September 10, 2015

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Wellness Checkup

Corporate Wellness Programs are Increasingly Popular, but do they Work?

By Adva Biton

September 10, 2015

The CDC estimates that 75 percent of healthcare costs come from 117 million people with one or more chronic health conditions. For employers, this can mean paying an annual average of $12,000 per employee on healthcare costs, according to a study by the Henry J. Kaiser Family Foundation. In recent years, many employers have gotten on board with wellness programs to mitigate that cost and to bolster employee morale, concentration and overall health—but how well do these programs actually work?

According to Robin Marcus, chief wellness officer and physical therapist for the University of Utah Health Sciences, the answer depends on what your definition of “work” is.

“There’s been a lot in lay literature in the last couple of years talking about how wellness doesn’t work,” says Marcus. “When you ask people ‘does wellness work?’ it really does depend on what outcome you’re looking at.”

Dollars and Sense

If what your company wants is to lower healthcare costs, the prevailing theory is this: Set up a wellness program, get your employees to be healthier and healthcare costs will go down. It seems like common sense—but the truth is the financial return on investment for wellness programs may not be that simple.

“There’s a raging debate around this notion of ROI,” says Michael Cochran, director of health and productivity at Regence BlueCross BlueShield of Utah. “The Holy Grail has tended to be reductions in medical costs—if not reductions, then reducing [the healthcare cost] trend down a few percentage points.”

Cochran believes the financial ROI for companies can be as much as 3:1 and cites a 2012 meta-evaluation of worksite wellness initiatives by Larry S. Chapman at the American Journal of Health Promotion. The study examines 62 peer-reviewed articles on workplace health promotion with a total of 546,971 subjects involved and concludes that “the summary evidence continues to be strong with average reductions in sick leave, health plan costs and workers’ compensation and disability insurance costs of around 25 percent.”

For the companies who don’t see this trend, Cochran believes their wellness programs haven’t been around long enough to realize those benefits—or that their metrics simply aren’t measuring the right values. The Chapman study mentions that more than two-thirds of the included studies examined savings “limited to a single economic variable” and that they arrived at their ROI calculation by simply dividing that savings by the entire program cost. Doing metrics this way, according to Chapman, understates the economic impact (and value) of wellness programs.

Marcus and Cochran both say there’s a misconception among most companies that the financial savings from their wellness programs should be immediate—and that they tend to ignore other returns on investment.

“We think that wellness programs should lower healthcare costs,” says Marcus. “There are companies that say that they do, but there are others that say that they don’t. But maybe these people are looking at different things. If you are looking at decreased costs, unless you follow people for a very long time, you may not see a ROI.”

Therein lies the problem with most wellness programs—oftentimes the scope of the metrics is too narrow to see their true value. The Chapman article says that “the ideal would be for each study to examine health plan cost, sick leave cost, workers’ compensation cost, disability management and presenteeism cost effects.”

Wellness programs at their best do not just deliver a financial ROI—they offer benefits to the employees and the company at large in other forms just as valuable. 

“There is increased value to the employer if you look at measures like improved presenteesim, decreased absenteeism, increased productivity,” says Marcus. “People can do more in less time. The same wellness program that we might [have implemented] to decrease healthcare costs—if you’re looking at these outcomes—you’re more likely to see a more immediate ROI.”

A Culture of Health

Employees want wellness programs. A survey conducted by the Survey Sampling International revealed that 71 percent of consumers want their employer to offer some wellness or health management program. Furthermore, the Society for Human Resource Management found that 72 percent of organizations offering wellness programs found them effective.

“There’s one more group of outcomes that wellness is really good for and has a higher ROI. And that is the value to the employee,” says Marcus. “The value to the employee is like increased engagement in their work, happiness, greater creativity, increased attraction to the employer—which makes it easier for [the employer] to recruit and retain employees. They’re happier, they’re engaged. That type of ROI from a wellness program is probably the highest.”

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