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Spencer Green
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Sales and the 'Talent Magnet'

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25 May 2011

We can work it out

By Ian Clover

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W ith sickness and absenteeism costing businesses billions of euros each year, Ian Clover looks at an innovative Stateside scheme that has incentivised thousands of employees to get active, fitter and more productive in the workplace.


“Virgin HealthMiles provides it companies with real-time data on what is happening, and also instigates conversations between the CFO and a dedicated Virgin account manager to discuss where the improvement areas lie for their population.”

We all know the facts. We have all heard the horror stories. Inactivity, sedentary lifestyles and bad diets are eviscerating the populations of the western world, causing chronic diseases, shortening life spans and drastically altering behavioural patterns. Obesity and ill health caused by the lifestyle choices of individuals were previously issues to be dealt with solely by that person, their immediate family and their GP. If a person chose to saunter, waddle or puff their way through life, fine; that was their prerogative. But now, the situation has become so problematic and universal that it has begun to negatively impact upon the lives of the majority.

In Europe, national healthcare services are stretched to breaking point throughout the continent due to increased occurrences of preventable diseases such as hypertension, diabetes, heart disease and many forms of cancer. In the USA, health insurance programs - the majority provided by an individual's employer - are becoming ever more expensive and restrictive. This epidemic of the west has become a responsibility for us all, from the individual themselves right up to politicians and medical and industry leaders.

Sickness and absenteeism from work cost businesses billions of euros every year. In the UK, a study by Hewitt Associates estimates that sickness costs British companies more than £1000 (€1250) per employee a year, while absenteeism adds an additional £662 (€870) per employee. If you factor in the unquantifiable indirect costs of lower productivity, replacement recruitment and other issues, these figures can increase by as much as 60 percent.

Poor employee health is an expensive issue throughout Europe and the USA. But while most companies in Europe do little to monitor, address or rectify the situation - largely because of the free or subsidised provision of universal healthcare throughout the continent - a pioneering scheme in the States is tackling the issue of staff ill-health head on.

Virgin HealthMiles provides incentivised employee health programs for companies eager to get a handle on the collective health, and consequential productivity, of their staff. The company has devised a Pay-for-Prevention model that measures the physical activity and healthy lifestyle changes of participants, and then devises a number of rewards for the employee, closely collaborating with the employers to ensure the incentives are in the best interests of both parties. So, workers on the scheme could earn days off work, cash prizes or contributions to their pension plans by simply signing up, working out and getting fit.

"What we're doing is very straightforward," says Sean Forbes, President of Virgin HealthMiles. "We're creating a good drive discount for healthcare and it came about in a pretty straightforward manner. We recognised that there was a disease that was exploding across the developed world - obesity, and all of the chronic diseases that came with it, like diabetes, heart disease and a lot of forms of cancer, not to mention the precursors to those diseases like hyperlipidemia and hypertension."

According to the Milken Institute, obesity in the workplace has begun to account for 75 percent of all corporate healthcare spending, amounting to approximately $1 trillion (€730 billion) in lost employee productivity. The idea behind Virgin HealthMiles is to make it easier for both employees and employers to reach a happy medium; a medium that encourages personal fitness and involvement, allied to corporate reward and, hopefully, resulting in better work performance, fewer sick days and a reduction in unspecified absenteeism.

"Richard Branson is probably the world's pioneer social entrepreneur, and our thesis was that Virgin could bring the funds together to go where all the collective wellness programs of the past three decades have failed to go," says Forbes. Investment has been instrumental in getting the scheme off the ground, but it is not just financial incentives that have been the drivers behind corporate and worker participation.

"There are three factors behind the success of Virgin HealthMiles, and one of those is certainly the lure of the dollars," says Forbes. "But it's also the fun factor, and the trust too. We currently have approximately 650,000 people on the program, and we spend a lot of time talking to the ones who have been on it for some time now because we see renewal rates that are in the high 90-percents."

