BOARD OF SUPERVISORS
BUDGET ANALYST
1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642
FAX (415) 252-0461

March 11, 2008

Honorable Sean Elsbernd,
and Members of the Board of Supervisors
City and County of San Francisco
Room 244, City Hall
1 Dr. Carlton B. Goodlett Place
San Francisco, CA 94102-4689

Dear Supervisor Elsbernd and Members of the Board of Supervisors:

The Budget Analyst is pleased to submit our report presenting an Evaluation of the City's Employee Health Promotion Programs. The Budget Analyst conducted this evaluation, pursuant to the Board of Supervisors powers of inquiry as defined in Charter Section 16.114. The purpose of the evaluation has been to analyze the efficiency and effectiveness of City departments' employee health promotion programs, and identify program and policy changes to improve outcomes and benefits. This transmittal letter to our Evaluation of the City's Employee Health Promotion Programs presents the Budget Analyst's findings and recommendations.

Employee health promotion programs are worksite programs to encourage employees' physical activity, nutrition, and other activities promoting health. Health programs can take a variety of forms. Frequently offered programs include flu shots, health fairs, health screenings, organized employee walks and challenges, on-site work out facilities and exercise or yoga classes, and other activities.

The City's Existing Employee Health Promotion Programs

The City's two existing Citywide employee health promotion programs include Shape Up at Work and the Employee Assistance Program. Additionally, 13 City departments have allocated funding or implemented employee health promotion programs within their respective departments. Estimated FY 2007-2008 funding for these programs is $1,248,315, which includes $18,000 for the Department of Human Resources temporary intern position to coordinate Shape Up at Work, $338,814 for the Employee Assistance Program, $814,577 for City departmental programs, and $76,924 for a health fair conducted by the Department of Public Works.

In addition, the Fire Department was awarded a $1.2 million one-time grant by the Federal Emergency Management Agency (FEMA) in February 2008 to implement an ongoing wellness and fitness program for the Department's uniform and civilian employees. The total program costs for the Fire Department's program are $1.5 million, including the $1.2 million grant and $300,000 in Department funds.

In general, City programs to promote employee health do not collect and analyze data sufficiently to track program participation and outcomes, although, as noted below, specific programs track some program participation.

The City has two Citywide employee health promotion programs, Shape Up at Work and the Employee Assistance Program, as follows:

• The Mayor issued an executive directive in April 2006, adopting the San Francisco Shape Up at Work Strategies (Shape Up at Work). This directive instructed all City departments to incorporate employee health promotion strategies into their mission statements. The Departments of Public Health and Human Resources and the Health Service System were to assist City departments to develop five-year implementation plans. Shape Up at Work, which promotes employee health through worksite physical activity, nutrition, and other programs, does not have a dedicated budget for program management or implementation. Although the Department of Human Resources hired a part-time intern to coordinate Shape Up at Work programs within City departments at a cost of $18,000 in FY 2007-2008, City departments have participated in the program through existing resources.
  
  Thirty-three departments responding to the Budget Analyst survey reported participating in Shape Up at Work in 2007. According to the Shape Up at Work Steering Committee members, Shape Up at Work has experienced growing participation but does not maintain formal participation numbers.

• The Employee Assistance Program, which is currently organized in the Department of Human Resources, offers free, confidential, and voluntary mental health counseling and information to City employees and their dependents. The program is staffed by licensed mental health counselors. In FY 2007-2008, the Employee Assistance Program has a budget of $338,814, which pays for rent, software licenses and other expenses, and salary and fringe benefits for three positions, including one Senior Employee Assistance Counselor, on Employee Assistance Counselor, and one Clerk Typist.

  The Employee Assistance Program tracks program participation through the Employee Assistance Program's data management system. In FY 2006-2007, the Employee Assistance Program opened 292 client cases during the year, which is approximately 18.4 percent less than the 358 client cases opened in FY 2004-2005. This reduction in cases occurred at the same time as reductions in Employee Assistance Program staff, from 3.5 counselor positions in FY 2004-2005 to 2.0 counselor positions in FY 2006-2007.

In addition to these two Citywide programs, 13 City departments have implemented employee health promotion programs with estimated FY 2007-2008 costs of $814,577, as follows:

• Eleven of these 13 departments reported small amounts of funding for employee health promotion programs or partial funding of Department positions to promote employee health programs as part of their broader responsibilities, totaling approximately $180,781 of the $814,577. These 11 departments include the Airport, the Asian Art Museum, the Human Services Agency, the Department of Building Inspection, Commission on the Status of Women, Fire Department, Public Library, Public Utilities Commission, Recreation and Park Department, Sheriff's Department, and Rent Arbitration Board.
  
