Employee Wellness Newsletter : Corporate Wellness Programs: What is the Return on Investment?

Many employers, as part of their efforts to contain rising healthcare expenditures, are implementing worksite programs variously described as Company Health Promotion Programs, lifestyle programs, health and productiveness management, population health management and, simply, wellness programs.

The purpose of this article is to consider whether such programs improve health. If so, do they in turn decrease utilization of healthcare services and decrease healthcare expenditures?

The popular media have done much to reward the concept of business wellness. Last year, In Business: Madison magazine printed a story accompanied by a table reporting an impressive range of returns on investment (ROI):

Return on Investment (Per dollar ROI for lifestyle programs)
• Coors $6.15
• Kennecott $5.78
• Equitable Life $5.52
• Citibank $4.56
• General Mills $3.90
• Travelers $3.40
• Motorola $3.15
• PepsiCo $3.00
• Unum Life $1.81
Source: 2004 T.E. Brennan Employer, as published

Would these ROIs stand up to thorough empirical analysis of the data? What factors create such disparate returns among these programs? And does the published literature, subject to peer review of scientific methods, support the ROIs published here?

Health and Productivity Leadership

Illness and injury associated with an unhealthy lifestyle or potentially-modifiable risk factors is stated to account for at least 25% of employee healthcare expenditures. The most significant of these risk factors are stress, tobacco use, overweight or obesity, physical inactivity, excessive alcohol use, and poor nutritional habits. Over the past two decades, a variety of groups at the local, state, and national echelons have promoted the concept that health risk reduction and care management programs have the potential to improve employee health, and that worksite health education, health risk management, and benefit counseling must complement standard medical insurance benefits.

The intensity of Workplace Wellness Programs range from bulletin board, pamphlet or newsletter information to worksite fitness facilities, health risk reduction classes, and personal lifestyle change coaching.3 Workplace Wellness Programs today often include a health risk assessment (HRA) to evaluate each employee’s modifiable risk factors of disease. Program coordinators then target interventions to those that are at increased risk through personal talks and individual follow-up.

All-Inclusive Company Wellness Programs may include classes on health risk reduction and job safety, fitness and exercise activities, health club memberships, and reductions in co-payments or premiums for workers who adhere to recommended medical assessment instructions.

Along with this, some employers are restructuring health benefits and encouraging employees’ cost-sensitivity when accessing medical.5 These changes are intended to lower employees’ need for and utilization of medical, provideing reduced group medical costs. Demonstrated reductions in medical expenditures should then support employers with a powerful bargaining chip in negotiating decreased health care insurance premiums during future terms.

Evidence basis: A range of return on investment estimates

The empirical research has produced results as varied as the popular media on return on investment. Nonetheless, evidence continues to grow that well-designed and well-resourced Employee Wellness Program and disease prevention programs provide multi-faceted payback on investment. Peer-reviewed evaluations and meta analyses show that return on investment is achieved through improved worker health, reduced benefit expense, and enhanced productiveness.

• Goetzel and colleagues, in their meta-analysis of two dozen articles summarizing economic evaluations of health and productivity management programs, reported an average return of $3.14 per $1 invested in traditional Worksite Wellness Programs. The ROI estimates for the individual programs ranged from $1.49 to $13.7,8
• Aldana reviewed 72 articles and concluded that Company Health Promotion Programs achieve an average return on investment of $3.48 when considering medical care expenditures alone, $5.82 per $1 when examining absenteeism, and $4.30 when both outcomes are considered.
• Ozminkowski and collagues conducted a 38 month case study of 23,000 participants in Citibank, N.A.’s health management program and reported that within a 2 year period, Citibank realized a ROI between $4.56 and $4.73.10  Follow-up studies saw improvements in the risk profiles of participants, with the high-risk group improving more than the “usual care” group11 as a result of more intensive programming.
• Chapman’s 2004 meta-assessment of 42 research studies, ranking central validity of the research studies, reports cost-benefit ratios from $2.05-$4.64.

In addition to immediately quantifiable cost reductions, researchers have published a variety of spin-off benefits: greater productiveness, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15 Such programs may also have beneficial effects on employee perceptions of the company14 and worker morale, even among nonparticipants. 13 These outcomes go beyond savings in direct healthcare costs to provide non-health related return on investment.

Tailoring program to maximize ROI Worksite Wellness Programs aim to cut the health risks of employees at high risk while maintaining the health status of those at low risk. A variety of disease management interventions are available to fit the specific risk profiles of various worksites. Insurers and organizations now seek to calibrate their interventions in order to achieve optimal risk reduction and costeffectiveness.

In 2001, University of Michigan researchers published on stable trends in medical costs for over 2 million current and former staff members in an 18 year data set. The mean cost increase per risk factor gained ($350) was found to be more than double the mean cost decrease per eliminated risk factor ($150). In other words, increases in costs when groups of staff members moved from low risk to high risk were much greater than the decreases in costs when groups moved from high risk to low risk. Their conclusion: Programs designed to keep healthy people healthy will likely offer the greatest return on investment.

On the other hand, Pelletier’s meta-analysis16 and other program evaluations18 suggest that individualized risks reduction for high-risk staff members within the context of all-inclusive programming is the vital element in achieving beneficial clinical and expenditure outcomes in workplace interventions.

Dose-Response?

Several factors might affect the impact of various programs and the ultimate return on investment, including cultural and environmental factors, workforce demographics, level of participation and longevity of the program.

Most cost-benefit studies have been conducted in large organizations with more than fifty employees. But researchers have demonstrated that similar results are able to be obtained by small organizations with as few as five employees actively involved in a well-managed program.

Various studies also suggest that even relatively modest levels of participation have the potential to achieve substantial program influence. Contrary to reports by the popular media that such programs require more than 70% participation, published reports of at least one case showed beneficial return on investment with 51% participation.

Length of intervention appears to be a more salient variable: an impact on healthcare costs generally requires three-to five years of programming.

Future developments

Despite the abundance of positive program evaluations, several caveats remain. Negative results are less likely to be reported or published, thus biasing the ROI upward.

Uncertainty persists regarding the specific impact of the various program components. But as these programs take hold, further research and assessment will enable fine-tuning of program investments.

Meanwhile, the preponderance of data and the strength of the published research stand in favor of a beneficial ROI for Worksite Health Promotion Programs. Indeed, the organization case for such programs is now well enough defined that some insurance brokers offer discounted rates to employers that institute or subscribe to wellness programs.

Future questions will focus on how best to combine accross the board and focused interventions, the intensity of components, and how to calibrate the dose-response model to achieve a target ROI. Here, employers, employees, and researchers will need to collaborate to define mutual objectives and goals in terms of both clinical and cost outcomes.