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Life Health > Health Insurance > Your Practice

RIP wellness ROI?

By Bruce Jacobs

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Common sense suggests that sprawling out on the sofa and binge-watching “The Walking Dead” while plowing through endless bags of potato chips and super-sized, sugar-laden sodas has got to be less healthy than, say, knocking off a couple of miles on a treadmill. For administrators of corporate wellness programs, however, proving the link between good health and lower corporate medical bills has proved, well, elusive.

Which is a problem, because according to a report published last year by the RAND Corp. – “The Workplace Wellness Programs Study” – slightly more than half of U.S. companies with more than 50 employees offer workers some sort of wellness program. And while most of these companies were certain that their wellness plans “reduced medical costs, absenteeism, and health-related productivity losses,” only about half the organizations had ever formally evaluated their wellness plans. Of those that had, only 2 percent reported actual cost savings.

Return on investment, of course, is what gets obsessed over both to justify and to reject implementation of corporate wellness programs. Citing a number of peer-reviewed studies, the Society for Human Resource Management found that wellness programs returned an ROI ranging from 3.27:1 to 6:1 over a three- to five-year period.

The formula to calculate ROI is easy, notes SHRM. Simply divide the amount saved as a result of the program by the total costs of implementing the plan. The savings are expressed as a ratio. An ROI of 3.27:1 means that for every dollar spent there’s a savings of $3.27.

Simple, right? Well, not exactly.

A 2012 study of Pepsico’s wellness program found that after three years, the company’s disease-management efforts (aimed at treating chronic illnesses vs. encouraging healthier lifestyles) returned an ROI of 3.78:1. Meanwhile, incentives offered by the company to encourage employee lifestyle changes did not result in lower corporate medical bills. A 2010 study of the University of Minnesota’s wellness program revealed similar findings, and concluded that the overall savings were lower than the costs of the programs.

All of this explains, as the RAND report noted, why “many experts even question whether an organization should look at ROI.”

Total Wellness, a health care consultant based in Omaha, Neb., agrees, advising clients to consider the following criteria beyond hard cost savings alone when evaluating the success of a wellness plan:

  • Utilization by employees;
  • positive feedback from employees;
  • reduction of overall health insurance costs;
  • overall improvement in employee satisfaction;
  • requests for additional programs;
  • reduction in sick days and absenteeism;
  • employees likely to recommend the program.          

Of course, whatever does get measured demands a warm body willing to be scrutinized. Persuading employees to engage in a wellness program is always the first challenge of any plan. Most programs generally start with a health-risk assessment that seeks to isolate particular medical issues: body fat, high blood pressure, diet, exercise, cholesterol, and smoking, for example.

Also read: Three reasons wellness programs fail

And that’s where the resistance usually begins. Many employees are concerned about privacy and deeply suspicious about how their personal medical information might be used – usually against them.

There’s no shortage of example of this.

In 2012, Citizens Medical Center, a Texas hospital, had a policy of not hiring anyone with a body fat index (BMI) of more than 35, meaning that a 5-foot-10 individual weighing 245 pounds need not apply. (BMI measures body fat using a person’s height and weight, and experts have concluded that it’s not a particularly accurate gauge.)

In 2006, the CEO of Scotts Co. hoped to reduce corporate health care costs by instituting a strict policy forbidding employees from smoking – on or off the job. Scott Rodrigues, a new hire of the lawn care company and still on probation, was fired when a routine drug test revealed nicotine in his urine.

Also read: Wellness delivers minimal ROI, RAND says

Countless stories like these over the years have left many employees to wonder whether wellness is being done “for them, or to them.”

“Employers must be clear that personal data will be kept confidential,” stresses Joan Benz, founder of Benz Communications, an employee benefits specialist. “By really addressing this head-on, companies can get over one of the barriers that stops people from participating.”

Addressing the question head-on might include informing employees of their privacy rights under the federal Health Insurance Portability and Accountability Act, which governs the way medical information can be used and disseminated.

Many companies approach the task of softening employee resistance in a more old-fashioned way – with money.

Nearly 70 percent of U.S. companies that offer wellness plans resort to cash, the RAND study found. Employers dangle monetary incentives for filling out health assessments, losing weight, quitting smoking, reducing blood pressure, exercising, even eating more fruits and vegetables. Reductions in insurance co-pay premiums are also common. Besides money, there are a host of “novelty” and creative approaches such as gym memberships, massages, yoga classes, T-shirts, coffee mugs, tickets to local events, and gift cards.

Ralph Harik and his brother Georges, for instance, co-founders of imo, a 20-employee Silicon Valley social networking company, offer employees treadmill desks, custom Nike running shoes, even membership in a concierge physician’s group that makes house calls.

While incentives, monetary and otherwise, certainly add to the overall cost of a wellness program, their use naturally raises the question of ROI.

But there may be better metrics to watch.

Wellness perks show that we care about our employees, says imo’s Ralph Harik. And healthier employees, he is convinced, tend to be more energetic and enjoy coming to work, which translates into greater company loyalty and higher productivity.

While this might seem a touch touchy-feely, consultant Total Wellness also encourages companies to consider some of the less concrete, though equally significant, benefits of a wellness plan.

  • Healthier employees are more productive: Obese employees experience higher levels of absenteeism due to illness than normal weight employees.   
  • Attracts the best employees: Corporate wellness programs show a company’s commitment to its employees, and can be a draw for top talent to join or stay.
  • Increases life expectancy: On average, every minute of exercise can extend a person’s life by 1.5 to 2 minutes.   
  • Keeps employees emotionally healthy: Regular exercise is a great way to reduce stress and feelings of depression and anxiety, which very likely increases productivity.  
  • Boosts energy levels: Employees that exercise regularly are more alert during work hours and they are less likely to get tired during the workday. 

And that, perhaps, may be the way to embrace wellness programs beyond ROI.

Employees who are healthier, who are mentally and physically resilient, who stay out of the medical system because they don’t need hospitals and doctors, are simply going to be more productive workers – and, for those who still need that ROI booster shot, probably cheaper to insure over the long term.

As the RAND survey concluded, “Whereas significant reductions in health care cost may take time to materialize … well-executed programs appear to improve employee health meaningfully.”

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