As the cost to insure employees rises, hospital executives may dream of an entire staff of triathletes who eat lunches of vegetables and lean meat every day and rarely visit the doctor. But in reality, hospitals employ a lot of stressed-out caregivers who work long, unpredictable shifts and whose intense focus on others makes them lousy at caring for themselves.

Workplace wellness programs have been in place for years, and hospitals have struggled to make these programs pay off by helping their employees stick with choices that stave off chronic illness.

But with increasingly sophisticated ways to crunch data, more hospitals are seeing impressive returns on investment from wellness programs, as they find new, more relevant ways to reach out to their workers to help them live healthier, less stressful lives.

McLeod Health in Florence, S.C., for instance, launched its redesigned wellness initiative with an unlikely choice: a 13-week personal finance program. It's been a hit—500 employees participated, racking up $1.5 million in improvements in their financial lives. "We have countless anecdotal testimonials from employees how it's helped them get their hands around finances and that McLeod cares about them," says Tim Hess, associate vice president of human resources.

But what does personal finance have to do with wellness?

"Financial stress and distress take away from people's ability to focus on their work," Hess explains. "We have absentee-ism/presenteeism issues. Research shows that they're not giving to their job what they could."

The organization's wellness program is continuing with more traditional biometric assessments, health questionnaires and incentives to participate. But starting out by giving employees some solid stress reduction and personal life improvement on the company's dime generated some serious good will, he says.

Meanwhile, Sentara Health System, Norfolk, Va., says it's saved $3.4 million in health care costs over three years with 80 percent of its 11,200 benefit-eligible employees participating. The program, which worked with Sentara's Optima Health insurance plan, saved $6 for every dollar spent. Employees filled out health assessments and those with low-risk factors got an immediate $500 per year discount on their health premiums; those with two or more risk factors could earn the incentive by working with a health coach.

The potential for savings like that has most hospitals joining the wellness bandwagon. According to a survey released last month by the American Hospital Association, 86 percent of hospitals have an employee health and wellness program.

The survey was commissioned after the AHA's Long-Range Policy Committee chose wellness as its issue for the year, says Maulik Joshi, AHA senior vice president of research and president of the Health Research & Educational Trust. The goal meshed with AHA's work on its Health for Life campaign in health reform and also connects with federal Healthy People 2020 goals released in December and with provisions of the reform law. Closer to home, Joshi noted, "Many hospitals' missions are focused on the health of their communities, and they start with their own employees."

John Bluford, chairman of the AHA board of trustees and former chair of the Long-Range Policy Committee, notes that improving employee health is an essential goal for the association. "This is a call to action," Bluford says of the survey and its recommendations. "All our hospitals have a legitimate reason to participate and improve the health of their employees. You get a more productive workforce, less absenteeism. Hospitals need to read and understand the information and take action."

Bluford is a big proponent of workplace wellness in his own hospital system, Truman Medical Centers in Kansas City, Mo., where he is CEO. He recently sent a memo to employees noting the $23 million per year the organization spends on medical care for them and their dependents, and challenged staff to reduce that by 20 percent. To assist employees, 70 percent of whom are considered overweight, Truman offers health-risk assessments and biometric screening with a medical plan premium discount for participants; free wellness coaching; special educational programs for employees with chronic illnesses; development of on-site fitness opportunities; and a paid time-off exchange to pay for health club memberships and other wellness activities.

"With some reasonable intervention on health and wellness, we expect to reduce [the amount spent on health care] by 20 percent in a short time frame," Bluford predicts. "Everybody needs to be involved. You have to make sure you get those people who are less motivated to participate."

Community Role Models

For hospital leaders, wellness initiatives connect with a number of strategic goals. "It fits into two organizational strategies—chronic disease management and community health and wellness," Bluford says. Truman, with a large constituency of low-income urban dwellers with poor access to fresh fruit and vegetables, sets up a farmer's market in spring and summer that draws people from the neighborhood. It also is working on a plan to support the establishment of a grocery store in a neighborhood that lacks one.

Neil Douthat, a trustee on Truman's board and past chairman of its charitable foundation, says hospitals have an obligation to model healthful behaviors for patients and the community. "We need to set an example," he says. "Our own employees need to be living the life before they can counsel others to do it."

The AHA survey found the top motivator for adopting workplace wellness is reducing health costs. Next are improving employee health and reducing absenteeism/presenteeism; improving employee morale and productivity; and providing an example to the community.

The board's role has been to support the wellness program as an investment in the organization's workforce as well as its role in the community, Douthat says. Trustees get frequent reports on the status of the programs but don't get involved in the details.

Bill Butler, a board member for both Sentara and its health plan Optima, says hospital administrators and trustees must be personal role models. "We make those choices, we have healthy meals at our meetings," Butler says. "Most board members take the stairs."

Carrots Better Than Sticks

The survey shows a lot of participation in wellness, but that takes a different form at each hospital. The most common are flu shots (97 percent) and mental health services (81 percent); least typical are 24-hour nursing help lines (23 percent) and personal health coaching (37 percent).

Positive incentives are much more common than negative ones (60 percent vs. 6 percent, while 37 percent of hospitals use none). Incentives might include a discount on health premiums (which can be limited by federal law, though that limit is going up and could increase further), a cash bonus or credit toward a gym membership. Forty-seven percent of hospitals in the survey offer a discount between 5 and 20 percent of an employee's monthly premium for participation. About a third of hospitals surveyed offer cash incentives of between $100 and $300 per year, and 41 percent award $100 or less.