  
• The Police Department reported an estimated $383,796 for the Department's physical fitness program for uniform personnel. In FY 2006-2007, 1,298 uniform personnel participated in the Police Department's physical fitness program, which is mandatory for uniform personnel hired in 1994 and later.
  
  
• The Municipal Transportation Agency (MTA) reported $250,000 for the Agency's employee health promotion program. According to the Municipal Transportation Agency, the number of MTA employees participating in the program increased from 1,107 participants in July 2007 to 1,327 participants in January 2008.

In addition to the $814,577 in FY 2007-2008 reported by City departments, the Department of Public Works conducted a health fair for departmental employees, at an estimated cost of $76,924.

The Health Service System's Wellness Project and Dashboard Project

In addition to the two Citywide programs, Shape Up at Work and the Employee Assistance Program, and the departmental programs noted above, the Health Service System is considering two additional projects. The Health Service System has been evaluating the feasibility of a "Wellness Project" through its contract with an outside consultant, Mercer Health and Benefits (Mercer). According to the August 2007 Health Service Board minutes, the Wellness Project would consist of health risk assessments, health coaching, fitness and disease management programs, and behavioral health services. According to a report provided by Mercer to the Health Service Board on September 13, 2007, Mercer is evaluating wellness programs provided by the City's existing health plans with the intention of evaluating gaps in existing programs and proposing program enhancements. Mercer expects to present the preliminary recommendations to the Health Service Board prior to March 2008.

The City has four health plans: one self-funded plan, the City Health Plan, and three insured plans, Kaiser, Blue Shield, and PacifiCare. The Health Service System is in the process of developing an information system user interface (or "Dashboard") that would allow the four City health plans to electronically transfer utilization and health plan performance data to the Health Service System. The goals of the Dashboard Project include (a) standardizing reports and data that the Health Service System receives from the four health plans; (b) improving financial and performance management of the health plans; and (c) measuring health plan members' access to and use of each health plan's health promotion or disease management program. According to the Health Service System, the first phase of Dashboard implementation was completed in December 2007. The second phase of Dashboard implementation, which includes measurement of members' use of the health plans' health promotion and disease management programs, will be completed at a later unspecified date.

The Health Service System refused to provide any cost information regarding the Wellness Project and the Dashboard Project to the Budget Analyst.

Role of the Health Service System in Coordinating a Citywide Employee Health Promotion Program

San Francisco does not currently have an effective City-wide program to promote employee health. The Mayor's Shape Up at Work initiative is largely unfunded, and only 22 departments reported having implemented the Mayor's April 2006 directive to incorporate employee health promotion strategies into their mission statements. The City's decentralized approach to employee health promotion programs results in inconsistent information sharing. For example, the Health Service System and the Department of Public Works did not coordinate or share information on their respective health fairs, despite significant overlap of information, services and vendors between the two health fairs.

The City's decentralized approach to employee health promotion programs also results in widely varying employee participation levels across departments For example, the Municipal Transportation Agency and Police Department employees have direct access to programs sponsored by their respective departments while employees of many other City departments do not have such direct access.

The existing City-wide employee health promotion programs are managed across a patchwork of departments. The Department of Human Resources and Department of Public Health have shared responsibility for coordinating Shape Up at Work. The Department of Human Resources currently oversees the Employee Assistance Program. The Health Service System oversees the City's health plans, and is implementing its Wellness Project and Dashboard Project independently of other City departments.

Our report recommends that the City's employee health promotion programs should be centrally coordinated to eliminate program gaps, ensuring that all City employees have equal access to health promotion programs, and reduce redundancies, such as the overlap of information, services and vendors between the two health fairs noted above. Because the Health Service System has begun working with the City's health plans to develop the health plans' existing health promotion programs through the Wellness Project and improve data collection through the Dashboard Project, the Health Service System is the logical organizational unit for a coordinated City health promotion program. Therefore, the Health Service System should coordinate the two existing City-wide employee health promotion programs, Shape Up at Work and the Employee Assistance Program.

The Budget Analyst notes that, although the Health Service System is the logical organizational unit for a coordinated City-wide employee health promotion program, the Health Service System has not been consistently responsive in working with Shape Up at Work or in providing information for the preparation of this report. Although the Health Service System Executive Director met with the Budget Analyst staff in an initial interview, and Health Service System staff have provided some requested documents, the Health Service System Director refused to meet with the Budget Analyst in an exit conference to discuss the confidential draft report, which was provided to the Health Service System Executive Director on January 18, 2008. The Health Service System also refused to provide any cost information regarding the Wellness Project and the Dashboard Project to the Budget Analyst, as noted above. In fact, the Health Service System's refusal to provide requested information, as detailed further in this report constitutes an impairment of the audit process under U.S. General Accountability Office's Government Auditing Standards prepared by the Comptroller General of the United States.

