Virtual Fitness Coach, Inc.

Industry Background and Cost Savings for Employers

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*Below estimates are based on national averages and data, sourced at end of document

The Impact of Rising Obesity

Obesity and being overweight is a severe problem facing a vast majority of adults, families and companies throughout the country. Improving the health, wellness and weight of employees and their families can significantly cut company costs on insurance and health, as well as lost work days due to sickness and/or injury for employees. Moreover, employee well being and quality of life can greatly be improved through an effective wellness program both short term and long term, promoting a healthier lifestyle for employees and their families.

In a research study conducted by the World Cancer Research Fund and the American Institute for Cancer Research, researchers found that healthier living would prevent 43% of colon cancer cases and 42% of breast cancer in cases in Britain, and 45% of bowel cancer and 38% of breast cancer cases in the United States.¹

The National Center for Health Statistics² reports that the prevalence of obesity in adult Americans is 32.2%, and the American Academy of Child & Adolescent Psychiatry3 reports between 16-33% of children and adolescents are obese.

Costs Incurred by Obese Workers

Here are reported cost increases and data analysis resulting from obese adults:

• The Kaiser Family Foundation reports: Nationwide, employer-sponsored health coverage premiums for family coverage have increased by 97% since 2000, from $6,438 to $12,680 in 2008.4 Many have experienced 16% increases during the last 3 years much due to the rising epidemic of obesity and overweight adults.
• A study in the journal Health Affairs⁵, noted that per person health care spending for obese adults is 56 percent higher than for normal-weight adults. Over 15 years, the additional costs incurred by obese adults with private health insurance versus normal-weight adults increased from $272 to $1,244 per person per year. The International Journal of Obesity reports, weight gains of 20 pounds are associated with medical care cost increases of >$500 over the last three years.⁶
• Obese workers lose about 13 times more days per year of work from injury or illness.⁷ (In an organization of 10,000 employees, with 32% obesity, that equates to 334,880 hours or an estimated 161 full time employees. With an average national salary of $38,500, the total cost of lost days can be as much as: $6,198,500 per year.)
• Obese workers are 2 times as likely to file for workers’ compensation⁸, which the Workers Compensation Research Institute (WCRI)⁹ reports a state average claim for physicians to be $2,973 and hospitals to be $5,111.
• A Medical News Today article states that through a Duke University Medical Analysis, the average medical claimscosts per 100 employees were $51,019 for the obese and $7,503 for the non-obese.¹⁰

Cost Savings from a ‘Traditional’ Health & Wellness Program

'For every $1 spent on wellness, $16 is saved on productivity, absenteeism and health care premiums", said Sara Alger, Milwaukee executive director of the American Heart Association.¹¹

A sutdy from Kaiser Permanente indicates that:

• Modest weight loss of 5%, attained by participation in a health program, resulted in cost savings from theperspective of the health care system of more than $400 per patient per year..¹² (For a 200 lb adult, that is only 10lbs

SAVINGS WITH A MODEST 5% WEIGHT LOSS AMONG 20% OF EMPLOYEES:

(Estimated data based on various studies and will vary from company to company.)

• 1,326 Obese and overweight participants
• With a weight loss of 5% (-$400 per patient/year)= $530,400 Health Care Savings Per Year
• 8,372 total missed days of work saved by 1,326 obese employees, approximate value = $1,239,700 Total estimated savings from 20% participation = $1,770,100
• Total estimated savings from 20% participation = $1,770,100

While the above savings are impressive, it only represents approximately 20% of Sample Employer’s estimated obese and overweight employees. With 100% participation, savings of $8,850,500 per year are possible according to data from the various studies listed.

Notes

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1. MSNBC. (2009). Clean living could cut third of many cancers. Retrieved February 26, 2009, from MSNBC.com Web site: http://www.msnbc.msn.com/id/29407297/
2. National Center for Health Statistics. (2008). Overweight. Retrieved February 23, 2009, from Centers for Disease Control and Prevention Web site: http://www.cdc.gov/nchs/fastats/overwt.htm
3. American Academy of Child & Adolescent Psychiatry. (2008). Obesity In Children And Teens. Retrieved February 23, 2009, from American Academy of Child & Adolescent Psychiatry Web site: http://www.aacap.org/cs/root/facts_for_families/obesity_in_children_and_teens
4. The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, "2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds," March 25, 2008, p.173, Washington, DC., accessed October 10, 2008, http://www.cms.hhs.gov/reportstrustfunds/downloads/tr2008.pdf.
5. Stop Obesity Alliance. (2007). Get The Facts. About Overweight and Obesity. Retrieved February 24, 2009, from Stop Obesity Alliance Web site: http://www.stopobesityalliance.org/PDF/STOP_Obesity_Fact_Sheet.pdf
6. Sturm R. The Effects of Obesity, Smoking, and Drinking on Medical Problems and Costs, Health Affairs. Mar/Apr 2002: 245-253.
7. International Journal of Obesity. (2009). Effects of weight gain on medical care costs. Retrieved February 23, 2009, from International Journal of Obesity Web site: http://www.nature.com/ijo/journal/v28/n11/abs/0802774a.html
8. Stop Obesity Alliance. (2007). Get The Facts. About Overweight and Obesity. Retrieved February 24, 2009, from Stop Obesity Alliance Web site: http://www.stopobesityalliance.org/PDF/STOP_Obesity_Fact_Sheet.pdf
9. Workers Compensation Research Institute. View WCRI Benchmarks. Retrieved February 25, 2009, from Workers Compensation Research Institute Web site: http://www.wcrinet.org/benchmarks/benchmarks_07/benchmarks_07_tbl-A.html
10. Medical News Today. (2009). Obesity Increases Workers' Compensation Costs. Retrieved February 24, 2009, from Medical News Today Web site: http://www.medicalnewstoday.com/articles/68795.php
11. The Business Journal. (2008). When workers lose weight, companies gain cost savings. Retrieved February 24, 2009, from The Business Journal of Milwaukee Web Site: http://dallas.bizjournals.com/milwaukee/stories/2008/11/24/focus2.html
12. Nichols GA, Brown JB, Stevens VG, Crawford J. Medical care costs reduction resulting from intentional weight loss. Presented at 2004 North American Association for the Study of Obesity Conference; 2004 Nov 14¬18; Las Vegas, NV.