One of Missouri's largest employers saw a sharp, rapid drop in hospital visits by workers and their families for costly and chronic conditions after insisting employees in its most popular, generous health plan enroll in wellness initiatives.

Outpatient costs, meanwhile, increased almost as much as hospital costs fell.

The results, published in the journal Health Affairs, found an estimated 41% drop in hospital stays between January 2004 and December 2006 for stroke, heart disease (hypertensive and ischemic), chronic obstructive pulmonary disease and acute pulmonary infections among employees and dependents with health benefits from BJC HealthCare.

BJC, based in St. Louis, has 12 hospitals in Illinois and Missouri and adopted a new wellness program in 2005.

BJC paid a greater share of the total premium cost under the most-generous of BJC's three health plans, or gold plan. (Employees, however, did also pay higher premiums in the gold plan.)

Notably, employees paid nothing out-of-pocket for hospitalization under the gold plan. Workers paid 10% to 15% of hospital bills under two less-generous plans, the silver and bronze plans. The gold plan also waived the deductibles.

The additional cost to BJC for the gold plan totaled $1,700 for family coverage when compared with the silver plan, the authors wrote.

But to enroll in the gold plan—which in 2005, replaced a managed-care plan that covered 90% of BJC workers and dependents the prior year—workers had to report their waist size, blood pressure, cholesterol and field other questions on a health assessment. Employees also had to promise to eat well and exercise. Smokers had to enter a cessation program.

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Economist Gautam Gowrisankaran, one of the study's researchers and a professor at the University of Arizona, said the results suggest a strong incentive to participate in wellness plans could be effective.

The estimated drop in hospital visits for chronically ill patients was calculated based on the actual decline in hospitalizations in BJC's health plans and by comparing data with two nearby employers that made no health plan changes.

Hospital costs per month dropped $22.20 per month for each enrollee in 2005 and 2006 compared with 2004, the year before the incentive program. Outpatient care increased $19 per month for each enrollee during the same period, and use of blood pressure and cholesterol drugs increased.

Mr. Gowrisankaran said the increased outpatient costs did not include $530,000 in 2005 and $550,000 in 2006 to operate the wellness program.

Results suggest employers can help improve workers health, but that may not immediately lead to lower costs, Mr. Gowrisankaran said. Employers may also benefit in ways not measured by the study, such as greater productivity and fewer sick days, he said.

The authors conclude that the study “underscores that wellness program incentives under the Affordable Care Act are unlikely to greatly reduce healthcare spending over the short run.”

But the findings could say little about the broad potential of such programs because of the wide variation in their design, said Harald Schmidt, a research associate with the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania Perelman School of Medicine.

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Mr. Schmidt praised the study as a contribution to a growing body of research on employee health incentives and interventions, but he noted that wellness program incentives can vary by size and the frequency that workers are rewarded or penalized. Programs may also target different behaviors, and research suggests that simple actions—such as filling out a health assessment—are easier to influence than more complex behaviors such as losing weight or trying to quit smoking.

BJC did not monitor attendance in smoking cessation class for those required to sign up, Mr. Gowrisankaran said. Nor did BJC require employees to demonstrate they made good on their promise to eat well and exercise, which Mr. Gowrisankaran called “completely unrealistic” and “intrusive.”

Melanie Evans writes for Modern Healthcare, a sister publication of Business Insurance.