In order to implement the Budget Analyst's recommendation that the Health Service System coordinate a Citywide employee health promotion program, the Budget Analyst recommends that the Health Service Board, which oversees the Health Service System, should engage in a policy discussion and adopt a resolution that (i) identifies the Health Service System's role in coordinating a City-wide employee health promotion program; (ii) links the Health Service System's Dashboard and Wellness Projects to the City's Shape Up at Work Strategies and Employee Assistance Program; (iii) ensures channels of communication and cooperation with City departments; and (iv) identifies and ensures the Health Service System's accountability and responsibility as coordinator of the City-wide employee health promotion program to the Mayor, the Board of Supervisors, City departments, and City employees.

The Mayor's 2006 executive directive establishing the Shape Up at Work Strategies assigned the Health Service System responsibility for implementing Shape Up at Work, in conjunction with the Department of Human Resources and the Department of Public Health. If the Health Service System were to actually coordinate Shape Up at Work, the Health Service System would need to work more closely with the Department of Human Resources, the Department of Public Health, and other City departments than it currently does. Presently, the Health Service System is not a member of the Shape Up at Work Steering Committee and has not worked consistently with the Department of Human Resources and Department of Public Health in coordinating Shape Up at Work. Further, the Health Service System has moved forward with its own Wellness Project with little discussion or involvement of other City departments.

In order to successfully implement a coordinated employee health promotion program, the Health Service Board would need to ensure the accessibility and accountability of the Health Service System to City departments, their employees, the Mayor, and the Board of Supervisors, as recommended in this report.

Citywide Employee Health Promotion Programs Costs and Benefits

As noted above, the Budget Analyst estimates that City departmental programs to promote employee health, including Shape Up at Work and the Employee Assistance Program, cost approximately $1,248,315 per year. This estimate of $1,248,315 does not include the Fire Department's program to be funded by the $1.2 million FEMA grant, which was awarded in February 2008, or the Health Service System's one-time costs for the Wellness Project and Dashboard Project.

This report does not propose any new direct costs in FY 2007-2008. Transfer of the Employee Assistance Program and assigning responsibility for Shape Up at Work to the Health Service System should not result in immediate new costs.

If the proposed City-wide employee health promotion program were to be coordinated by the Health Service System, as recommended by the Budget Analyst, the City-wide program could incur new costs over time for data analysis and performance measurement, program outreach, and program services. The Budget Analyst has not quantified these potential costs. To identify the program needs and the related potential costs, the Health Service System would need to evaluate and develop a program plan for Shape Up at Work and the Employee Assistance Program, which the Budget Analyst has recommended should be coordinated by the Health Service System. The Health Service System would also need to evaluate and develop a program plan for the proposed Wellness Project and the Dashboard Project.

Studies of employers' programs have found that employee health promotion programs can result in potential savings in reduced medical claims costs, contributing to reductions in health plan premium costs. However, because more than 83 percent of active employees are members of Kaiser or Blue Shield, in which market rates and member profile, rather than utilization, drive monthly premium costs, reductions in utilization or medical costs will have minimal impact on the City's contributions for employee health plans. Consequently, in the professional judgment of the Budget Analyst, employee health promotion programs intended to reduce health plan premium costs will have little impact on actual health plan premium costs.

The City could experience cost reductions from successfully implementing a City-wide employee health promotion program through reductions in workers' compensation leave, sick leave, and disability leave. The Budget Analyst estimates that if the use of such leave were decreased by five percent, the City could realize annual savings of approximately $8.9 million, or savings of $4.0 million if such costs are reduced by just two percent.

Any benefits or savings resulting from implementation of a City-wide employee health promotion program would not be realized immediately, however. Based on the Budget Analyst's interviews with private and public employers and industry experts, improvements in employee health resulting from participation in employee health promotion programs, and related savings, would not begin to be realized until an estimated three years after implementation of an employee health promotion program, and total benefits would not be fully realized until an estimated five years.

We would like to thank the staff of the Department of Public Health, Department of Human Resources, Fire Department, Police Department, Municipal Transportation Agency, Health Service System, and various representatives from other City departments for their cooperation and assistance throughout this evaluation.

Respectfully submitted,

Harvey M. Rose

Budget Analyst
cc: President Peskin
Supervisor Alioto-Pier
Supervisor Ammiano
Supervisor Chu
Supervisor Daly
Supervisor Dufty
Supervisor Maxwell
Supervisor McGoldrick
Supervisor Mirkarimi
Supervisor Sandoval
Clerk of the Board
Cheryl Adams
Controller
Nani Coloretti