H.J. Cummins: At Juut, that extra dollar goes to health

  • Article by: H.J. CUMMINS , Star Tribune
  • Updated: August 22, 2007 - 11:05 PM

Patrons of the chain of salons now pay a "wellness charge" to help cut workers' health care costs.

Call it a healthy tip.

Minneapolis-based Juut, an upscale chain of salons and spas, has come up with a novel approach to rising health care costs: It has added a $1 to $6 "wellness charge" to everything it sells and promised that every dollar of the fee will go straight to the employees' health plan.

Placards announcing the charge and the company pledge -- new this month -- are posted by the cash registers at all eight Juut shops for customers to see.

"We really wanted to be transparent," President Pam Langseth said. "We wanted to say, 'Our prices are going up, and this is why.'"

So far, most clients are supportive, Langseth said. The designated increase has also allowed the chain to lower employee premiums, which has helped double enrollment among Juut's 350 workers.

Minnesota employers routinely cite health care as their top problem, as premiums have gone up as much as 16 percent a year since 2000, according to state statistics.

At the Minnesota Chamber of Commerce, the rising costs "have gone beyond a problem to becoming a frustration" to members whose many attempts to contain them have failed, said Bill Blazar, senior vice president of the chamber.

That's why the chamber is in the process of developing "a comprehensive plan for changing the way the health system works," which it plans to roll out before the next legislative session, Blazar said. He declined to offer details.

Juut's approach would likely have limited reception beyond certain service businesses, said David Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas.

The idea of adding $1 to every iPod sold at a Best Buy or Circuit City would never fly, he said. But it works at Juut -- and possibly the neighborhood hardware store or flower shop -- because customers have a personal relationship with the person helping them, Brennan said.

Buzz Anderson, president of the Minnesota Retailers Association, said he hadn't heard of such a medical charge before. "I applaud them for their innovation," he said.

Small businesses are among the hardest hit by rising health care costs. Juut was looking at a 50 percent cost increase as of this month, Langseth said.

The company's first step was to change carriers, which cut the increase to 23 percent, she said. The next step was to cut the employees' premiums, which it did by increasing the company contribution and creating the wellness charge.

That dropped the single premium -- and that's 85 percent of the plan -- from $212 to $167 a month. That meant more employees felt that they could afford to sign on, and that extended coverage from about one-third to more than two-thirds, Langseth said.

Juut, with seven shops in the metro Twin Cities area and one in California, is a likely candidate for this kind of creativity. Started by Horst Rechelbacher of Aveda fame, it has a history of wellness and socially conscious policies. Indeed, Langseth's real title is "Audacity Agent."

Current owner David Wagner recently focused on benefits after an encounter in Long Beach, Calif., with a Starbucks barista who managed to be cheerful at 6:30 a.m. He struck up a conversation and heard her pride in getting full benefits through her job.

"I decided I want to be the Starbucks of the beauty industry," Wagner said.

Diane Pyle, a receptionist at the downtown Minneapolis Juut, said she appreciates the company's effort.

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