Engagement and incentive

Very few people would choose a life that is threatened by health concerns, blighted by shortness of breath and subject to the castigation and social stigma that comes with being obese. Yet millions make the daily lifestyle choices that set them sleepwalking down this path almost absent-mindedly; whether they lack the will power, the motivation or the confidence to affect change, there exists this ticking time bomb of an obesity problem throughout the western world. Forbes has recognised why people perennially try - and fail - to lose weight, get fit, and change the habits of a lifetime.

"Engagement has been the number one reason why other wellness programs have failed," he says. "People try to get excited about having a gym membership for the first few weeks after their New Year's resolution, and then we all know what happens. So we have recognised a way that keeps people engaged in the scheme."

By aligning the workplace with one's own personal health, Virgin HealthMiles has been able to elicit not only a greater take-up in participants to its health schemes, but more regular participation too. The Pay-for-Prevention model treads the well-worn path of professional relationships, mining that same vein that dictates that colleagues work for, rather than against, one another, and fostering a healthy level of camaraderie and competition among the participants.

From a corporate perspective, such positive and quantifiable participation is invaluable. "The CFO of a company that is involved in the Virgin HealthMiles scheme can, for the first time, inspect what they expect around the health of their workforce," says Forbes. "So we take some simple measurements of employee activity, and then once a month some biometric measurements, blood pressure, weight and body fat, and we put this information together in the form of reports to employers that can be used in an anonymous format. The employer then dishes out the reward, which can be a cash reward, premium discounts, days off or HSA contributions."

Virgin HealthMiles enters into a discussion with the employer in order to work out what type of reward they would like to bestow for each type of behaviour. These 'qualifiers' are flexible; equipping the employer with the ability to accurately assess how well their staff is performing, and how best to reward this good performance. All of this is achieved through the utilisation of some simple but effective technology that enables accurate reporting, recording and feedback.

"One of the most important parts of the program is a family of activity and biometric measurement devices that we use," says Forbes. "From an employee's point of view, they get three things when they sign up to a program. They get an activity measurement device, which is an accelerometer the size of a one-euro coin; they get access to a personalised website that shows how much activity they have done over the days, weeks, months and year and what that is worth them in terms of money, days off work or HSA contributions; and they get a social network, that looks a lot like Facebook."

While the accelerometer might sound very much like some frightfully futuristic 'stick' with which participants are beaten in order to attain better health and fitness, the personalised website and social network act very much as the 'carrots'. There is a tangible sense of reward and progress viewable on the website, while the social network acts much like a cyber-version of the obligatory cheering, clapping crowd that line the course of marathons the world over - offering encouragement to those in the race. This cooperation, this sense of achievement and belonging is, cites Forbes, one of the key drivers behind the success of these programs.

"The social network is right there on the homepage. Users are also taken there automatically whenever they plug in any of our devices. The site allows them to engage with other HealthMiles members, typically in competition but also in chat communication, feedback and banter. This all happens virally, and when we talk to the users for feedback, they all say that the thing that keeps them coming back to the program are the social connections they are making."

Most communications are initially made within the boundaries of a single company, but can quickly expand externally, as Forbes explains. "There are no barriers with the scheme - there's nothing keeping a HealthMiles member from, say, the American Diabetes Association from reaching out to somebody from a bank. And they do. Typically, individuals initiate competitions between themselves, or even form teams. So then, during the Olympics and the last World Cup, teams began forming around their favourite countries, with cross-company competition occurring organically."

Benefits to business

So far, so good for the employees. Coupling personal achievement with financial or career reward is a masterstroke, while the sense of belonging and social interaction forged by the competitive nature of the programs has been the key driver behind Virgin HealthMiles' impressive renewal rates. But what of the companies that get involved? How difficult, time-consuming and rewarding is participation? How does the technology employed make it easier for companies to quantify investment, risk and return?

"The social component is facilitated by our technology - both the hardware and the software - in bringing people together around this unifying goal of positive behaviour change related to activity and biometrics," says Forbes. "For the company, we can get them up and running with 70 percent participation rates very quickly. This is incredibly important, because CFOs want to manage their population costs down, and if you do not have a large threat for the population using something that is beneficial, then you're not going to see a large impact."

