Target pilot pays employees to monitor health

Shoppers enter a Target store in Arvada, Colorado February 24, 2009.

SAN FRANCISCO (Reuters) - Target Corp, the No. 2 U.S. discount retailer, is testing a program it hopes will lower healthcare costs by paying employees to undergo a health screening and follow recommended steps.

The pilot program is being run in partnership with RedBrick Health. It has been offered to roughly 4,000 Target employees, including 10 percent of the workers at the retailer's Minneapolis headquarters, a distribution center and 11 stores.

"We're going to measure biometrics progress through time," said John Mulligan, vice president of Target Pay & Benefits, in an interview. "How are the average cholesterol scores of our population? How are the average blood pressures of our population?

"We're willing to make the bet that if we see those numbers improve, we will see the financial benefit of that to our team members and to Target. Both of us will share in the cost savings."

The move comes as the Obama administration has made reforming the $2.5 trillion U.S. healthcare industry a top priority.

Healthcare accounts for more than 16 percent of U.S. gross domestic product, nearly twice the average of other developed nations. Healthcare costs doubled from 1996 to 2006, and are projected to rise to 25 percent of GDP in 2025 and 49 percent by 2082 if something does not change.

GETTING PAID TO WATCH YOUR WEIGHT

Under Target's pilot program, participants were paid $25 to undergo a biometrics screening that included measuring cholesterol, glucose and triglyceride levels, as well as blood pressure, height and weight. They also needed to fill out a health risk assessment and register for the program online.

Once those three steps were completed, participants received a personalized health plan and were paid $50 a quarter if they followed recommendations on that plan, such as talking to a nutritionist. Employees could also earn $25 for visiting a doctor for annual preventive care.

Target said that 59 percent of eligible employees at its headquarters completed the three steps to enroll in the pilot, and 38 percent of those employees remain "engaged" in the program on a quarterly basis.

In addition, the RedBrick pilot program pairs employees up with a "health advocate" who can help them navigate their benefits and resolve claim issues.

Kyle Rolfing, chief executive of RedBrick Health, said more employers are looking for ways to lower costs by rewarding employees for taking steps to improve their health.

"By involving people in their health and giving them rewards for making investments in their health we've seen significant returns even in year one in this approach," he said.

Rolfing said employers that have implemented similar pilot programs have seen a decrease in the number employees who fall into high-risk health categories, and they have also seen a drop in healthcare claims being processed.

Target is currently evaluating the pilot to determine whether to roll it out to all of its 350,000 employees.

"We're trying to engage 350,000 people in caring about their health, their family's health and do it in a way that makes getting and staying healthier easier," said Jodee Kozlak, Target's executive vice president of human resources.

Separately, Target also said it has become a founding member of the Alliance to Make US Healthiest, a coalition that aims to help U.S. citizens become more physically and emotionally healthy.

(Reporting by Nicole Maestri; Editing by Steve Orlofsky)