CFRI 2017

Healthcare CEOs Say Leaders Need to Redefine Wellness

As companies compete for talent and corporate culture becomes a differentiator in recruitment, it’s clear that organizations need to shift focus from the financials to the people. And by making physical and mental wellness a number one priority, senior-level financial executives may discover an alternative solution to the health care crisis.

Johnson & Johnson CEO Alex Gorsky spoke to an audience of senior-level financial executives at the Current Financial Reporting Issues (CFRI) conference in New York City yesterday about the mounting pressure on healthcare providers and the need for change. “There is so much pressure building in the healthcare system. One thing that I can say with absolute certainty is demand for healthcare is going to increase over the next 30 or 40 years. These pressures are going to cause changes in new ways, but we have to be thoughtful with that and make sure we keep the patient at the center.”

Aetna CEO Mark Bertolini urged the audience to consider a new definition of health. “Healthy people are productive,” he shared. “Productive people are physically, socially, spiritually, and economically viable and viable people are happy.”

According to the Bureau of Labor Statistics, over the last five years, labor productivity grew at an average rate of just 0.7 percent. Bertolini points to declining health and a “backwards” healthcare system as the culprits for the loss in productivity.

Bertolini explained that we have to go “from the exam table to the kitchen table.” In other words, limited time with a doctor, with a focus on ailments or disease, versus a personal discussion about how things are going at home, major life events, stresses, and even financials. Social determinants such as your zip code, work, or money determine 60 percent of your life expectancy, according to Bertolini.

As the Aetna CEO says, “your zip code matters more than your genetic code.”

Gorsky shared that about 75 percent of the conditions that affect us have a significant behavioral component. “We know that by making certain differences in the way we eat, the way we move, the way we recover, the way we rest, combined with trying to identify the progression of certain diseases much earlier in the process – we could have a dramatic impact on outcome.”

This attention to wellness and prevention is equally as important for employees as it is for customers. As CEO, Bertolini raised the minimum wage and reduced healthcare costs for low-income employees. That decision was fueled by Bertolini’s commitment to yoga and mindfulness. After implementing programs for Aetna employees, they saw a 50 percent reduction in stress levels, a significant increase in productivity and savings in medical costs in just 12 weeks.

The most important thing that influenced change, however, was hearing from employees themselves. Bertolini’s learned how costly the benefits were and that employees didn’t have enough time away from work to take care of their families. “What we learned from those conversations and from those journals was that we needed to help people. We increased, on average, peoples’ disposable income by 28 percent. That turned the rest of the organization on to saying ‘why don’t we do this?’ ‘let’s pay back student loans,’ ‘how about paying people to sleep?’ and all of a sudden the organization was turned on about investing in our employees and in each other.”

Healthcare Reform

Though Bertolini posits that healthcare reform is a good first step in changing the way we think about health, he thinks the focus on financing, rather than the inefficiencies of the current system, is far from inspiring. “Until we get at the underlying cost of care, the investment we’re making as a nation with the outcome we are expecting from that investment, financing in different ways is like rearranging the deck chairs on the Titanic.”

“75 percent of the next $10 trillion of debt in the United States will be related to Medicare and Medicaid. Healthcare is our economic problem. Not only is our spending our economic problem, but the malaise created by an inefficient healthcare system is our problem. We have to fix it. What we’ve done in healthcare is we’ve confused the investment decision with the financing decision. What is it we’re investing in? What return do we expect? How do we pay for it? Healthcare is backwards. Healthcare reform is backwards.”

Gorsky recognizes that reform is no small task. “If I reflect back on the ACA, it was essential that we, as a country, started down this road towards healthcare reform. What we had in place was not sustainable over the long term. So the questions becomes how do we go about making change? And of course to do that you need to make sure that you have the right changes in process, the right changes in the regulatory systems, the right changes in law to accommodate it. At the same time, you’ve got to make sure that you’re going to have a system that works, particularly when it deals with 20 percent of our economy. It’s complex, and local, and very personal.”

Healthcare may not be where it needs to be quite yet, but companies like Johnson & Johnson and Aetna are proof that investing in people is the future. Gorsky’s parting words to the audience were to be proactive about their healthcare. “Invest in your health,” he shared. “Just like you’re investing in your portfolio.”