Recommendations

The Health Service Board should:

1. Engage in a policy discussion and adopt a resolution that:

The Board of Supervisors should:

2. Authorize the transfer of the Employee Assistance Program, including one Senior Employee Assistance Counselor, one Employee Assistance Counselor, and one Clerk Typist, from the Department of Human Resources to the Health Service System during the FY 2008-2009 budget review, upon adoption of a resolution by the Health Service Board.

3. Request the Mayor to assign responsibility and oversight for Shape Up at Work to the Health Service System, upon adoption of a resolution by the Health Service Board.

4. Instruct City departments to incorporate employee health and safety into the departments' mission statements and strategic plans, as part of the FY 2008-2009 budget review.

The Health Service System Executive Director should:

5. Report to the Government Audit and Oversight Committee prior to June 1, 2008, on the Health Service System's proposed Wellness Project, including:

6. Work with the Department of Public Works and other City departments to develop coordinated plans, extending access to health fairs and other health plan information, including access to stand alone computer terminals, to difficult-to-reach employees due to work location or shift assignment.

7. Develop short term and long term employee health promotion program measures, including program participation, changes in risk profile, health plan utilization, decreases in absenteeism and other measures of program effectiveness and provide an annual program report to the Board of Supervisors prior to June 30 each year.

Costs and Benefits

Costs of Recommendations

This report has not proposed 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, as recommended in Recommendations 3.2 and 3.3, should not result in immediate new costs.

• 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. These three positions and the associated program expenses, which are funded by the General Fund, would be transferred to the Health Service System.
  
  
• Shape Up at Work has not had a dedicated budget or staff. The Department of Human Resources hired a part time intern to coordinate the program, with an annual salary cost of $18,000 but this position no longer exists. Implementation of Shape Up at Work has been largely through the voluntary efforts of the Steering Committee and other City department staff.

  The Shape Up at Work Steering Committee members stated the need for a Shape Up at Work coordinator. The Budget Analyst has not recommended a new coordinator position, but has recommended in Recommendation 3.5(d) that the Health Service System evaluate and report on the potential integration of Shape Up at Work into the Health Service System's proposed wellness program, including existing Health Service System resources for program coordination and analytical support. If the Health Service System were to request new resources, including new positions, to support Shape Up at Work, these would be General Fund costs. For example, a new 1823 Senior Administrative Analyst position would incur new General Fund costs for salaries and benefits of $113,295. The Health Service System would need to provide justification for any new position requests, which would be subject to Board of Supervisors approval.

Summary of Costs

In summary, City departments' programs to promote employee health are estimated to cost approximately $1,248,315 per year. These costs include:

• $814,577 for City department programs,
  
  
• $338,814 for the Employee Assistance Program,
  
  
• $76,924 for the Department of Public Works health fair,
  
  
• $18,000 for the Department of Human Resource's temporary part time intern to coordinate Shape Up at Work.

The Health Service System refused the Budget Analyst's request to provide information on the one-time costs to implement the Health Service System's Dashboard Project and Wellness Project, which are General Fund costs.

The proposed City-wide employee health promotion program coordinated by the Health Service System 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 program needs and potential costs, the Health Service System will need to evaluate and develop a program plan for the Shape Up at Work program, Employee Assistance Program, health plans' wellness programs, and availability of program and health plan data.

Program Benefits

The Budget Analyst interviewed other local government employers, business organizations, and health program professionals for this report. According to these interviews, employers can not easily identify the cost benefits of employee health promotion programs. As discussed in Section 1, 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, 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 benefits from implementing a City-wide employee health promotion program through reductions in workers' compensation, sick leave, and disability leave costs. As discussed in Section 1, the City's lost work hours due to sick leave, disability leave, and workers' compensation leave were 6.6 percent of total work hours, resulting in an estimated $160 million in salary costs. If the use of leave were decreased by 5 percent, a reduction of 0.33 percentage points from 6.6 percentage points to 6.27 percentage points, the City's lost work hours due to sick leave, disability leave, and workers' compensation leave would reduce to an estimated $151 million in salary costs, an annual savings of approximately $8.9 million. If the use of leave were decreased by 2 percent, a reduction of 0.13 percentage points from 6.6 percentage points to 6.47 percentage points, the City's lost work hours due to sick leave, disability leave, and workers' compensation leave would reduce to an estimated $156 million, an annual savings of approximately $4 million.

Any cost benefits resulting from implementation of a City-wide employee health promotion program would not be realized immediately. According to King County, any improvements in employee health and resulting cost benefits would be begin to appear three years after implementation of an employee health promotion program and would not be fully realized until five years.