Introduction

Wellness Programs: Tell Us What You Think

Workplace wellness has become a $6 billion industry in the United States. After all, what company doesn't want to cut their health benefits bill? But do wellness programs actually save companies money? Our Square-Off panel had some polarizing views on the subject. Soeren Mattke says the RAND Wellness Programs Study, which included almost 600,000 employees at seven employers, showed that wellness programs are having little if any effect on health-care costs. Mattke, a RAND scientist, also say ..

Employee “wellness” (or well-being) has become quite the buzzword in workplaces. Smoking cessation courses, company fitbit competitions, yoga rooms — even “mindfulness” programs, which promote activities such as meditation, are being implemented in corporate settings.

Michael Booth

Michael Booth

While you can’t place a dollar value on personal well-being, there are documented costs associated with absenteeism, insurance claims, and turnover from employee disengagement and burnout. A properly designed and implemented wellness programs addresses and reduces many of these high-cost line items for corporations and therefore may yield a positive ROI.

Some argue against wellness programs because there are companies that have implemented them but have not achieved a meaningful ROI. While that is true, it is generally not the wellness program itself that is inadequate, but the way the program is rolled out. Sometimes organizations simply fail to determine benchmarks, goals, and the vision for their wellness program. Just as the best-performing companies are guided by a strong mission statement, wellness programs should be guided by goals from all of those involved and not haphazardly pieced together.

Once you get the right metrics in place, research shows that there is a bottom-line benefit to be gained from properly implementing a wellness culture. In the study Workplace Wellness Programs Can Generate Savings conducted by professors at Harvard University, the cost/benefits ratio showed the savings from health promotion programs are much greater than their cost. Medical cost savings averaged $3.27 per dollar invested, and absenteeism savings averaged $2.73 per dollar invested.

And companies that focus on implementing preventative wellness programs can save as much as $4.50 for every dollar invested. Such was true in a case study of the health management program at Citibank. Furthermore, companies that were identified in a Towers Watson study as “highly effective” in rolling out wellness programs are saving up to $1,600 per employee per year in health-care costs.

Aside from saving on insurance claims from a physically healthy workforce, there are other factors that can lead to employees being disengaged and absent that can be costly. Stress management is a real challenge for today’s workforce, and elements such as financial and mental well-being play a large role in that. Employers can alleviate some of these stress triggers by providing avenues for employees to seek assistance when needed. This can be done through employee-assistance programs that can offer benefits such as free counseling and even financial literacy programs. If you take care of your greatest asset, your employees, through a comprehensive and well-designed wellness program, they will take care of business.

So how can you ensure that your wellness program is properly designed? There are a few guidelines that every organization should follow when creating a wellness program:

Have a mission/goals. You can’t measure success if you haven’t decided what qualifies as success.

Start with building a foundation. Without a strong foundation and support from upper management, the program will not become an integral part of the organizational culture and will fail to fully engage employees.

Be strategic. Take into account the unique needs of your workforce and don’t implement costly programs that employees don’t want or need. Give them a voice in creating the wellness tactics.

Be comprehensive. Remember, your employees’ wellness is made up of more than just physical health. Financial, mental, and emotional well-being all play a large role in a productive workforce.

Michael Booth is president of Axion RMS, a risk management company that consults with CFOs on their benefits packages and business growth.

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7 responses to “Wellness Programs Work if Properly Designed”

  1. Someday you folks need to stop citing Katherine Baicker’s 6-year-old 3.27-to-1 ROI on wellness to justify your revenue stream. It’s never been replicated (all attempts to replicate have shown the reverse), RAND has attacked it, and she herself has refused to defend it for years and says she no longer has any interest in wellness. Not exactly a ringing endorsement, I’d say. And that Citibank study is based on 15-year-old data and is probably wrong anyway. I notice there is no mention of the recent wellness industry report in which 39 wellness industry leaders (including the author of that Citibank study) got together and admitted that wellness ROIs are negative? It can be downloaded from my essay on wellness.

  2. Very amusing. The Citibank studied cited in the essay is more than 20 years old, which means that the data reported in it is even older. Impossible to take seriously.

  3. The cited materials in this article seem to have been chosen for marketing purposes rather than what is creatively cited as “analytical rigor” in one of Mr. Booth’s sources. From 100+ articles regarding financial return on wellness programs, the 2010 Baicker study notes that 32 were applicable (many of which being older than 20 years). The two sources of savings noted in these studies were “weight loss/fitness” and “smoking”, which comprised roughly 60% and 50% of the studies’ interventions, respectively. “Savings” were calculated using “pre-post” methodology, but with a pretty extreme caveat:

    “We calculated savings as the difference between treatment and comparison groups after the intervention subtracted by the differences between the groups before the intervention (when available).”

    Essentially, an ROI figure was generated for both groups using pre-intervention and post-intervention costs, unless the former was unavailable. Without knowing specific information regarding what information was unavailable, it seems that even their “pre-post” methodology may be significantly flawed. That’s without even entering in on the problematic nature of “pre-post” methodology or the numerous noted limitations of the study related by the author, herself.

    Without specific knowledge of previous member costs (let alone a rigorous method of analysis), how can one “compile standardized ROI estimates”?

  4. Great article! What I would also add, is that EAP services are wonderful but “many” people don’t feel this is a program for them. They see this as only for those who have increased mental conditions. I believe the KEY is offering programs, on topics that are relevant to the individuals every day life. I teach on topics that most individuals encounter on a daily basis. If we want to see real change in people, beyond that physical wellness, companies must invest in coaches that inspire, motivate, teach and educate individuals on how to change their thinking, overcome obstacles, and help them to find their purpose and potential. I know this sounds like I’m tooting my own horn but the fact remains, I became a Personal Development coach after spending years as a “health coach” of chronic conditions, only to find what people really needed. A change in their mindset.

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