IN AN INDUSTRY where business is made or broken by how well guests are treated, it shouldn’t be unreasonable for those who provide hospitality to receive the care they need.
To curb escalating health costs, operators are turning toward outsourced services and programs that emphasize well-being. Pending legislation might also offer financial relief. If the result is lower turnover in a tight labor market, the efforts are bound to be worthwhile for large and small operators.
“Every employee, from the least glamorous to the most glamorous, is important to the success of the company,” says Peggy Rubenzer, director of people services at P.F. Chang’s China Bistro. “Because of that, providing healthcare is extremely important to us.”
WELL BEING
Providing health-related initiatives called wellness programs in addition to traditional health benefits is not new, but the concept still is in training wheels. In 2004, Seattle-based Starbucks Coffee rolled out Thrive!, an online wellness program where employees can monitor their health, but the company has yet to study the program’s effectiveness.
P.F. Chang’s China Bistro offers wellness programs for senior management in conjunction with its healthcare provider and plans to extend the program to all employees in several years. The Scottsdale, Ariz.-based chain also sponsors the annual Rock ‘n’ Roll Arizona Marathon (r.) in Phoenix, Scottsdale and Tempe, which it encourages employees to enter. Last year, 170 employees participated in the event.
Foodservice is the biggest employer at Miami University in Oxford, Ohio. So when the university started analyzing rising healthcare costs, it also looked at ways to improve overall employee health and well-being.
Campus human resources and foodservice departments teamed up six months ago to embrace wellness programs. The For Your Information training fair offered skin-cancer screenings, hearing tests, blood-pressure tests and tips on maintaining health.
Informational events are designed to reduce weight and smoking. By offering information on healthful living, Bill Moloney, director of student dining, hopes to soften the impact of rising healthcare costs.
“If we can spend this money on wellness and our overall costs go down, then we think that the wellness program is the way to go,” says Moloney.
COST CRUNCH
When it comes to offering employee healthcare, it’s no secret that costs can be prohibitive. According to a study by Washington, D.C.-based Employee Benefit Research Institute, 59% of small companies offer health benefits; among large firms, uninsured workers are concentrated among lower-wage employees in service industries.
Small businesses also have a higher percentage of employees qualified for coverage who decline because of cost. Tallahassee, Fla.-based, Po’ Boys Creole Cafe offers health insurance to every employee through its payroll company. But of the six-unit chain’s 90 employees, many of whom work part-time, only a few opt for insurance.
“It’s a significant amount of money taken out of their paychecks every week,” says Charlie Youngs, vice president of franchise development for the chain. “Insurance has always been a challenge.”
The issue hasn’t been ignored by the Washington, D.C.-based National Federation of Independent Business, which supports legislation that would allow national trade associations to sell health insurance to their members. By mimicking the buying power of large companies, associations could offer small businesses lower rates than they currently qualify for.
Proponents of such health plans estimate that offering insurance through a national organization could save small businesses 15% to 30% in healthcare costs. However, critics caution that the legislation fails to protect patients’ rights due to its omission of some state healthcare regulations.
If the legislation passes, the Washington, D.C.-based National Restaurant Association (NRA) will offer healthcare plans to restaurateurs at competitive prices, according to Brendan Flanagan, vice president of federal relations for the NRA. “It doesn’t solve all the problems,” Flanagan explains, “but it does take the important step of giving restaurateurs the tools to address cost increases.”
SAVING GRACE
Independent restaurateur Deirdre Pain knows first hand that offering health insurance is not impossible, but she acknowledges that it requires dedication.
“It’s a personal choice. I believe in the value of my employees,” says the founder and owner of Malee’s Thai Bistro on Main in Phoenix and managing partner of Malee’s Thai Bistro and Sushi Bar.
It hasn’t been easy. Pain has seen her employee health insurance more than double in cost since she began offering it in 1988. Rising fees made her scale down her original 100% coverage for long-term employees to 50%. But she’s never questioned whether or not it’s worth offering. She’s had too many close calls.
When a young, healthy waitress was diagnosed with multiple sclerosis months after signing up for Malee’s insurance plan, the worker was able to get the care she needed. A manager reluctant to get insurance was gradually talked into it. A few months later, he collapsed at work and landed in the hospital.
With these experiences in mind, Pain has no plans to scale back on benefits. But she does have a tip for other operators. To provide healthcare most efficiently, she recommends forming a relationship with a healthcare insurance broker who understands the foodservice industry.
“I have a terrific broker,” Pain says. “She is very diligent in shopping for me to get the best plan.”
BOTTOM LINE
Food service operators have always had to grapple with part-time employees and high turnover. But Paul Fronstin, a senior research associate with the Employee Benefit Research Institute, believes that choosing to provide healthcare in foodservice isn’t so different than offering it in other sectors.
“Bottom-line productivity is a common concern in any industry,” Fronstin says. A stable, predictable work force is better for business, and health benefits remain a tried-and-true retention tool.
“But will offering health insurance mean fewer sick days among your staff?” he asks.
But operators need to ask themselves how much of a premium they can require employees to contribute as well as whether they will include families in coverage.
He suggests taking a close look at all the angles related to healthcare costs. If providing health benefits leads to better employee retention, then healthcare expenses may offset training costs. There also are tax incentives for providing employee health benefits. Customer service could improve too.
HELPING HAND
There’s no shame in asking for help.
PF Chang’s China Bistro, which offers health benefits to employees who work at least 20 hours a week and have been employed a minimum of one year, debated whether to include tipped employees in its group plan. With paychecks for tipped employees occasionally working out to $0 after taxes, there were times when employees couldn’t afford to contribute to their healthcare plan.
Instead of denying coverage, the company contracted a vendor to collect healthcare contributions. “It’s a bit of an issue for operators who don’t want to manage another account, but it’s important for us so we make it work,” says P.F. Chang’s Peggy Rubenzer.
And for the interim period, when employees haven’t reached their required one year of employment, new hires receive information on alternative affordable healthcare plans that bridge the gap until they can sign up for group insurance. New employees can choose between catastrophic or comprehensive coverage. If employees leave P.F. Chang’s, these alternative plans can travel with them.
“We’ve seen employee satisfaction improve based on comments from workers,” Rubenzer says. “We’ve seen a positive impact on retention.”