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.”
Oftentimes, companies looking to implement wellness programs are happy to do a health risk assessment, slap up some educational material on a website and call it a day. Most wellness providers are quick to say the same thing—that approach alone does not create what a wellness program should: a corporate culture of health.
CHG Healthcare Services rolled out its wellness program eight years ago with a weight loss program. While the program created camaraderie and friendly competition between the workers, Nicole Thurman, senior director of talent management, says it was the least effective thing the company did in terms of wellness achievement.
“People gained [the weight] right back,” says Thurman. “So we decided to take a different approach by having a wellness program to allow our employees an opportunity for wellness.”
CHG looked at value to its employees and their own financial goals, and decided to invest in having an onsite healthcare clinic. Having high-quality healthcare on premise allows CHG employees to cultivate relationships with primary care physicians and reduces their need to access the outside healthcare system.
“We knew that we would achieve cost savings through our clinic. Nobody has to go to Urgent Care for a bad cough; they can go downstairs. It’s not $300 to 400 [per visit]—it’s wholesale for us,” says Thurman. “We save the differential. That’s an ER visit that got missed. When we add up all those cost savings, because we’re deferring the visits, it pays for our health initiative.”
Other measures that have worked for companies are incentivized programs, where employees can get a discount on their health insurance premiums for hitting certain goals, attending health education sessions or engaging in preventative care. Whether the employee is healthy or has a preexisting health condition that requires management is irrelevant—the healthy employee can get incentives for reaching fitness goals and the employee with the health condition can reach their incentives for adhering to a disease management program.
Other features like a company gym or sponsored hikes, walks and runs are also popular.
Thurman adds that in order for wellness programs to work, a high trust index must exist between the employer and employee. “Our employees do believe we care about them and are trying to do right by them,” she says.
For Sunwarrior, a St. George-based health food company, threading a culture of health into the company’s fibers is paramount to success. Sunwarrior rolled out a nine-month wellness challenge complete with personalized meal and fitness plans. Of Sunwarrior’s 49 employees, 46 of them have taken the challenge.
“We want to stress a healthy lifestyle,” says Susanna Kalnes, representative for Sunwarrior. “This makes a positive message for the company as a whole. A lot of the employees are already into health and wellness, but they don’t follow it as closely as they like.”
Following more closely seems to have plenty of benefits to employer and employee alike—so long as you know what you’re looking at.
“Do [wellness programs] result in a lower healthcare cost? That’s one way of looking at it, but these other things are just as important to employees,” says Marcus. “There are a lot of benefits to happy employees—and there’s a fair amount of literature that suggests wellness contributes to happier employees.”