Some U.S. companies reforming healthcare in-house

WASHINGTON (Reuters) - Companies impatient to rein in healthcare costs can go ahead on their own without waiting for federal legislation, Safeway Inc. president Steven Burd said on Tuesday.

Steven Burd, chairman, president and CEO, Safeway Inc. speaks in Beverly Hills California April 28, 2008. REUTERS/Fred Prouser

He said that making employees at the third-largest North American supermarket chain accountable for their weight, smoking, cholesterol and blood pressure, has saved millions. Burd proposed the highly praised program used by his company as a model not only to other companies, but to the federal government.

“If you are part of a large organization, you really don’t have to wait for government to do anything,” Burd told the World Health Care Congress being held in Washington. “You can design your own healthcare reform.

“In effect your behavior is a form of currency,” said Burd, who is also Safeway’s chairman and chief executive officer.

Healthcare reform is a priority of both the administration of President Barack Obama and this year’s Congress -- both of which say some kind of legislation must be passed this year.

Americans spend more on healthcare than residents of any other country, yet some 46 million lack health insurance. The cost of care and insurance has been rising rapidly with healthcare costing $2.2 trillion in 2007, or $7,421 per capita.

Healthcare accounts for more than 16 percent of gross domestic product, nearly twice the average of other developed nations. This is projected to rise to 25 percent of GDP in 2025.

It costs Safeway $1 billion a year for 200,000 employees, Burd said, adding that the program had held those costs level since 2005.

Burd agrees with experts who say chronic diseases such as heart disease and cancer are responsible for most of this spending, and that behavior such as smoking, lack of exercise and poor diet are responsible for up to two-thirds of cases of cancer and heart disease.

“We took advantage of a little-known fact; that is that 70 percent of healthcare costs are driven by behaviors,” Burd said.


Safeway, which operates 1,775 grocery stores in the United States and Canada, has been running an experiment called Healthy Measures among 30,000 nonunion workers. Burd said 74 percent of them have signed up for the plan.

Employees have to be part of the program to qualify for a discount -- those who score the lowest pay 51 percent more for health insurance premiums than those who score perfectly.

To take part, employees must submit to an annual cheek swab to prove they are not smoking, have their cholesterol and blood pressure measured and be weighed yearly.

Workers who flunk a test one year but who improve over the next get a rebate of some of the added premium, Burd said.

“We didn’t add anybody to our staff to do this,” he said. The company already had a fitness center at its headquarters and offers discounted gym memberships and a 24-hour nurse health hotline. It also encourages employees to get their health testing done at Safeway’s 1,400 pharmacies.

Steve Lampkin of retailer Wal-Mart Stores Inc said his company’s voluntary program, called the Personal Sustainability Project, has inspired hundreds of thousands of employees, which it calls associates, to adopt healthier behavior.

“Nearly 20,000 associates have quit smoking,” Lampkin told the meeting. “Collectively, associates have lost more than 184,000 pounds (83,000 kg),” he added.

Editing by Eric Walsh