Benefits of Employee Wellness Programs (Part 2)
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Benefits of Employee Wellness Programs
Any savvy reader knows that employees are in business: companies are looking at their bottom line. In other words, CEOs are not providing chef-prepared lunches and massages to employees, and bikes to employees’ children, simply because they are good people. They are doing it to help their bottom line. Does it work?
The answer is that employee wellness programs are almost certainly worthwhile. There is no single dollar amount that applies to each company, since each company and its wellness program are different. However, many studies have shown positive returns on investment (ROI), lower healthcare costs, and improved productivity.
Lower Healthcare Costs
Current findings suggest that the greatest cost savings come not from promoting healthy behaviors among low-risk, already-healthy employees, but rather from reducing costs associated with chronic diseases. This can include preventing chronic disease development among high-risk employees, for example, preventing diabetes among employees with prediabetes through diet and exercise.
Even greater healthcare cost savings can come from managing chronic conditions to prevent progression or complications, for example, enrolling employees with hypertension in programs to monitor their blood pressure, improve medication compliance rates, and incorporate more fruits and vegetables into their diets.
Take the classic example of Johnson & Johnson’s wellness program, which includes health risk assessment, vaccinations, education, and chronic condition management resources for employees. The program saved a total of over $38 million in its first four years, averaging $224 per patient per year.Savings in inpatient hospital use accounted for over half that amount, and reductions in mental health expenses made up another third. Overall, ROI was $2.71, according to “Harvard Business Review.”
There are other promising figures on the economic benefits of workplace wellness programs that result from reduced healthcare costs.
- $1,421 lower costs over one year for employees who were initially “high risk,” with a $6 ROI.
- $1.5 million in cost savings with a program that included workers’ comp and injury care.
- $1,500 less per year in health care claims from high-risk participants than non-participants.
Since healthcare cost savings and ROI are higher with high-risk employees, it makes sense to include chronic disease management and high-risk patient disease prevention elements in a workplace wellness program. A simple and low-cost way to do this is with a smartphone app, such as Lark, that combines health coaching with tracking and monitoring to encourage long-term healthy behavior change and improve health outcomes.
Absenteeism and Productivity
The values of healthcare costs and cost saving values may be staggering, but they are small compared to values related to productivity. A study in “Journal of Occupational and Environmental Medicine” estimates that the costs of absenteeism, or missed days of work, and presenteeism, or being at work without being as productive as expected, are 2.3 times the cost of healthcare for employees. Workplace wellness programs can improve productivity and lead to fewer sick days.
- 80% reduction in lost work days within 6 years of implementing a program at MD Anderson Cancer Center.
- $3, $5.82, or $2.73 ROI from reduced absenteeism.
- Programs addressing obesity, stress, and multiple risk factors simultaneously are likely to have a positive effect on absenteeism, according to research published in “American Journal of Health Promotion.”
Employee wellness statistics tend to show that companies with employee wellness programs are more productive.
Value on Investment
Dollars saved are not the only metric. Other examples of important quantitative metrics are blood sugar levels, body mass index (BMI), physical activity levels, and number of sick days. Even for businesses, though, qualitative metrics can matter. Enter value on investment (VOI), which Kaiser Permanente describes as a qualitative metric, analogous to ROI as a quantitative one. When calculating their own versions of VOI, employers can consider morale, retention, and even worker compensation claims.