Published on: January 15, 2008Burd, Nooyi Urge Creation Of Coalition Focusing On Health Care, Obesity
SCOTTSDALE, Arizona - In separate presentations today to the Food Marketing Institute (FMI) Midwinter Executive Conference here, the CEOs of Safeway and PepsiCo each threw down a challenge to the industry to create a coalition that can fight obesity in the US and develop a more holistic approach to the health care issue.
The challenge from Safeway’s Steve Burd certainly had more meat on it, since it came a year after he’d rocked the same conference with a speech about corporate and national health care policy that stressed the importance of personal responsibility, and pledged to create a corporate approach at Safeway that would have enormous impact on both the health of its employees and the health of the company’s bottom line.
This year, Burd’s update on last year’s speech came after a 12-month period in which his company had negotiated numerous union contracts, each of which had health care-related elements. And if there was one question that hung out there a year ago, it was whether Burd would be able to make his argument stick during negotiations, and convince union leaders that it simply made sense that people who demonstrate unhealthy behaviors should pay higher insurance premiums than people with more healthy lifestyles.
Remarkably enough, he did. Burd said that in virtually every negotiation, union leaders were willing to adopt a personal responsibility-driven health care model because they understand that if health care costs continue to go up, there will be no money left for pay increases. (And the fact that Safeway is willing to write a rebate check at the end of the year to people who change their behavior and adopt a healthier lifestyle certainly means hat Burd is putting his money where his mouth is.)
Burd reiterated some of the basic numbers he presented in January 2007 – that 70 percent of all healthcare costs and behavior-driven, that 74 percent of all health care costs are related to four chronic conditions, the vast majority of which can be reduced through a change in personal behavior and that the private sector – through smart and disciplined programs – can reduce costs without shifting costs or turning to the government for assistance. In the case of Safeway, Burd said, health care costs were taken down 13 percent in 2006, remained flat in 2007, and he was convinced that they would stay flat or fall further in 20098.
Burd noted that the Safeway approach has been two-pronged – it both encourages greater amounts of exercise (through a corporate fitness center and subsidizing gym membership costs in other locations) and better eating (the company cafeterias subsidize healthy meals and charges full market value for less healthy options).
But there were other, remarkable elements to the Safeway approach that Burd described, including a soon-to-launch concierge service that will assist employees and their family members diagnosed with either cancer or cardiovascular disease. It will, he said, give them some they can call and rely on for support after getting the diagnosis, helping them make the proper and most effective treatment decisions.
And, he said, Safeway currently is forming a healthcare services company that will endeavor “to help other companies and governments replicate our experience.”
Burd urged attendees – retailers and manufacturers alike – to join the Coalition to Advocate Healthcare Reform (CAHR), which currently consists of 53 members and is focused on influencing national public policy in the health care arena. The essential concept is to create a mechanism so strong that it will be able to influence, even dictate, national policy in this area because it has been so effective and efficient, creating a market-based healthcare system that focuses on universal coverage and individual responsibility, imbedding real change within both public institutions and private enterprise.
In the morning’s opening presentation, PepsiCo CEO Indra Nooyi chose to address the obesity crisis in America, urging the food industry – and society at large – to “stop the blame game. You cannot blame one person, industry or government.”
Nooyi suggested that the industry band together to create a national awareness program on the scale of the “Keep America Beautiful” and “Buckle Up” campaigns. Such a campaign, she said, would develop science-based programs that could be distributed to schools, helping students understand portion control, healthy eating and the importance of moderation; it could also lobby for states to mandate K-12 physical education programs.
Virtually everyone in the industry can agree on both the goals and the process, Nooyi said. “The hardest part is the will,” he said. And she called for an obesity-focused industry conference that would take place within three months, aimed at pulling together a cohesive and coherent strategy.
Burd agreed with the suggestion, but emphasized that any obesity strategy has to be a subset of the larger health care debate.
Note: Michael Sansolo will offer additional analysis in his “Sansolo Speaks” column Tuesday morning.
In other news...
• Barry Scher, the longtime vice president of public affairs at Giant Food and Ahold USA, received the FMI 2008 Glen P. Woodard Jr. Public Affairs Award, in recognition of his leadership in helping the industry address governmental issues.
• Liz Minyard, former co-chair and co-CEO of Minyard’s Food Stores, received the FMI 2008 Sidney R. Rabb Award for community service, especially “her efforts to feed the hungry and help the homeless, students and other people who suffer from chronic diseases.”
• Tom Infusino, chairman emeritus of Wakefern Food Corp., received the FMI 2008 Herbert Hoover Award for “personal and professional excellence in serving the food retail and wholesale industry.”
• A.G. Lafley, chairman/CEO of Procter & Gamble, received the FMI 2008 William H. Albers Industry Relations Award.
- KC's View:
- Over the last six years, it seems like the obesity issue has come up in some sort of MNB story at least once a week … and while I think there is a public policy role that government can play, the country – and individual consumers – will be far better off if the notion of individual responsibility is front-and-center.
This is the central thesis advanced by Safeway’s Burd, and I find it no less compelling today than I did a year ago. In fact, it may be more compelling, because real, not just theoretical, dollars and cents are beginning to be show up in the ledger, even as care gets better and people become more responsible.
Burd’s argument, at its most basic, is this. As a driver, you get better insurance rates if you have a good record than if you have a bad driving history. That same formula should be applied to health insurance.
I have to say that it is impressive the extent to which Steve Burd has made this issue a kind of personal mission … and I am convinced that part of the reason he is so successful – and persuasive – is that this has become a personal passion, one that he lives and well as preaches. It isn’t just about money, but doing something that can have lasting impact on society as well as business.
It’s strong medicine for business, but necessary.