Incentives usually are linked to specific types of participation such as completing a health-risk assessment, weight-management program, biometric screen or smoking-cessation program.

Hess says McLeod focuses on incentives to participate rather than penalties for risky health behaviors, such as smoking. The stick approach doesn't fit McLeod's culture, he says. "We want to do this because it's the right thing to do."

Penalties tend to be very unpopular, says Jenny Jones, director of human resources for Sentara. "We proposed charging tobacco users a premium on their health insurance. We took that idea to our CEO and he said, 'What do you think our employees will think about that?' So we did an online survey and within 36 hours we had 2,000 responses. Five hundred of them were nurses and while just 12 percent of them said they use tobacco, 40 percent of them opposed a penalty. So we went back to the drawing board and designed something that was more of a carrot approach than the stick."

Even when attempting to encourage behavior rather than enforce it, employers have to be careful, Hess says. If an employer offers a credit for healthy behavior, those not receiving the credit can perceive it as a penalty because they pay more. Nevertheless, McLeod employees can get a tobacco-free incentive of $10 per paycheck against health premiums.

Health First, a 6,000-employee health system based in Rockledge, Fla., tried wellness incentives that offered a financial reward to anyone who completed a baseline health assessment and then showed improvement. Just 200 people participated. "It was not serving our population," says Bob Walters, corporate director for human resources operations.

So the organization switched to a more open-ended design, giving all employees free access to the system's fitness centers, which are located at or near each of the hospitals. It also sponsors contests for weight loss. Walters says his organization found the best results in a wellness program that gives employees as much choice as possible rather than prescribing what they need to do.

McLeod also has designed a program that is broad-based and intended to give all employees the opportunity to improve their health, not just the small percentage of people with chronic illnesses that eat up a lot of costs. "A broad-based wellness program where you try to touch everybody will give you a bigger impact than doing some of those focused, targeted initiatives," Hess says.

The health system eventually may use a more targeted approach with employees. But McLeod leaders want to be careful about maintaining trust and not seeming too intrusive.

"We've had a good bit of debate about that," he says. "We want to make sure our employees feel safe participating in the program." The system chose to work with an outside consulting firm so workers didn't worry that their medical information was being handled by the company's human resources department. "We have agreements with our claims provider to work within HIPAA rules. We only see the aggregate data, we don't want to get into the individual data."

Data Needed for ROI

There is skepticism about wellness programs, given that their first wave in the 1990s didn't produce good data on return on investment. Just 20 percent of health care employers offering wellness programs believe they reduce health care costs, according to a 2010 survey by the Kaiser Family Foundation and HRET.

Hess says workplace wellness these days is motivated by "getting our hands around medical claims," but also benefits from improved data analysis methods. McLeod had a well-designed, robust wellness program in the 1990s, but it withered when the ROI couldn't be demonstrated. So now leaders are diligent about data, tracking metrics from both health assessments and aggregated claims data to determine what kind of bang they get from their bucks.

"What we didn't have the first time around was the ability to take participation data" and show people where they are now and engage them to improve, Hess says. "From that, we can better manage the results and see if we are really achieving better health claims and productivity. We didn't have a good way to do that in the past."

Sentara also places a high premium on data. It keeps its program mostly internal rather than hiring a vendor, largely because of the tight connection among the hospitals, health plan and physicians in the system. "We've been great partners in designing this and setting goals with [the health plan]," says HR director Jones. "A lot of health care organizations have their insurance plans with another national carrier and can't get the kind of health information or metrics we're able to get very quickly."

Measuring ROI is challenging, and the AHA survey indicates just a third of hospitals have attempted it. Seven percent have succeeded, and those tend to be urban hospitals, those with more than 200 beds or part of a health system. The good news: 82 percent of hospitals that measure ROI report their ratio was equal to or beat expectations.

There also is good news about ROI coming from business researchers looking at wellness programs as a whole. A report in Harvard Business Review that reviewed wellness programs at 10 large employers, including MD Anderson Cancer Center in Houston, concluded that the programs can be an effective way for employers to "chip away at their enormous health care costs, which are only rising with an aging workforce." MD Anderson, for instance, reported that its workers' compensation and injury care unit within its employee health and well-being department reduced lost work days by 80 percent over six years, costs dropped $1.5 million and workers' compensation insurance premiums fell by half.

The AHA committee, in its survey and report on employee wellness, offers some observations and advice about measuring ROI. First, measurement likely will take several years, so make a long-term commitment to the effort. Hospitals also should take care to choose the most effective metrics. These might include savings in health care costs (medical claims) and savings from improved productivity, such as absenteeism and presenteeism. Involve employees by reporting on how the organization has benefited from their improved health. Also, consider boosting the validity of data by tracking employees with similar characteristics who participated with those who didn't.

For the new wave of wellness programs to survive, they'll need to prove their worth. But workplace wellness can be particularly effective in health care settings because of the nature of the business. "If we're doing this right, we show that we care about them," says Hess. "That helps employees care about McLeod and the work they do for our patients. It creates a win-win for the organization and the employees."

Jan Greene is a freelance writer in Alameda, Calif.