For many workers, health insurance is an important job benefit, but with health care costs continuing to rise, it’s becoming more difficult for employers to offer competitive health insurance plans. Last year health care costs increased for 79 percent of organizations with an 11 percent increase on average, according to the Society for Human Resource Management’s 2017 Employee Benefits Report.
Jeff Skeen, CEO of Results Redefined in McClean, Va, is working to provide better health care solutions and reduce costs by integrating the fitness and health care industries. SmartCEO spoke with Skeen about his 26 years of experience in the fitness industry, the problem with the health care industry today and what business leaders can do to help solve it.
SmartCEO: You got started in the fitness industry by owning and operating Gold’s Gym franchises. Would you recommend becoming a franchisee for a first-time business owner?
Jeff Skeen: I would if you don’t have much experience. Being a franchisee of a successful organization is a wonderful way to go, like Gold’s. McDonald’s is a great example of an organization that has made a lot of people very wealthy.
I think now that I have the experience that I have, I don’t believe I need a franchisor because I’ve had so many years of experience in the industry that now I can do it on my own without a brand behind me.
It also depends. I would say that if you’re in an area where you’re competing heavily with somebody, having a brand can be very powerful, depending on the competition you have around you.
The lesson I learned as a franchisee is: Make sure you investigate deeply what they offer for services. If you’re going in, are they really just giving you a name to put on the wall? That’s how Gold’s originally started out, as a licensing company, where you paid a fee and then you got the brand name that you put on the building, and then everything else was yours to do. As we bought it and evolved it it became a franchisor, which not only had branding but also offered consultative services and advice university to train you on how to do things.
So I would say if you’re going to be a franchisee, make sure you interview the company and fully understand what services you’re getting before you get into it, because you can pay a lot of money for not getting a lot with it.
SmartCEO: What was one of the biggest challenges or setbacks you faced early on?
Jeff Skeen: Well, the biggest setback I ever faced temporarily in the fitness industry was The Great Recession. That was nothing like I’d ever faced, it was unbelievable. And it was at that moment that I realized that people in the retail industry could not be priced in the middle, you either had to go up in price and be like [luxury fitness company] Equinox, or you had to go down in price and be someone that sold products like $9.99 a month, like a Planet Fitness — what they call a low price/high volume organization.
But being priced in the middle was very, very difficult. And we ended up converting from Gold’s Gym to Fitness Connection in 2011 because it was at that point. Besides competing with other franchisors, we also realized that being in the middle really was a dangerous place for our company to be in, and so we bought Fitness Connection and changed our entire structure from selling memberships for an average of, say, $40 to $50, to announce something for $9.99. And it turned our entire company around.
SmartCEO: Was leaving the Gold’s Gym name behind and starting a new brand, Fitness Connection, a difficult decision to make?
Jeff Skeen: Extremely hard, because I grew up as a Gold’s Gym franchisee. I mean, that’s all I had ever known in the fitness industry and I loved the brand. It’s a global brand, and to leave that brand was a very, very difficult decision, not only just financially, but it was part of who I was. That’s how I came up through the industry, is through that brand.
The thing that was really difficult was: How do you change a pricing model across the country from one price to another? And one of the biggest challenges of dropping from $40 or $50 dollars a month down to $9.99 is, what happens to all those members now when you drop their prices down to that level? So we had to have a strategy in which we were able to manipulate pricing in a way that kept us from tanking our entire business. So there were a lot of things that were very difficult from being part of a brand and leaving it, and then reinventing ourselves within a very short period of time.
SmartCEO: What do you think has been the key to your success in the fitness industry?
Jeff Skeen: Looking at the gym industry as a business and not as a gym. A gym is like any other business, you have accounting, finance, IT, marketing, you have all those things.
Also, building the product for the consumer and not for yourself. Many fitness people will open a gym and build the gym that they want to work out in, but not think about the population they’re serving.
And the other thing was that I always told our employees when I hired them is, “I’m hiring you to leave me.” And what I meant by that was that I wanted them to know that when they come to our organization that we want to help advance them, and if they get to a point of advancement that we can no longer provide them a job, that we’ll help them find a job with another organization that allows them to grow in the industry. So it’s, it’s a different idea. Some employers look at it as, keep the person in that position for the rest of their lives. They’re a great salesperson, never help them advance. But our organization, our philosophy, is really to help people to to grow through the organization.
SmartCEO: With your new business, Results Redefined, you’re working to integrate fitness and healthcare. What do you think is the biggest challenge in the healthcare industry today, and how can it be solved?
Jeff Skeen: What is interesting is that it’s really not that hard to solve, if both fitness and health care would work together. And I think what you’re seeing — one thing that has been very curious to me — is why the two industries haven’t been working together. You don’t hear fitness professionals at The White House being asked their opinion, right? It’s easily health care professionals, and fitness operators are not seen as healthcare. It’s seen as a “gym.” “All you guys care about is the beauty of the body, not how to make someone healthy.”
So there’s this misconception that the fitness industry is a bunch of young kids that just care about being really strong and looking really good on the beach, but not a group of professionals that truly care about solving healthcare. Now, our industry has in some way deserved the perception that we get, because there are a lot of people in the industry that don’t look into the eyes of health care, they look at the eyes of just beauty. However, there are a lot of fitness professionals like myself who really want to be part of the solution.
On the other side, I think the fitness industry looks at the medical professionals as “They don’t want to work with us,” and fitness professionals don’t learn the language of the medical side. So there’s kind of a gap between people seeing how they can work together.
There’s very practical things. Like with type 2 diabetes, it can be reversed through exercise and nutrition, and medical professionals have told me that the average cost of a type 2 diabetic is $50,000 a year. That cost is primarily because of surgeries.
But if it can be reversed through exercise and nutrition, then it seems like you wouldn’t have to spend lot to save $50,000 a year. But unfortunately in the medical industry, it’s been sick care.
SmartCEO: What is the most important thing businesses can do to promote health and wellness in the workplace?
Jeff Skeen: Reward healthy lifestyle. What I’ve found, and I’ve talked to a lot of professionals about this, is unfortunately, people will not change their health just because. There normally needs to be a reward for it. I’ve seen this a number of times where a father has been told by his doctor that he’s going to have a heart attack – and possibly leave his wife and children without a father and a husband – and that person does not change their lifestyle.
When they change it is when they have the event. And that always has baffled me. If you were told that you’re going to leave those you love behind, why wouldn’t you do something about it? And so I’ve been talking to a couple professionals, and unfortunately, money talks and financial incentives seem to be the way to drive people.
I think also with employers, the fascinating thing is employers are now a lot becoming self insured. Now, a lot of companies will have an insurance policy where their employees get benefits and they’ll pay a premium to an insurance company. What a self insured company will do is they will handle covering the cost up to a certain point, and then they’ll have something that’s kind of like catastrophic insurance.
So what’s happening is employers are also incentivized to help their employees live healthy lives, because when the costs are lower, the employer saves money. And if employers are incentivized to lower costs, they can also reward their employees and encourage them and look at ways of working with the fitness and medical professionals to help them provide their employees with a better healthcare and better services.
SmartCEO: Is there anything else you’d like to add?
Jeff Skeen: I’m just looking forward to more and more people looking at this world together so we can all partner. We think it’s just a U.S. thing because that’s kind of what we’re focused on, but when you travel the world you find that other countries are facing the same dilemma. So it’s really a global issue. Everyone has different kinds of healthcare issues.
But still, we have one body, and I’m looking forward to everyone really working together and also not relying on the government to come up with a solution. It really should be us as business leaders working together to solve it.