Is Business Bungling Its Battle With Booze?

By almost any measure, Bill Daniels is one of the most successful men of his generation. A pioneer in cable television, he has built a $1.9 billion cable and mobile communications empire and amassed a personal fortune estimated at $325 million. But a few years ago, Daniels came close to losing it all to alcohol.

Daniels, now 70, had been drinking heavily since his forties. "I drank every night," he recalls, "and then I started to leave the office earlier" to hit the sauce. Even so, Daniels kept telling himself he was fine. Then, after reaching bottom in 1985 in a Scottsdale (Ariz.) hotel room, where he drank two fifths of scotch in one night, Daniels called his secretary for help. Later that day, his two top lieutenants arrived in the corporate jet and took Daniels to the famed Betty Ford Center in Rancho Mirage, Calif. He had six weeks of intensive treatment and has been sober ever since. Moreover, he has taken his career to new heights, including founding Prime Network, the nation's largest regional cable sports network.

Booze is the substance most abused in the business world. Experts estimate that it afflicts at least 10% of senior executives, such as Daniels. And of the $86 billion-plus that alcoholism costs the nation every year (table), business pays the lion's share in extra health care, lost productivity, and absenteeism.

Employee assistance programs (EAPs), designed to help workers and their families cope with personal problems that interfere with work performance, proliferated in the 1980s. Today, more than 70% of the nation's largest companies offer EAPs that include help for alcoholics (table). But as corporations seek to cut health care costs, recovery programs are often the first to feel the pinch. While few companies have wiped out benefits entirely, many have asked their insurers to "manage" usage. A. Foster Higgins & Co., a benefits consulting firm, reports that 87% of 2,000 employers it surveyed now limit substance-abuse and mental-health benefits, up from 75% in 1988.

Over the long term, however, that quick-fix approach to the high costs of problem drinking may be as bad for business as for drinkers. Treatment is expensive, but it's usually a onetime charge. Many companies have learned that skirting the problem or skimping on treatment means paying full price, in salary and benefits, for a less than fully functional employee--sometimes for years.

Alcoholism affects employees at every level, but it's costliest at the top. "I don't know of anything else that has a more deleterious impact on upper management," says retired Kemper National Insurance Cos. CEO James Kemper, a recovered alcoholic who set up one of the nation's earliest EAPs in 1962. It's not hard to figure. An executive paid $100,000 a year plus bonuses and fringes who is unproductive and files large health claims costs more than an $8,000 dry-out program.

A 1990 study done by Alexander & Alexander Consulting Group for McDonnell Douglas Corp. shows how expensive it is to ignore substance-abuse problems in the workplace. The company found that in the previous five years, each worker with an alcohol or drug problem was absent 113 days more than the average employee and filed $23,000 more in medical claims. Their dependents also filed some $37,000 more in claims than the average family.

Furthermore, company studies show that intervention works. Du Pont Co., which has an extensive and generous EAP, has found that about 80% of its alcoholic workers with long service recover with treatment. General Motors Corp., whose EAP counseled 6,400 employees with alcohol problems last year, or almost 2% of its work force, reports a 65% to 70% success rate, well above the 50% to 60% national average for problem drinkers. The carmaker estimates that it gains $3 for every $1 spent on care. Sums up Daniel C. Smith, director of McDonnell Douglas' EAP: "Our feeling is that if you do the job right the first time, it's cheaper in the long run."

LOWER BILLS. A case in point was Walter Stogsdill, now 50, who went to McDonnell Douglas' EAP for help in 1983. Stogsdill, then a supervisor of security services for McDonnell's Electronic Systems Div., was a 10-year veteran. But his drinking was taking a heavy toll. He had bouts with gastritis, acute pancreatitis, and depression, all symptoms of alcoholism. When he did come to work, "I was usually hung over and often late," he says.

Stogsdill's boss spoke to him several times about his job performance and chronic absenteeism--the best way to confront an employee suspected of problem drinking. Stogsdill approached the company's EAP, which recommended a 21-day inpatient program. Insurance paid 80% of the bill, which came to about $5,000. Stogsdill has remained sober since his treatment and has received two promotions. He now counsels other employees, and his once-heavy medical bills are "minimal."

