Health and Wellness Leads : Corporate Wellness Programs: What is the Return on Investment?

Many employers, as part of their efforts to contain rising health care costs, are launching worksite programs variously described as Company Wellness 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 better health. If so, do they in turn lower utilization of medical services and lower 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 Company, as announced

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 announced here?

Health and Productivity Leadership

Illness and injury associated with an unhealthy lifestyle or modifiable risk factors is published to account for at least 25% of employee health care 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 levels have promoted the concept that health risk reduction and care management programs are able to better employee health, and that workplace health education, health risk management, and benefit counseling should complement standard healthcare insurance benefits.

The intensity of Corporate Wellness Programs range from bulletin board, pamphlet or newsletter information to worksite fitness facilities, health risk reduction classes, and personal lifestyle change coaching.3 Corporate 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 discussions and individual follow-up.

Complete Employee Health Promotion 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 medical screening ground rules.

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 ought to then offer employers with a powerful bargaining chip in negotiating decreased health insurance premiums during future terms.

Evidence basis: A range of ROI 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 Company Wellness Program and disease prevention programs support multi-faceted payback on cost. 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 productiveness management programs, found an average return of $3.14 per $1 invested in traditional Corporate Health Promotion Programs. The return on investment estimates for the individual programs ranged from $1.49 to $13.7,8
• Aldana reviewed 72 articles and concluded that Workplace Health Promotion Programs achieve an average ROI of $3.48 when thinking of medical 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 published that within a 2 year period, Citibank realized a ROI between $4.56 and $4.73.10  Follow-up studies reported 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 studies, ranking overriding validity of the studies, reports cost-benefit ratios from $2.05-$4.64.

In addition to immediately quantifiable expense 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 positive effects on employee perceptions of the company14 and worker morale, even among nonparticipants. 13 These outcomes go beyond savings in direct healthcare costs to offer non-health related return on investment.

Tailoring program to maximize return on investment Workplace Health Promotion Programs aim to reduce 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 organizations now seek to calibrate their interventions in order to achieve ideal risk reduction and costeffectiveness.

In 2001, University of Michigan researchers reported on stable trends in medical costs 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 costs when groups of workers 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 support 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 accross the board programming is the essential element in achieving positive clinical and cost outcomes in workplace interventions.

Dose-Response?

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

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

Various research studies also suggest that even relatively modest levels of participation are able to achieve substantial program effect. Contrary to reports by the popular media that such programs require more than 70% participation, published reports of at least one case showed positive ROI with 51% participation.

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

Future developments

Despite the abundance of beneficial 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 positive ROI for Company Wellness Programs. Indeed, the company case for such programs is now well enough defined that some insurance brokers offer discounted rates to businesses that institute or subscribe to wellness programs.

Future questions will focus on how best to combine inclusive 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 expense outcomes.