Worksite wellness initiatives have been a part of the corporate landscape for many years. Recent data from the American Institute for Preventive Medicine reveals that more than 80 percent of U.S. companies with 50 or more employees have implemented some form of wellness or health promotion program. These programs come in many forms—from basic health fairs, smoking cessation programs and self-help manuals to comprehensive wellness initiatives, complete with health risk assessments, wellness coaching and sophisticated intervention strategies.
Traditionally, the primary reason given by business leaders for the implementation of these programs was simply because they felt the benefits justified the cost, but the data to back up these beliefs has been lacking. Huge annual increases in health insurance premiums and other healthcare costs, however, have forced business leaders to take a much closer look at the true impact these worksite wellness programs have on the bottom line. Employers who are just now embracing wellness as a means of reducing healthcare expenditures are doing so much more methodically. By collecting data from a variety of relevant sources, employers are better able to understand the impact these programs are having, not only on healthcare costs, but also on employee productivity, by combining claims data with data on absenteeism, occupational injuries and disability claims.
How Are Companies Responding to Increased Costs?
U.S. healthcare expenditures in 2010 totaled approximately $2.4 trillion, or roughly 16 percent of the gross domestic product. According to the Towers Perrin Health Care Cost Survey, it is projected that companies will pay an average of more than $9,300 annually per employee for healthcare.
The cost of health insurance has far outpaced the rate of inflation and workers’ earnings over the past two decades. Employers, as a consequence, have made a variety of adjustments to deal with increased healthcare costs, including increased co-pays, higher deductibles and switching providers. These strategies have had minimal success, however, because as a supply management approach, they simply shift costs.
An alternative approach is demand management, which focuses on employee lifestyle issues. By encouraging employees to engage in healthier lifestyles and to be wiser healthcare consumers, a positive impact on healthcare expenditures can be realized. Comprehensive wellness programs play an integral role in this process, as unhealthy lifestyles definitely impact a company’s bottom line. According to an Indiana University-Purdue University study, poor lifestyle choices account for more than 87 percent of healthcare claim costs.
To understand employee lifestyle issues that impact a company’s healthcare costs, business leaders must first acquire an understanding of what types of risks their employees face. Having employees fill out a health risk assessment (HRA), gathering biometric data and obtaining appropriate lab work as part of a comprehensive wellness screening is the most accurate way of obtaining this information. The Department of Health and Human Services, however, has published statistics that estimate risk factors for every 100 employees. These risk factors have a significant impact on increasing healthcare costs. More importantly, the reduction of these risks has a significant impact on reducing overall healthcare expenditures. As an example, according to the Department of Health and Human Services, for each 100 employees, the following risk factors are expected:
- 25 have cardiovascular disease
- 21 are smokers
- 12 are asthmatic
- 31 use alcohol excessively
- 6 are diabetic
- 20 don’t wear seatbelts
- 26 have high blood pressure
- 24 don’t exercise
- 30 have high cholesterol
- 44 suffer from stress
- 38 are overweight.
Cost-Effectiveness of Wellness Programs
Companies receive many benefits after implementing a comprehensive worksite wellness program, in addition to reducing costs. These include increased employee morale, improved employee health, reduction in workers’ compensation, reductions in absenteeism and increases in productivity.
The cost per employee for worksite wellness varies depending on the range of services offered, from $20 to $40 per employee per year for basic services such as health fairs and self-help literature to upwards of $200 to $400 per employee per year for a more sophisticated, comprehensive program which includes an HRA, biometric and lab screening, wellness coaching, and more targeted interventions.
Research has shown that the more comprehensive a program’s design, with emphasis on accurate data collection and targeted risk factor reduction strategies, the greater return on investment. A review of 56 published studies of worksite health promotion programs by the Washington-based Partnership for Prevention found they produced an average savings-to-cost ratio of $5.81 to $1 when factoring in healthcare cost reductions and increases in productivity. The programs reduced annual healthcare costs by an average of 26 percent, absenteeism by 27 percent, and workers’ compensation and disability claim costs by 32 percent.
In conclusion, for many U.S. companies, medical costs can consume half of corporate profits or more. Many employers look to cost sharing, cost shifting, managed care plans and cash-based rebates or incentives to address these issues. These methods merely shift costs without providing sustained cost reduction. Worksite health promotion stands out as a long-term answer for reducing risk by keeping employees more healthy and productive. Worksite wellness is an investment in any organization’s most important asset—their employees and the very positive impact this investment can have on the corporate bottom line. iBi