In many small and inexpensive ways, businesses are purging poor health habits in the workplace and reporting some encouraging outcomes, from trimmer worker waistlines to improved health measures. Business leaders hope fitter employees will be more productive and miss fewer days of work.

But will the wellness craze spur reductions in the annual rate of employer health care spending--the Holy Grail of cost containment? Only time will tell.

A year ago, Rockford Acromatic Products Co., a family-owned automotive parts manufacturer in Loves Park, Ill., began rewarding employees for shedding excess weight and maintaining a healthy body mass index. At the start of the initiative, more than two-thirds of its 80-member workforce was overweight or obese. Since then, employees have shed a collective 330 pounds.

Their secret? A little healthy competition. Employees compete individually and as teams for cash awards. An employee can earn $4 per quarter for each 1% drop in weight. Those rewards are cumulative, so workers who sustain their weight loss from quarter to quarter continue to reap the financial benefits of a leaner body.

The company also attempts to foster a healthier work environment. Personal trainers counsel employees about exercise and nutrition. On Fridays, the company pays for fresh fruit for employees to snack on during breaks.

"I love doughnuts--let the record be clear on that--but we wanted to introduce people in common sense kinds of ways to ideas about nutrition and exercise," said Jim Knutson, Rockford Acromatic's risk manager.

Mr. Knutson figures the company is spending about $600 a month, including the cost of hiring Boston-based Tangerine Wellness Inc., which designed the weight management program and online tools used by the company.

Although Rockford Acromatic's annual health care claims costs have dropped 15% to 20% over the past year, Mr. Knutson said it's still too soon to draw a cause-and-effect relationship. For a small company, such a precipitous drop over a short period of time could easily be random. On the other hand, it appears that the decline is due to a reduction in utilization of services--not costs for third-party administration or reinsurance. "We're encouraged by what we see in that arena, certainly," he added.

Businesses don't have to spend a fortune on wellness to get results, said Sandy Walters, executive vp and senior consultant at Kelly & Associates Insurance Group Inc. in Hunt Valley, Md.

An employer might spend a couple of dollars a month doing a wellness assessment and using free or low-cost services from national organizations, such as the American Cancer Society, which helps businesses start an employee wellness program.

Mr. Walters has clients with more elaborate programs that spend closer to $50 per member per month, but he hasn't seen any studies that show $50 buys more value. The key, he said, is "having people motivated and participating one way or another."

Where big companies often fail, added Tangerine Chief Executive Officer Aaron Day, is failing to align the incentive with the expected behavior. "If you pay someone to join a gym, it has nothing to do with whether they ever use the gym," Mr. Day said.

Mr. Walters advocates a baseline assessment of employees' health status before implementing a wellness plan to better target limited dollars. "If you don't have a lot of smokers, don't spend a lot of time on smoking," he said.

Often, though, small businesses aren't even aware of available disease and lifestyle management programs that could help their employees keep chronic diseases in check, quit smoking or reach a healthy weight. That is why the Council of Smaller Enterprises, the small business division of the Greater Cleveland Partnership, is launching a new wellness initiative in partnership with Cleveland-based Medical Mutual of Ohio to teach 15,000 COSE members about existing disease and lifestyle management programs.

"This will be the largest effort of this type in the country that we're aware of and that is specifically focused on small business," said Nancy Pokorny, COSE's vp of member products.

In addition to spreading the word about existing programs, COSE will teach businesses how to encourage employee participation in disease and lifestyle management programs through financial incentives. COSE also plans to hand out grants of up to $1,500 per business to help pay for prizes--another way employers can get employees to join the wellness bandwagon.

PyraMax Bank in Greenfield, Wis., is a big believer is rewarding employees for healthy behavior. Each quarter employees can earn $45 to $80 depending on their level of participation in a variety of activities that include having their blood drawn annually, telephonic health coaching and wellness campaigns. Beginning in September, the company's 140 employees will get credit for participating in "Start!," the American Heart Assn.'s walking program.

PyraMax budgets $2,500 for campaigns, prizes and sports sponsorships a year and says the payoff has been tremendous. It estimates its wellness program has saved at least $160,000 over two years based on just those employees who completed a health risk assessment, and up to $250,000 during the period across all wellness participants. For hypertension alone, the number of employees reporting the condition dropped 13%, saving $14,000 to $21,000, company officials said.

The point of the program is to reduce costs and get people up and moving, said Ondine Wallinger, PyraMax's human resources coordinator. "Each year we keep jazzing it up and going up another notch and making it more exciting and fun for the employees."