A self-help incentive to employee health

For a guy who started a successful health plan and sold it for hundreds of millions to America's biggest health insurer, Kyle Rolfing is surprisingly down on the industry.

Patients just don't trust insurers, Rolfing says.

That's why he and other co-founders of Definity Health, now part of UnitedHealth Group Inc., started a new kind of health services company altogether called RedBrick Health. The Minneapolis-based company is not an insurer but it does a lot of things insurers do these days. RedBrick runs health-and-wellness as well as disease-management programs for companies, then translates better employee health to lower monthly premiums.

"When we built Definity, we recognized trust was an issue," Rolfing said. "We have a different solution now."

RedBrick has signed up its first clients: Hannaford Brothers Co., which owns more than 150 grocery stores in the Northeast; Welch Allyn Inc., a medical device manufacturer in New York; and Ridgeview Medical Center in Waconia.

For CEO Rolfing, it's the next stage in the evolution of so-called consumer-driven health care.

"It puts more accountability on consumers," he said.

RedBrick works with large, self-insured employers and designs incentives for employees to get healthier. A smoker who signs up for a cessation program, for example, gets a discount on premiums. So does an obese worker who chooses to participate in a weight-loss program.

Other health insurers do similar things. But Rolfing says employees may be hobbled by deep-set suspicions the insurer is just trying to cut costs to make more money. Rolfing thinks employees will respond to RedBrick's overtures the same way they view a 401(k) plan -- a program administered by a third party that benefits both employer and worker.

Companies pay RedBrick to advise employees on health issues, administer and track incentive programs, and to provide Internet and telephone support. RedBrick also gets revenue based on how many people sign up for the incentive programs.

Employees will go through a health-risk assessment and get a personalized program. They'll be checked quarterly to see if they're maintaining their health in a way that makes them eligible for discounts.

RedBrick provides nurse support through call centers and a software program for companies to keep track of employee health and translate it into premium changes.

If RedBrick's strategies work, the payback for big employers is a healthier employee pool and lower health care costs down the road.

Robert Stevens, Ridgeview president and chief executive, wants to reduce health claim costs by 10 percent, or $600,000 a year. The company, which employs 1,200 workers, now spends $6 million on claims.

Overall, the company is spending $350,000 a year on employee incentive programs and fees to RedBrick, a worthwhile investment since Ridgeview's health care costs have been rising 4 to 8 percent a year, Stevens said. Tactics such as health savings accounts have helped reduce costs but "we need to take it to the next level by really engaging employees to be healthier," Stevens said.

For example, Ridgeview will pay employees $75 just to have their cholesterol, body mass index, and glucose levels measured. The company will also pay $300 to $400 a year to employees who quit smoking.

Definity was a pioneer in offering health savings accounts, where employees put pretax dollars away to spend on medical costs. But after UnitedHealth acquired Definity in late 2004 for $300 million, Rolfing chafed working for a big corporation.

"After working for a small start-up, taking the trash out every day, it was hard to go back to a large corporation," Rolfing said. "You get the entrepreneurial bug."

Other Definity alumni at RedBrick include Chief Strategy Officer Abir Sen and Pat Sukhum, head of marketing.

With its Definity pedigree, RedBrick has attracted some serious brains and money. The company raised $15 million in venture capital from Versant Ventures of Menlo Park, Calif., and Highland Capital Partners of Lexington, Mass. Its board of directors includes Dr. Glen Nelson, a former Medtronic executive and Bill Pelfry, a management adviser who came from UnitedHealth Group.

They have 54 employees on the 10th floor of the International Centre building in downtown Minneapolis. The space was going cheap, so they decided to take all 18,000 square feet on the floor, even though much of it is empty.

"It's room to grow," Rolfing said.

Chen May Yee • 612-673-7434 • mychen@startribune.com Thomas Lee • 612-673-7744 • tlee@startribune.com