A dollar invested in Wellness Programs can yield savings up to $5.93

Wellness Programs Generate Incredible Savings

Employees’ lifestyles have been found to make a huge impact on an employer’s financial situation because many of the diseases suffered by the population such as diabetes are directly related to poor health decisions. These health issues spill over directly into the workplace, as an unhealthy workforce hits employers squarely in the pocketbook. For instance:

  • Obese employees with 3 or more chronic health conditions miss an average of 3.5 days of work per month, 42 days per year.
  • Obese Americans spend approximately 36% more on health care costs and 77% more on medications.
(Sources: Gallup, “Unhealthy U.S. Workers’ Absenteeism Costs $153 Billion,” and the Office of the Surgeon General, “The Surgeon General’s Vision for a Healthy and Fit Nation Fact Sheet.”)

There is strong evidence that Wellness Programs are generating dramatic savings. The chart above shows savings generated from wellness programs based on a meta-analysis of multiple workplace wellness programs by the American Institute for Preventive Medicine accessed on October 14, 2008 as reported in their white paper: The Health & Economic Implications of Worksite Wellness Programs: An American Institute for Preventive Medicine Wellness White Paper.  The return on investment for employers that offer wellness programs looks compelling. For every dollar invested in wellness programs, companies can save up to $6 on health insurance costs, according to the University of Michigan’s Health Management Resource Center’s 2010 Cost-Benefit Analysis and Report.)

Wellness Programs Now a Core Cost Control Strategy

Supply management approach: Employers have been employing numerous tactics that employ a supply management approach to deal with increased health care costs. These include a variety of adjustments including increased copays, higher deductibles, and switching providers. Although they have had initially encouraging effects, during the last few years, they have been more limited in reducing the health care costs.

How Companies Respond to Healthcare Costs 2006

Demand management approach: An alternative approach that is growing in popularity is one that focuses on supporting the employee in living a healthier lifestyle and becoming wiser health care consumers. Wellness programs are the key component of this strategy.

Wellness initiatives are among the top cost-control strategies implemented by employers today with more and more employers turning to this strategy, as shown on this 2006 chart by the Society for Human Resources Management. . The Society for Human Resource Management’s (SHRM) June 2011 Employee Benefits report shows that 75 percent of employers now supply their workforce with wellness resources and information.

Many employers that aren’t on the wellness bandwagon plan to soon. A September 2011 survey of government employers by the International Public Management Association for Human Resources showed that 51 percent planned to implement wellness programs or promote healthy behaviors in the next 12 months.

7 Steps To Implement a Successful Wellness Strategy

Change Agent Workgroup (CAWG) has published a helpful guide for employers that can help them introduce cost-effective employee health programs, available as a PDF file here.  As featured by Amanda McGrory of Benefits Pro, the guide, titled “Employer Health Asset Management: A Roadmap for Improving the Health of Your Employees and Your Organization,” outlines seven strategic elements that should be implemented in order to implement a successful wellness program. Each of the seven steps requires involvement and accountability from employers and employees.

Step 1: Develop and embrace an organizational vision of health

While employers may tend to focus on reducing short-term medical costs, research shows that a short-term focus on medical costs provides limited results. The more effective approach is a strategic vision of employee health focusing on making employee health a central part of the organizational vision. This means establishing a vision of a healthy and productive work force, and supporting programs that improve employee health through workplace policies that complement healthy values.

Step 2: Senior management commitment and participation

In implementation, senior leadership needs to lead the way for establishing the programs and policies designed to encourage healthier lifestyles  by ensuring that all managers recognize their own responsibilities in the culture of health. Evidence and research of the financial correlation between productivity and healthy employees is key.

Step 3: Address workplace policies and the work environment

Smoke-free workplace policies are an example of workplace policies that create a wellness-promoting environment.

“When a substantial portion of the employer’s health care costs result from unhealthy lifestyle choices made by employees, health policies are as important as safety policies,” Employer Health Asset Management states. “Written policies do a good job defining and communicating expectations.”

Step 4: Identify diagnostics, informatics and metrics

Metrics and measurements are invaluable in analyzing what contributes to the total cost of poor health and the true impact of health initiatives. For employers who do not have integrated data warehouse capabilities, insurers and vendors in the health benefits and analytics marketplace do. Some provide a comprehensive analysis for a more complete picture.