With the majority of employees now equipped with their own smartphone, they are always connected to the Internet and, as a result, more likely to engage in and be attracted by the social component of Virgin HealthMiles. Additionally, there is a growing desire among the populations of Europe and the USA to get fitter and healthier. How, then, is this desire and accessibility transferred into increased productivity and better performance in the workplace?

"Many businesses in the U.S. are reaching a tipping point," says Forbes. "As self-insured businesses they are paying their employees' claims costs. Those claims costs associated with preventable chronic disease have been increasing at double-digit rates for the last 12 years. So this has become the largest unmanaged portion of their income statement. There are other portions that are equally large, but these are generally associated with their sales force, which they have been managing for years. But there has never been a way for companies to get independent, third party validated data about something that drove so much cost and had such a large impact on profitability as employee welfare. So we have seen a really big take up in self-insured employers wanting to figure out how they can get a measure on something that has traditionally been unmeasured."

Virgin HealthMiles provides its companies with real-time data on what is happening, and also instigates conversations between the CFO and a dedicated Virgin account manager to discuss where the improvement areas lie for their population. This analysis and feedback is then translated into the company to provide more incentives for its employees to strive for.

"This is a very active conversation," admits Forbes. "We have a real-time reporting facility that we use inside of Virgin HealthMiles to keep track of our clients, so that we reach out to them proactively when we see, typically, certain departments or certain demographics heading towards risk areas, or not keeping up with what we see is either the pace of the rest of the company, or the industry benchmark." How the company then acts upon this information is a decision taken collaboratively with Virgin.

Under the Pay-for-Prevention model, an employer can accurately work with its employees to assess where each individual needs to align its objectives with next year's healthcare plan, and how to attribute a suitable reward parameter. "People can receive up to $2500 a year for doing the right thing," says Forbes. "CFOs have the option of making that a zero impact to their income statement by balancing it against premium increases for people who either elected not to participate, or didn't push their activity and biometrics in the right direction."

Extending such a business model into Europe is Forbes' next aim, a region where, he admits, businesses and healthcare policies are set up in a manner quite different to those in the U.S. "Clearly, the U.S. has got its own, very defined way of doing things, especially in terms of reward schemes and self-insured companies," concludes Forbes. "But you cannot lose sight of that $1 trillion worth of lost productivity. Businesses in Europe are going to be interested in hearing more about that, and how to - excuse the pun - eat into it."

Who would have thought that doing so little could cost so much?

  • According to the Center for Disease Control (CDC), inactivity drives 40% of the cost of lifestyle-related chronic diseases.
  • Treating and paying for preventable chronic diseases accounts for 75% of all business healthcare costs in the U.S.
  • In the UK, the total cost of sickness and absenteeism to business is £20 billion.
  • In Ireland, absenteeism costs employers €563 million a year.
  • Obesity in Europe accounts for 7% of all healthcare spend.
  • Peninsula Employment estimate that 17% of all sick days are not genuine
  • Employers typically see a return of €3 for every €1 they invest in employee health initiatives.
  • A recent survey from National Business Group on Health found that two out of three workers whose employers offer financial incentives say it has motivated them to try healthier lifestyles.

About Virgin HealthMiles

Virgin HealthMiles provides employee health programs that pay people to get active. The company's Pay-for-Prevention approach, based on physical activity and healthy lifestyle change, attracts an average of 40 percent of employees who participate, which helps organisations reduce medical costs and improve employee productivity and satisfaction.

The program is offered by employers, government entities, and insurers. Over 120 industry leaders representing more than 600,000 employees across the U.S., including American Diabetes Association, Intuit, MWV, OhioHealth, Ochsner Health System, Protective Life, SunGard, SunTrust, and Timberland have selected Virgin HealthMiles' program for their employees.

Members are rewarded for getting approximately 30 minutes of moderate activity five days per week. That is the same amount of activity the CDC recommends adults get in order to reap long-term health benefits such as a significantly reduced chance of developing type 2 diabetes.


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