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Scarlet: It is a new year. While trying to get fit, your HR department is getting involved
as well with the help of a company called Retrofit. The CEO of Retrofit joins us next
on Surveillance.
Scarlet: All right, let's move on here, because one of the topics we've been looking into
is it's a new year, and everyone is trying to get fit, right? Two-thirds of all Americans,
and, Tom, I'm looking at you here, are overweight.
Michael: Yeah, but that would mean two out of the three of us.
Scarlet: All right. And we know that that obesity and that overweight problem causes
health problems. It costs money. Retrofit reports that obese employees cost an average
of $1,500 a year more in healthcare costs. What are you doing?
Tom: I'm doing iPhone-sthetics.
Brendan: Now, is that an iPhone 4 or an iPhone 5?
Scarlet: That's like what, four grams?
Tom: It's an iPhone 4. iPhone 5 would be . . .
Brendan: So you're really lifting a lot there. That's a big difference.
Tom: It's really weighty.
Scarlet: So beyond subsidizing gyms, and Tom's I guess doing lifts with his iPhone, HR departments
are hiring companies, such as Retrofit, to promote health and help people lose weight.
This is part of our New Economy series, and we speak with Jeff Hyman, the CEO of Retrofit.
Tell me how you guys operate. HR departments hire you, and then what do you do?
Jeff Hyman: It's a weight loss program specifically designed for business professionals. We work
with about 100 different employers. They're looking for their folks to improve their health,
obviously to start to cap their healthcare costs, and obesity is the biggest driver.
So what we do is we work with the employer to basically build a healthier and more well
environment.
Scarlet: And the reason this has gained a lot of traction recently is there's a little
known provision of the Affordable Care Act that boosts incentives for these workplace
programs. How has that affected your business?
Jeff: So employers are now legally allowed to differentiate healthcare premiums by up
to 30%. So what they're starting to tell their folks is, "Look, if you're going to be an
overweight smoker, you're going to pay more in terms of premiums." That's already starting
to happen, and at the same time they're starting to offer programs like Retrofit and others
to help their people avoid that penalty.
Tom: You know, we make jokes about it, but this is, with no pun intended, deadly serious
stuff. How do you incentivize X% of a given company's professional force that says, "Yeah,
yeah, go away"?
Jeff: So we're seeing different companies do it different ways. Some are doing it as
a carrot. Some are doing it as a stick. It really depends on the culture and what their
philosophy is.
Tom: Sure.
Jeff: So, as an example, we work with Salesforce.com. They give every employee in the company $100
a month to spend on anything wellness or weight loss related. So $1,200 a year. It's a very
meaningful stipend, and what they're hoping is that people will take advantage of that,
and they usually do, to either reduce their health or get a personal trainer, join Retrofit
or Weight Watchers, whatever it might be, to avoid that penalty.
Brendan: These are all incentives to employees to change their behavior, and that makes sense,
but we also know that one of the biggest drivers of obesity is stress and loss of sleep.
Jeff: Correct.
Brendan: So are there any incentives to the companies to get them to change behavior as
well?
Scarlet: Good question.
Tom: To let them, let people work nine to five? Let them go home, have a decent meal,
get eight hours of sleep?
Jeff: I don't think we're going to see many companies force their people to leave at five
o'clock. I don't think that's going to happen anytime soon.
Scarlet: Just Credit Suisse.
Brendan: Definitely not here.
Jeff: Not Bloomberg. The good news is that even with remote wireless devices, so the
one I'm wearing, which Retrofit provides, this actually tracks your sleep.
Tom: They're not a gimmick?
Jeff: Not a gimmick, and it tracks your sleep and sends it to the cloud. So at Retrofit
your team of experts, your psychologist, your exercise physiologist monitor your data on
a real-time basis. I mean, it's 21st century weight loss. It wasn't even possible before.
Tom: Let's get Michael McKee in here. Somebody that is actually cut and chiseled.
Brendan: The question I have is, "Do you end up with the same problem that you sort of
see going on in Obamacare, with those taking advantage of the incentives and acting on
this, being the younger, fitter people who need it less, and the older people who need
it more, they don't?
