. By the 1980s, employers were spending $5 per employee on workplace wellness programs, and today they're shelling out $60 per employee for year-round programs on issues that range from smoking cessation to warding off stress.

The return on investment is promising. Studies show that workplace wellness programs save employers $80 to $225 per employee per year in medical care costs and an equal amount in productivity gains.

THE BOTTOM LINE Healthier people, lower healthcare costs. What a concept!

But if the advocates are correct, and these numbers show, as they seem to, that there are myriad benefits to corporate wellness programs, will they have an impact on prescription drug makers and those who invest in them?

My guess is yes. True, there are no hard numbers suggesting that wellness programs have had a negative impact on the biopharm sector — and certainly the sector is vibrant and healthy. But if people do take control over their own healthcare through wellness programs and, as the DuPont survey suggests, grow healthier, common sense tells us that they will not need to take as many prescription or "reactive" drugs as they once did.

That can't be good news for the prescription drug industry.

Celebrity author and business/finance commentator for CNN and Fox News, Brian O’Connell has written for The Wall Street Journal and Newsweek, 79 Radcliffe Drive, Doylestown, PA 18901, 267.880.3144, fax 267.880.1939, brian.oco@verizon.net.