Healthcare: Balancing Quality With Cost

CEOs share insights on assessing the true value of healthcare to their companies.

Kathwari recounted a lesson learned setting up plants in Honduras and Mexico. “They didn’t have doctors there because they couldn’t afford them,” he said. “They got sick, and then they wouldn’t be back to work for a week.” Ethan Allen decided to provide a doctor and nurses and arranged for employees’ families to come and be screened and treated twice annually. “Because if the children are not well, they don’t come to work,” Kathwari noted.

Since then, Ethan Allen also has set up medical clinics at plants in North Carolina and Vermont “so that people have the ability to come for small things before they get big,” he said, noting that the effort paid off. “We’ve been able to not increase our medical costs in the last four or five years, which is a major undertaking.”

For many, however, the business case for return on investment is difficult to prove, given the many factors involved. “Wellness traditionally is hard to measure an ROI on because it’s over a long time period and over a large population of things that are challenging to measure,” Shedlin noted.

“We’ve been able to not increase our medical costs in the last four or five years, which is a major undertaking.”

Yet those companies that have invested do generally find the return. Henry Schein, a Melville, New York-based provider of management solutions for dental and veterinary practices, offers employees a wide variety of on-site screenings, including mammograms, as well as telemedicine access so they can speak to doctors without necessarily having to take time off work for an in-person appointment. “I don’t know that we have all the financial elements of the business case, but we certainly have lots of evidence of chronic diseases caught early,” said Karen Prange, CEO of the company’s Global Animal Health and Medical Group. The earlier those diseases are caught, the easier and less costly they are to manage.

If You Build It, Will They Come?
For a truly effective employee wellness program, employees have to be willing participants and partners, taking advantage of screenings, onsite gym facilities, weight-loss programs and so on. That isn’t always the case. Many employees aren’t accustomed to visiting doctors regularly for checkups and may even be wary of getting negative results.

Some companies employ “carrot” and “stick” approaches to boost involvement. Clint Severson, CEO of Abaxis, a company that manufactures portable blood analysis systems, told the story of a client firm brought in to do onsite screening for companies with high incidences of diabetes and heart disease. Those whose results are high get immediate counseling on how to change their numbers. “They come back three months later and every employee whose blood pressure is down, glucose is down, lipids are down, gets $500 from the employer,” explained Severson. “Then the employer takes those plans and reinforces them, which then causes the insurance rates to come down because they have fewer problems. The insurance company [also] wins because they don’t have as many claims. So look how much you could reduce healthcare cost if every employer put a program together like that.”

Unfortunately, the carrot doesn’t always work. Sterling Talent Solutions of Independence, Ohio, offered lower premiums to any employee who agreed to verify that he or she did not smoke, had gone for a physical in the last year and had a BMI, or body mass index, within normal range. Only 35 percent of employees took advantage of it, reported CEO Clare Hart. “It’s shocking to me the number of people who ignore the emails and don’t go for the discount.”

Those who opt for the stick approach
may get a slightly better result, said Prange of Henry Schein. “If you don’t opt in, your cost of care goes up 5 percent. That works a little bit more effectively.”

Participants around the room agreed that any effort would likely only succeed in the context of a greater cultural shift toward wellness. Hart pointed out that her senior executives model good behavior. “Culturally, from the top, there’s very much a focus on making sure people know the executives exercise and are eating right,” she said.

Kathwari agreed. “You have to make it a part of your DNA of your enterprise that is constantly reminding people, you’ve got to be well and you’ve got to take
care of your family,” he said. “It is our responsibility as CEOs to create that culture.”


  • As healthcare costs continue to rise, CEOs must find innovative ways to lower expenses.
  • Workplace wellness programs keep employees healthier, but the culture has to start at the top.
  • Companies are using a mixture of “carrot” and “stick” approaches to  encourage employee participation.

Read More:
Control Your Company’s Healthcare Costs With A Self-Funded Program


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