Jeff: So adverse selection basically.
Brendan: Yeah.
Jeff: It doesn't happen that much, because especially in a weight loss program, like
Retrofit, people that join are looking to lose weight. Our average client is usually
looking to lose between 20 and 30 pounds, so most people that are fit, which is only
a third of the population, are usually not joining a program like that.
Michael: But to take the $100 and go spend it on a health club or something, it would
seem that a younger, fit person would be more likely to do that than an older executive.
Jeff: That's true. A lot of the employers are setting up criteria so that only certain
programs are eligible for that reimbursement. There's also some companies that we've seen
that are basically saying, "Look, we're going to do it by BMI, body mass index. So if you're
overweight or 27 or 30 BMI or higher, you'll get a higher subsidy than someone who is not.
Scarlet: So this program rewards employees based on effort, right, going out there and
doing it? Do you see a point at which companies or employees will be rewarded on outcome?
Jeff: Yes. I would say that this year is the year of participation. Next year, 2015, is
really about outcomes. One of the nice things about a company like Retrofit is we give every
one of our clients a wireless scale. Our client steps on that scale, and it wirelessly sends
that data to Retrofit.
Tom: Oh, way cool.
Jeff: It's remarkable. Our average client weighs in four times a week. So we can track
their progress.
Tom: So if I put the scale at the bar of the Red Eye Grill over on 7th and I can go in
Scarlet: That would be ugly.
Tom: . . . hold a drink or not hold a drink.
Jeff: It will measure how many drinks you've got, and it sends all that data. So we're
able to report back to the employer and say, "This person is eligible for the reimbursement.
Tom: Okay. I'm going to pin you down here. I want a serious answer. Weights or cardio?
Jeff: What we recommend to most of our clients is both. it takes . . .
Tom: Oh stop. Weights or cardio? Come on.
Brendan: CrossFit. Both.
Jeff: It really is both. We lose 3% of our muscle every year once we get past age 35,
so you've got to do some strength training. You've got to do some cardio, and the little
known secret is you've got to do intervals. You've got to surge the heart, so you're doing
that for about 30 minutes for about 2 minutes on, 1 minute off, 2 minutes on, 1 minute off.
Michael: How long does it take before employees and employers see a change, see a bottom line
result?
Jeff: Duke University has done the best longitudinal study and found that every overweight employee
that a company has costs $1,500 extra per year in healthcare costs. You start to see
that tipping point after about two years.
Tom: Brendan, jump in here.
Brendan: Well, if we're so focused on this, are we at all worried that long term there's
going to be an adverse selection problem in terms of hiring?
Tom: Exactly.
Brendan: If companies are really starting to pay attention to their costs . . .
Jeff: I actually do think you're going to see something. You will see the discrimination
lawsuits that come with that. So, for example, there are already companies that have said,
and this is legal, "We're not going to hire smokers." So that is already starting to happen,
and it has been proven as legal. I think you're unfortunately going to see weight next, and
there's a lot of weight discrimination.
Tom: With the math you said on muscle decay or muscle loss, you've just told me I've lost
120% of my muscle?
Jeff: If you do nothing to keep it up. So if you're doing strength training . . .
Brendan: Pick up the iPhone.
Jeff: . . . you can maintain, but the average American does no strength training.
Scarlet: You've got a lot of ground to make up.
Tom: Yeah. There you go.
Brendan: But it does, when you talking about the ideal program, it does sound like you're
channeling CrossFit. This is the very . . .
Jeff: One of the little known myths in weight loss is that the smallest piece of it is exercise.
So it's a psychology game, and it's a nutrition game, what you're intaking. The smallest piece
is actually exercise. So when we work with our clients, you're actually getting a behavior
coach who is working for that client.
Tom: You're our new coach. You've got to come back once a week.
Brendan: I was going to go take a shower.
Scarlet: All right. CEO of Retrofit, Jeff Hyman, thank you so much.
Tom: Great. Really good. Thank you so much.
Jeff: Thanks, guys. Appreciate it.
Tom: Outstanding.
Scarlet: All right. Coming up . . .