With the U.S. struggling with a growing obesity epidemic, employers across the nation are wondering which fitness, exercise and weight-loss regimens might best fit with their workforce. There are dozens of concepts and programs available for employers which can make it difficult to select the most appropriate one. The best choice though, might be cold, hard cash.

A study published in late 2007 shows that even a small amount of money can encourage people to make healthier choices and lose weight. Led by Eric Finkelstein, director of the public health economics program at RTI International, a research institute based in Research Triangle Park, N.C., the study tested how effective two levels of modest financial incentives would be for some 200 overweight employees from nearby North Carolina colleges.

All participants were at least 18 years old and considered overweight or obese, as defined by the national body mass index. They were divided into three groups - one group received no incentives, and the other two were given $7 or $14 for each percentage point of weight loss. For a 200-pound person, losing 1% of his body weight would equal two pounds.

Three months into the study, participants with no financial incentive lost an average of two pounds, while those in a $7 group lost about three pounds, and those in the $14 group lost 4.7 pounds. Among the 67% of participants in the latter group who lost weight, the mean payout was $49. Moreover, 17% of participants in the $14, or "front-loaded" group, lost 5% or more of their body weight, compared with 8% in the $7 group and just 4% in zero-dollar group. One participant earned $140 in the study.

"This pilot study reveals that even modest financial incentives tied to weight loss can be successful in reducing attrition and motivating a subset of overweight and obese employees to lose weight in a short period of time," the researchers concluded.

Showing the money

The study is timely given that 26% of employers who participated in a 2004 national worksite survey said they were implementing some form of financial incentive-based program.

Moreover, 90% of participants in Finkelstein's study reported they were in favor of employers or insurers implementing incentive-based programs tied directly to weight loss.

"Employers are profit maximizers in that they will invest in the health of their workforce to the extent that it's [profitable] for them to do so, but given the high cost of obesity, doing nothing is not profit maximizing," Finkelstein comments.

Unlike providing fitness center discounts or improving food choices in the cafeteria, cash provides an instant reward to employees.

"I think money is better than gifts and health insurance credit," says Finkelstein. "You can always take the money and buy other things, and it just has more uses. For people who might not be able to afford Weight Watchers or are less likely to join traditional programs, [money] might be more attractive because the program is more flexible and they can use it however they want to."

Finkelstein has consulted in the past with Tangerine Wellness, a Boston-based company that designs weight-loss programs that employ economic incentives.

Tangerine has produced impressive results for employers. A.O. Smith, a manufacturer based in Milwaukee, has seen a 60% participation rate in a Tangerine pilot program that it started last October. It calculated at a weigh-in event that 131 participants had collectively lost 525 pounds, including one overweight individual who lost 49 pounds.

"It's been so successful that we've already decided to expand the program to two other plants," says Mark Petrarca, senior vice president of HR at A.O. Smith.

A.O. Smith does not have onsite fitness centers, nor does it offer gym membership discounts, making the Tangerine program's success even more impressive. The company awards $4 for each percentage point of weight loss. Employees, therefore, could earn $40 for losing 10% of their body weight. Workers also have been divided into four teams and can earn group incentives of $20 per person for the first-place team, and $10 per person for the second-place team. Tangerine offers daily eating and exercise tips to those who sign up for the e-mail service, and employees can also keep their own food and activities log.

"It's really been working well for us," says Petrarca.

"We recognize the need to improve the health of our workers and to invest in their health. Long term, we think programs like this can also contribute to managing health care costs."

Fluid model

Where Finkelstein's research focused on overweight or obese employees, Tangerine CEO Aaron Day says their programs are available to everyone.

Clients have included companies with just eight employees to those with more than 3,000.

Day believes the Tangerine model has been successful because of its fluidity and certainty.

"I think programs that are prescriptive in nature just don't work," Day remarks.

"If you're focusing on the processes and procedures, then you probably won't get the results desired. And we don't just reward people for losing weight, but also for keeping it off over a period of time."

Typically, Tangerine helps companies set up three-year programs.

However, there are clients that have sought longer-term commitments. The financial incentives have worked so well for some employers that they want to keep the structure of the incentive program intact indefinitely.

It appears money might be the best way to go in terms of rewards.

Day explains workers can feel cheated out of something like a raffle, where nothing is assured and they could end up losing.

Finkelstein and his team use a hypothetical 1,000-employee firm to prove how an employer could benefit from a money reward program.

Two-thirds of workers in this firm are overweight or obese and are participating in a program where $14 is paid for every percentage point of weight lost.

Assuming that 67% of them participate and lose weight, then the total payout per year would be approximately $88,000.

This is less than one-third of the $285,000 annual costs of obesity for a company of this size, researchers estimate.

Read additional EBN coverage on employers' fight against obesity in the January issue.

Also, Read more from EBN about Tangerine Wellness.