“Once the employee population is stratified, management can select specific prevention and intervention strategies that will have the greatest impact on health status, healthcare costs and health-related productivity,” Employer Health Asset Management states. “Programs should also address employee relations and morale and job satisfaction, as well as discrete improvements in measurable biometrics such as blood pressure, cholesterol, blood sugar and stress levels.”

Step 5: Set health goals and program elements

Goals should be tied to improvements rather than fixed endpoints.  Implement programs that push trends in the right direction and accelerate the pace of improvement, focusing on 1) helping put high-risk employees on the road to better health; and 2) helping healthy employees maintain good habits. Incentives to promote healthy employee behavioral changes are particularly effective – they drive participation, which drives health improvement, driving cost and productivity improvement. Incentives range from cash cards and reward points for catalog shopping to a reduction in co-pays or premium contributions.

Step 6: Create a value-based plan design

Employers should adopt a model based on the value of particular benefits to individual patients.  One of the downsides of cost sharing is that it can create financial barriers to critical medical services and medicines that support wellness, resulting in higher long term costs.

Employer Health Asset Management states that benefit designs traditionally had little understanding of healthcare cost drivers and followed the lead of competitors without adequate consideration of how to fit the specific employee needs of the organization.  A one-size-fits-all cost-sharing model can be adopted to a value-based plan design by tailoring co-payments to the evidence-based value of specific services for targeted groups of patients.

Step 7: Integrate patient-centered medical home (PCMH) and chronic care management 

To attain better health outcomes, comprehensive primary care is key. A patient-centered medical home model (PCMH) provides each patient with a continuing relationship with a personal physician trained to provide ongoing, comprehensive care.  This is also effective in chronic care management to reduce the costs related to uncontrolled health conditions.

“Many employers and fund trustees understand the value of prevention and are receptive to the PCMH concept,” according to Employer Health Asset Management. “For those patients whose diseases need to be closely managed to prevent their health from deteriorating, the PCMH provides an integrated approach to care.”

2 Tactics to Support your Strategy:

Communication Boosts Participation

According to a report by consultancy Towers Watson, 58 percent of employers said low engagement was the greatest obstacle to their wellness initiatives. Reasons for poor participation included:

  • Employees’ misunderstanding that wellness programs are only for individuals with existing health conditions.
  • Inadequate education about the resources available to them.
  • Lack of clear communication to employees when the wellness program is introduced and implemented.

A Personal Approach Works Best

Some employers adopt wellness champions or ambassadors who help spread enthusiasm about the program throughout the organization. Employers can also publich regular articles in the company newsletters or distribute personal benefits statements that highlight their total compensation package. Outside resources, including top benefits providers can also provide communications support. Some benefits carriers offer one-to-one benefits counseling services as part of their enrollment package. Individual, personalized communication can provide consistent messages that help employees understand the wellness services available and the benefits of participation.

Colonial Life survey of employees who meet individually with benefits counselors during enrollment indicated the effectiveness of the one-to-one method. 96 percent of employees surveyed said personal benefits counseling improved their understanding of their benefits and that this type of communication was important (98 percent).

Related Articles:

More articles on setting up a wellness program:

Social media needs a place in wellness programsBenefitsPro

5 ways to improve your wellness programBenefitsPro

Say this, not thatBenefitsPro

10 key characteristics of wellness programs, BenefitsPro

Wellness Initiatives Can Ease the Pain of Rising Benefits Costs SHRM Online April 2012

What Level of Impact Fits Your Wellness Plan?SHRM Online Benefits Discipline, April 2012

Measuring the Success of Wellness Programs Still a ChallengeSHRM OnlineBenefits Discipline, April 2012

Designing and Managing Wellness Programs, SHRM Toolkits, December 2011

Employees Want Personalized Plans that Support Health Improvement,SHRM Online Benefits Discipline, November 2011

Declining Health of U.S. Workers Is Driving Up Employer CostsSHRM OnlineBenefits Discipline, April 2011

Finding Wellness’s Return on InvestmentHR Magazine, June 2008

The ROI of Wellness Programs: From Perk to Priority InvestmentSHRM Online Benefits Discipline, January 2007

How can wellness programs benefit employers, and what are the general steps for implementing a wellness program?, SHRM HR Q&As, January 2012


Snap! principle of Wellness Programs:

Adding wellness initiatives can help dramatically lower benefits costs, and improve employee morale can improve as workers begin to feel better about themselves and their employers.