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The Business of Corporate Fitness

The Business of Corporate Fitness

Even during the economic slowdown, corporate fitness and wellness programs survived relatively unscathed as more employers realize that an investment now in these programs could pay off later.

Executives at both large and small companies are now thinking alike when it comes to their employees’ health and wellness. Even during the recent economic slowdown, corporate fitness and wellness programs survived relatively unscathed. And it is hard to argue with the reasoning.

Numerous studies have shown that, during a three-year period, medical costs and costs associated with employee absenteeism are reduced by $2 to $3 for every $1 spent on workplace fitness and wellness programs. Indeed, the rest of the business world is discovering what those in the fitness industry have known for years: Healthy and fit individuals generally need fewer health care services, log fewer missed work days and are more productive when they are at work. That knowledge has led more businesses to partner with wellness companies.

“We are definitely getting more requests now than ever before,” says Debra Siena, president of Proactive Partners, a Chicago-based company that manages 19 corporate fitness centers and has been offering such services since 1989. “I attribute the increase to three things. First is health care reform. Second, the focus on prevention and how making healthier lifestyle choices are so important. And third, the recession, during which people lost jobs, perhaps lost health benefits, and are now focused on remaining healthy.”

All types of companies are now requesting workplace wellness and fitness services, Siena says.

“We used to get requests primarily from self-insured jumbo-sized companies that were interested primarily in giving benefits and perks to their employees,” she says. “Now we’re seeing companies of all sizes engaging in employee health and wellness as an integral part of doing business. So there’s been a leveling of the playing field in this space—a democratization, if you will.”


Individual Clubs

Most of the corporate requests for proposals for fitness management services these days go to a handful of larger companies that specialize in this space, says Mike Flanagan, CEO and president of Chicago-based LifeStart Wellness Network, itself one of the larger corporate fitness management companies with 21 corporate clients. Other companies include Proactive Partners, Plus One Health Management (based in New York), HealthFitness Corp. (based in Minneapolis), Advantage Health (based in Bloomington, MN), L&T Health and Fitness (based in Falls Church, VA) and Club One (based in San Francisco).

But, Flanagan says, opportunity still exists for fitness companies large and small that are looking at expansion in underserved corporate markets. High Impact Health & Fitness Services, Leominster, MA, is one such smaller company. Stephen Holt, president of the corporate fitness and wellness company, says High Impact Health & Fitness Services, which has six clients, has seen more interest in wellness programming among his corporate clients, all of whom want to reduce their companies’ health care costs.

“We identify the major employee health risks and develop comprehensive strategies to reduce these health concerns, thus potentially driving down their health care utilization,” Holt says.

Some individual club operators who already offer corporate fitness programs also are reporting an upward trend in that part of their business.

“Participation has maintained healthy growth since the recession of 2008, and [we are] looking forward to future exponential growth,” says Michael Smith, director of Weston Fitness, a health club that caters to the corporate market in downtown Philadelphia. “Our corporate wellness initiative is based on developing long-term win/win partnerships to increase the overall health and wellness of Philadelphia. With fostering a health-conscious environment, both Weston Fitness and the partnering companies benefit financially. Companies are beginning to understand that investing in prevention is less expensive than spending on the cure.”


Pilot in Denver

Another individual club that is active in corporate fitness is the Denver Athletic Club (DAC). It quietly launched a corporate fitness pilot program in December at the request of several corporations in its region. Corporate clients pay yearly subscriptions to DAC and get several services. For example, the client company can send an employee (usually a human resources representative) to DAC for monthly roundtable discussions with other human resource and corporate wellness promotion professionals to discuss workplace wellness.

DAC’s fitness director will go to each subscriber’s workplace four times annually to give seminars on wellness topics (e.g., benefits of physical activity, stress reduction, nutrition) that suit the needs of the employees. And if one of the employees of a corporate client joins DAC, the club’s $375 initiation fee is waived.

Six corporate partners signed up in the first four months of the program. Annual corporate subscriptions range from $250 for companies with 50 or fewer employees up to $1,000 for companies with 501 or more employees.

"We launched this because we were getting a lot of questions and requests for corporate fitness programming,” says Lauren Schwartz, DAC’s marketing director. “We didn’t want to over-promise what we knew we could deliver, so we’re starting slowly. We’re catering to offices in our region, those that don’t already have their own corporate fitness facilities or that haven’t hired a corporate fitness management company.”

It seemed like the right thing to do, Schwartz continues, because Colorado is usually on the lists of the healthiest states.

