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Fascinating profile in Business Week of Jim Hagedorn, CEO of Scotts Miracle-Gro Co., who is fighting the high cost of health care by forcing employees to take responsibility for their own wellness.

“Scotts is in the vanguard of companies seeking to monitor and change employee behavior,” Business Week writes. “The company's outlier status reflects the born-again zeal of its CEO. Hagedorn is a reformed nicotine addict himself. He smoked two packs a day for 20 years—until his mother, also a heavy smoker, died of lung cancer. Hagedorn quit the same day.”

Scotts banned smoking by company employees and has made the fight against obesity a major priority, and in doing so, adopted a carrot-and-stick approach. The company did its best to convince employees that they would be better off if they paid closer attention to their health, but also was willing to fire people if they did not adopt behaviors that would help them live longer and help the company drive down costs. One example:

“Hagedorn built a soup-to-nuts medical and fitness center across the street from headquarters. Operated by Whole Health, the 24,000-square-foot facility cost $5 million and can meet pretty much any health-related need an employee might have, including a drive-thru for free prescription drugs. The clinic employs two full-time doctors, five nurses, a dietician, counselor, and two physical therapists. A team of fitness coaches provides personal training sessions for $30 an hour.

“Scotts employees are now urged to take exhaustive health-risk assessments. Those who balk pay $40 a month more in premiums. Using data-mining software, Whole Health analysts scour the physical, mental, and family health histories of nearly every employee and cross-reference that information with insurance-claims data. Health coaches identify which employees are at moderate to high risk. All of them are assigned a health coach who draws up an action plan. Those who don't comply pay $67 a month on top of the $40.”

Business Week writes that “so far, the company says, more than 70% of headquarters staff belongs to the fitness center. The smoking-cessation program has already had a 30% success rate. The wellness program, which costs $4 million a year to run, is a financial drain. But the company expects it to pay for itself in three to four years.”

That’s not to say there aren’t challenges. At least one lawsuit has been filed against the company by a dismissed employee (who says that he was fired for smoking), and if it is successful, it seems likely that the lawyers will be lining up to take a crack at Scotts’ policies.

But there also are success stories about people who have changed their lives because Scotts forced them to be more vigilant about their own health.
KC's View:
There’s no question that the edges of propriety are being flirted with here, that legitimate questions can be raised about how involved a company should be in terms of the personal behaviors of its employees. One lawyer uses the “slippery slope” argument, suggesting that once the company is able to ban smoking and force employees to deal with obesity issues, it won’t be long before it can stop them from “eating processed sugars, owning dangerous pets, flying private aircraft, mountain climbing, downhill ski racing, single-handed sailing, or spreading toxic chemicals on lawns.”

On the other hand, it can be fairly argued that these people are killing themselves and asking for the company to foot the bill once they fall ill. Which also isn’t fair.

The one thing we would say about the Scotts approach is that the company isn’t just making up rules and enforcing them. It is working hard to be a participant in the process and supportive of people working hard to change their lives.

Good for them.