Health Tips A to Z : Worksite Wellness Programs: What is the Return on Investment?
Friday, July 31st, 2009Many employers, as part of their efforts to contain rising health care expenditures, are launching worksite programs variously described as Company Health Promotion Programs, lifestyle programs, health and productivity 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 medical services and decrease medical expenditures?
The popular media have done much to promote the concept of employer 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 rigorous empirical analysis of the data? What factors lead to such disparate returns among these programs? And does the published literature, subject to peer review of scientific methods, support the ROIs reported here?
Health and Productivity Leadership
Illness and injury associated with an unhealthy lifestyle or modifiable risk factors is stated to account for at least 25% of employee medical 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 are able to improve employee health, and that worksite health education, health risk management, and benefit counseling ought to complement standard medical insurance benefits.
The intensity of Company Health Promotion Programs range from bulletin board, pamphlet or newsletter information to workplace fitness facilities, health risk reduction classes, and personal lifestyle change coaching.3 Company Health Promotion 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 discussions and individual follow-up.
All-Inclusive Worksite 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 employees who adhere to recommended health care evaluation guidelines.
Along with this, some employers are restructuring health benefits and encouraging employees’ cost-sensitivity when accessing health care.5 These changes are intended to reduce employees’ need for and utilization of health care, provideing reduced group health care expenditures. Demonstrated reductions in health care expenditures should then provide employers with a powerful bargaining chip in negotiating decreased health 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 ROI. Nonetheless, evidence continues to grow that well-designed and well-resourced Worksite Health Promotion Program and disease prevention programs provide multi-faceted payback on investment. Peer-reviewed evaluations and meta analyses show that ROI is achieved through improved worker health, reduced benefit expense, and enhanced productivity.
Goetzel and colleagues, in their meta-analysis of two dozen articles summarizing economic evaluations of health and productivity management programs, found an average return of $3.14 per $1 invested in traditional Employee Wellness Programs. The ROI estimates for the individual programs ranged from $1.49 to $13.7,8
Aldana reviewed 72 articles and concluded that Worksite Health Promotion Programs achieve an average return on investment of $3.48 when considering medical care costs 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 stated that within a 2 year period, Citibank realized a return on investment between $4.56 and $4.73.10 Follow-up studies saw improvements in the risk profiles of participants, with the elevated-risk group improving more than the “usual care” group11 as a result of more intensive programming.
Chapman’s 2004 meta-evaluation of 42 studies, ranking central validity of the studies, reports cost-benefit ratios from $2.05-$4.64.
In addition to immediately quantifiable expenditure reductions, researchers have reported a variety of spin-off benefits: greater productivity, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15 Such programs may also have positive effects on employee perceptions of the company14 and worker morale, even among nonparticipants. 13 These outcomes go beyond savings in direct medical costs to provide non-health related ROI.
Tailoring program to maximize ROI Company Wellness Programs aim to cut the health risks of employees at elevated 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 corporations now seek to calibrate their interventions in order to achieve ideal risk reduction and costeffectiveness.
In 2001, University of Michigan researchers published on stable trends in medical expenditures for over 2 million current and former workers 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 expenditures when groups of workers moved from low risk to high risk were much greater than the decreases in expenditures 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 employees within the context of all-inclusive programming is the essential element in achieving positive clinical and expenditure outcomes in workplace interventions.
Dose-Response?
Several factors might affect the effect 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 sizable companies with more than fifty staff members. But researchers have demonstrated that similar results can be obtained by small companies with as few as five staff members actively involved in a well-managed program.
Various research studies also suggest that even relatively modest levels of participation can achieve substantial program influence. Contrary to reports by the popular media that such programs require more than 70 percent participation, published reports of at least one case showed beneficial ROI with 51 percent participation.
Length of intervention appears to be a more salient variable: an influence on health care expenditures 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 effect of the various program components. But as these programs take hold, further research and evaluation 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 return on investment for Company Health Promotion Programs. Indeed, the corporation case for such programs is now well enough defined that some insurance brokers offer discounted rates to corporations 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 elements, and how to calibrate the dose-response model to achieve a target return on investment. Here, employers, staff members, and researchers will need to collaborate to define mutual goals/objectives in terms of both clinical and expenditure outcomes.
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