“People here take their health and fitness seriously, and they know that improving employee health and fitness adds to the bottom line,” she says.

Success in Small Towns

Interestingly, it is not just club operators in big metropolitan areas that are capitalizing on the corporate fitness trend. Mary Greeley Medical Center’s Lifetime Fitness Center in Story City, IA—population of about 3,500—has nine corporate fitness clients.

“Initially, we were approached by a company here in town that wanted to improve their employees’ health and fitness,” says Brenda Baker, supervisor of the fitness center. “They asked if we would give their workers a discount to our facility and then send them monthly utilization reports.”

One of Lifetime Fitness Center’s corporate clients, Key Cooperative, an agricultural co-op, reimburses each of its employees $15 per month if he or she works out at Lifetime Fitness Center at least eight times during that month.

“Even that small amount per month seems to be a good incentive for some employees to get them in the gym,” says Valaree Muhlenburg, human resources director at Key Cooperative.

The Society of Human Resource Management (SHRM) reports that 31 percent of organizations offer rewards or bonuses to employees who complete certain health and wellness activities. But bonuses, discounts and other incentives do not work for everyone. Enter one of the newest strategies: disincentives.

“Even the insurance industry is starting to look at disincentives when they talk about employee consumerism,” Flanagan says. “In this concept, the onus is on the employee to participate and get well or pay more for their health care. A lot of companies are interested in that now. And HIPAA (the Health Insurance Portability and Accountability Act) allows for that. If a company offers a bona fide wellness program, it can offer an incentive to use it—or a disincentive to those who don’t.”

Beyond Utilization

Incentives and disincentives might help motivate employees, but many business owners want to ensure that the memberships are being used. Lifetime Fitness Center sends Key Cooperative a monthly report noting the number of visits by each employee.

That type of tracking, however, may not be enough in the near future. Increasingly, corporate clients want to see that their wellness offerings actually are improving worker wellness and decreasing health care costs in a tangible and quantifiable way, several corporate fitness management executives note.

“Five to 10 years ago, employers wanted to see mainly screenings, such as health-risk assessments, lipid profiles, etc.,” Siena says. “We would aggregate the data on employees to give to the employer and to raise awareness of employee health levels. Now, awareness is not enough. Today’s employers want to provide programs and initiatives that actually increase the health level of high-risk employees and keep all employees healthy.”

Proactive Partners has geared up for this heightened requirement of in-depth data tracking.

“When we get requirements for data, we collaborate with the client, usually the HR reps, and we supply what they need, such as an employee assessment profile,” Siena says. “We can aggregate and collate various data, and then give employers and their insurers information that helps determine health care costs vs. participation in specific programs, injury prevention program participation vs. injuries logged, and other correlations that help the employer quantify the programs we offer.”

 Flanagan concurs that today’s clients demand more reports with a greater depth and breadth of data.

“They want to see in the aggregate that the percentage of a population using a facility is showing actual health improvements,” he says. “To help achieve that, we make it mandatory that each participant undergo an initial health risk assessment with biometric measurements. We then aggregate those data, no employees’ names given, calculate the risk factors and show the client.”

LifeStart is taking this concept to the next level. This year, it will open 15,000-square-foot wellness clinics inside corporate fitness centers at two clients’ sites: one at the Altoona, PA, headquarters of a gasoline and convenience store chain, and the other in New Orleans at a manufacturing facility. The wellness clinics inside the corporate fitness centers will have registered dietitians, physical therapists, exercise physiologists and other professionals on staff.

“We’ll be able to share data between the clinic and the fitness center, to refer members back and forth,” Flanagan says. “These are forward-thinking companies, and with them, we’ll focus on ancillary services of health care, screenings and reporting.”

Through the clinics, LifeStart will be able to better show how employer costs are affected by LifeStart’s work, Flanagan says.

“So we’ll be able to produce more complex reports for clients,” he says. “We’ll have shared data migration, which will be essential in our ability to track employees’ progress.”

Flanagan will publish the results when he has enough information to share with the rest of the corporate fitness and wellness industry, he says.

Operators such as Flanagan show that facilities with the right resources who are not currently focusing at least some of their marketing and programming efforts on the corporate market may be missing a large revenue opportunity.

Today’s corporate leaders appear to now understand the inherent value of a healthy workforce, and they seem ready to support initiatives that help them achieve that goal.

“Corporate fitness is not just about discounting dues, like many commercial clubs do,” Siena says. “Rather, it’s about improving the health of people in the community.”

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