Health and Wellness Leads : The Case for Company Wellness Programs

Corporate Wellness Programs first became popular during the economic boom of the late 1980s and early 90s. Programs featured on-Site health clubs and massages, and were used as recruitment tools for young staff members searching for nontraditional work environments. Nonetheless, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and corporations returned to a more antiquated benefit structure focused on managed medical care.

In recent years, as Healthcare costs have spiraled out of control, organizations have explored the potential of Company Health Promotion Programs as a cost-saving strategy. Businesses such as Johnson and Johnson, General Motors, Motorola and Union Pacifi c Railroad have all seen a signifi cant return on investments in employee health (See Case Studies, p.20). Company Health Promotion Programs can help decrease the costs associated with:

Health Care premiums – The cost a corporation pays for medical insurance: According to a 2005 study by Hewitt, the Health Care cost per employee in the United States in 2006 will average $8,046, with businesses absorbing nearly two-thirds of that cost.

Prescription Drug costs – The price of a drug plan: According to a 2005 study by Mercer, the average annual drug costs for large businesses grew 11.5 percent, making it nearly a decade straight of double-digit increases in cost.

Short-term disability (STD) – The cost of offering short-term disability insurance to staff members: According to a 2004 study by insurance provider Cigna, the average short-term disability claim results in $13,094 in direct disability payments and medical costs. The report also found that 26 percent of claims related to medical events were a result of chronic conditions that could likely be mediated through Workplace Wellness Programs, and that these cases amount for 56 percent of the STD-related medical costs.

Rates of Absenteeism – The cost of missed work: Rates of Absenteeism cost corporations $660 per employee in 2004, with nearly one-third of corporations characterizing the trend as a weighty issue.

Presenteeism – The cost associated with staff members who work at decreased productivity levels: Sixty percent of the total cost of employee illnesses come from presenteeism, according to a 2004 study by the Institute for Health and Productivity Studies at Cornell University.

The evidence is clear that strategically designed Workplace Health Promotion Programs can reduce both direct and indirect Healthcare costs. A 2004 review of Workplace Health Promotion Programs revealed that, in total, an investment of $1 by a company in Wellness Programming returned a median cost savings of $2.05 to $4.64.