Despite such success stories, reforms in the system for treating problem drinkers were clearly warranted. For years, it was a medical tradition to offer inpatient alcoholism treatment only on a 28-day basis, despite evidence that for some alcoholics a shorter stay works, while others do well as outpatients. Outpatient care is not only cheaper, it also allows employees to continue on the job. But some treatment providers, especially psychiatric hospitals, resisted change. The 28-day inpatient stay typically costs $8,000 to $10,000 but can rise to $15,000 or more. The point of managed care is to examine each case so that people "end up in the right place," says President Travers Wills of MCC Inc., a subsidiary of Cigna Corp. that manages substance abuse care.

MANGLED IDEA. But in practice, contend critics, some managed-care companies have mangled a good idea by emphasizing cost reduction at the expense of individual needs. In some cases, says Michael Ford, president of the National Association of Addiction Treatment Providers, alcoholics must fail cheaper outpatient care before being considered for inpatient. Others charge that decisions about appropriate treatment for alcohol abusers at some managed-care companies are made by people with little knowledge of addiction. A gallows joke making the rounds among treatment providers goes: "For managed care, dial 1-800-Just-Say-No."

There's also evidence of a tougher new attitude toward alcoholic workers. Following the 1989 Exxon Valdez disaster, in which Captain Joseph Hazelwood was found by the National Transportation Safety Board to be alcohol-impaired at the time of the accident, Exxon Corp. revamped its policies. Now, even workers who have been successfully treated for substance abuse cannot hold "safety-sensitive" positions, encompassing about 10% of Exxon USA's 20,000 jobs. An Anchorage jury cleared Hazelwood of drunk driving, but he hasn't gotten his job back.

The change has already caused conflicts. One of the first involved Theodore M. Ellenwood, 45, a 20-year veteran and chief engineer. Ellenwood entered an alcohol treatment program in March, 1988. He says he has been sober since and that he never drank on the job. Exxon even commended his work. But in 1989, the company invoked its new policy to demote Ellenwood to first assistant engineer while guaranteeing his old pay for five years. Ellenwood refused to take the job and is suing Exxon Shipping for discrimination and breach of contract. Exxon declines to comment on his case.

In another, well-publicized case, Debi K. Eyerman, 38, sued Mary Kay Cosmetics Inc. for terminating her contract as a national sales director in January, 1989. Federal law and many state laws generally prohibit employers from firing alcoholic employees unless they pose a threat to safety or their performance is unsatisfactory. The company's notice of termination said Eyerman's drinking was "not sufficiently under control" for her to be dependable. A U. S. District Judge in Ohio dismissed her suit on Nov. 27 on the grounds that Eyerman was an independent contractor rather than an employee, but Eyerman is appealing.

Policies that make treatment harder to get may worsen Corporate America's biggest drug problem. Kemper believes that companies cutting back on treatment "will have more drunken employees. They are the people who smash up company cars, lose customers, and make costly mistakes." Thus, he concludes, saving money on treatment "is bound to be more expensive in the long run."

Alcoholism experts also argue that penalizing alcoholic employees who get help, as Exxon may have done with Ellenwood, will exacerbate the problem. "It will discourage people from going into treatment," says Paul Samuels, executive vice-president of the Legal Action Center, a nonprofit law firm specializing in alcoholism and drug abuse. "That will increase the number of people on the job with alcohol problems." If that happens, business' bill for alcoholism seems certain to grow even bigger.


Treats about 1,000 employees a year for alcohol abuse, shifting treatment to out-patient care whenever possible. About 20% of workers receive in-patient care


Benefits pay for two in-patient stays of up to 45 days, as long as they're a year apart. Recovered alcoholics in safety-sensitive jobs may return to their posts


Dramatically expanded EAP in 1985 by hiring more counselors. Serves about 5% of work force each year. Figures it gets a 4-to-1 return on its investment


Beer-tasters must take a breathalyzer test before they drive home. Employee assistance program (EAP) treated about 675 people last year for drinking or drug problems


EAP launched in 1972 now serves more than 6,000 workers with alcohol problems annually. Two-thirds of employes who receive treatment remain sober


Program launched in 1978 is now staffed by 10 professionals. Airline pilots with drinking problems are monitored for at least two years after treatment