Business Owners: Should You Consider a Wellness Program for Your Employees?

Are employer wellness programs worth the investment? A review of some of the key studies examining the topic seems to indicate that such programs may indeed bring a variety of organizational benefits, depending on overall objectives and program design. Focusing only on return on investment (ROI) results, however, could provide too narrow a view of the potential advantages.

Review the findings

In 2010, an article in the Harvard Business Review (HBR) detailed numerous wellness program benefits realized at several different companies. This article, which has been frequently cited in the employee benefit arena since its original publication, found that:¹

• One large, well-known health industry business saved $250 million in health-care costs over 10 years through its wellness program.
• Another company was able to see a $6 return for every $1 invested in its wellness program.
• A third organization realized an 80% decline in lost work days and a 64% decline in modified-duty days over a six-year period. Cost savings totaled $1.5 million over the time frame.

More recently, a popular study by the RAND Corporation questioned the 2010 HBR findings, citing differing results. In fact, the RAND Wellness Programs Study, which covered nearly 600,000 employees at seven organizations, concluded that “wellness programs are having little if any immediate effects on the amount employers spend on health care.” RAND also discovered similar results after analyzing 10 years of data by a Fortune 100 employer.²

In this second case, the employer’s wellness program had two different components: a lifestyle management program, which focused on employees with health risks such as smoking and obesity, and a disease management program, which was designed to help employees who already had a chronic disease. Overall, the program resulted in average health-care cost savings of $30 per member, per month. However, 87% of those savings were attributed to the disease management program (resulting largely from a 30% reduction in hospital admissions). Moreover, the program returned just $1.50 for every dollar invested, on average. But a closer look at this figure revealed that the disease management program returned $3.80 for every dollar, while the lifestyle management program returned just $0.50 per dollar invested.

However, RAND acknowledged that a lifestyle management program can help reduce health risks such as smoking, obesity, and lack of physical activity, as well as rates of absenteeism. “Thus,” it concluded, “if an employer wants to improve employee health or productivity, an evidence-based lifestyle management program can achieve this goal.”

An even more recent HBR piece offered tips that built upon RAND study findings. It suggested that employers take steps to identify at-risk employees through health risk assessments and biometric screenings, and encourage (rather than coerce) them to participate in programs designed to address specific issues. It also noted that since chronically ill patients — those who currently suffer from diseases such as diabetes and heart disease — consume at least 50% of health-care claim expenses, “enrolling the chronically ill in disease-management programs that ensure they get appropriate care has the most potential to reduce insurance premiums.”³

Finally, a Society for Human Resource Management (SHRM) article emphasized an additional benefit offered by wellness programs that is difficult to quantify: the “employee positivity factor.” In this report, SHRM listed some of the advantages a healthy employee can bring to work, such as stronger engagement, better idea generation, and more positive interactions with customers and co-workers. “While the concrete savings from reductions in health care costs and employee sick leave is a good method for calculating ROI, the additional benefits achieved by improving employees’ health and well-being should not be ignored,” the article concluded. “The additional contributions made by employees who are ‘well’ could potentially bury the ROI estimated by the hard-cost findings.”⁴

Consider the big picture

When deciding whether to add a wellness program to your benefit lineup, be sure to consider both the financial and intangible benefits, and how they align with your company’s objectives.