Benefits Business

Wellness programs and the bottom line

Studies reveal a definite relationship

By Len Strazewski

Most employee benefits agents and brokers know that the key to building a successful and sustaining wellness program is convincing your clients' top executives that wellness pays in real financial value.

As thrifty chief executive officers and chief financial officers watch every penny, making the case for workplace wellness isn't always easy. Economics continue to be a barrier to building successful health programs and helping them reach their full potential in encouraging healthful lifestyles and improving productivity.

However, the latest wellness and health management research reveals that senior executives are paying more attention than ever, and employers are learning more about how to make their programs successful.

The latest Willis Health and Productivity Survey, conducted by the Willis North American Human Capital Practice, indicates that wellness programs are becoming more popular—and have greater support than ever from senior executives, even the leaders of relatively small employers.

The global insurance broker surveyed nearly 2,000 executive participants late last year, with about 71% representing employers with 500 or fewer employees. More than half of the respondents (53%) said their companies had some sort of wellness programs. However, about 57% of those employers said their programs were "basic," focusing mostly on education and consumerism.

Health care costs continued to be the driving reason for implementing the programs, the survey revealed. About 78% of employers reviewed their health care costs before deciding to implement a program.

However, new wellness programs were more likely to have the support of senior executives and more likely to be implemented for more reasons that reducing costs. About 42% of senior executives surveyed said they supported wellness programs, compared to only 6% in 2009. 

Among the programs that participants said were successful, the two most important reasons cited for the success were "management support" and having a "strong internal leader."

And more than half of respondents acknowledged that they had sufficient data to establish some return on their investment in wellness.

The survey, however, also indicated that despite the growing support, not all employers were able to overcome the barriers that would allow wellness programs to reach their full potential and effectiveness.

—About 44% of participants said they had insufficient time or staff to offer a comprehensive wellness program.

—About 43% said they had budget contractions.

—Only 28% said they had a specific strategy to improve employee engagement in the workplace. But of those that did have a formal strategy, nearly two-thirds said their wellness program was an important part of an overall employee engagement strategy. 

"While it is encouraging to see organizational support significantly increasing at the senior level, the survey indicates a need to focus programs on increasing employee engagement," observed Cheryl Mealey, national practice leader for wellness consulting at Willis. "Senior management is really starting to embrace the idea that our health impacts how we work and how we work impacts our health."

But, she says, senior support is not enough. Mealey says employers are also missing an important opportunity to do more in building employee engagement by not investing in training designed to help mid-level managers manage relationships along with health and productivity.

"Our survey findings show that only 5% of respondents offer such training. The relationship an employee has with his or her direct supervisor is of paramount importance, not only in relation to engagement and job satisfaction, but also overall health and well-being."

She says that employers need to rethink their incentive and communication strategies and determine whether or not their approach is creating true health improvement "and ultimately the success of the business."

Return on investment

Return on investment is the most common measure of wellness program success, and a recent study conducted by Highmark, Inc., the parent of several BlueCross/BlueShield health plans based in Pittsburgh, Pennsylvania, indicates that cost savings are measurable and significant. The study was published in the February/March 2011 issue of the Journal of Health Promotion.

A four-year analysis of the health plans' wellness programs indicates that health care costs rose 15% slower among employers that participated in wellness programs compared to employers that did not offer wellness programs. The average savings per participant was $332. The study involved approximately 10,000 program participants at 47 Highmark employer groups with a risk-matched comparison group. The employer groups offered wellness programs from Highmark to their employees consistently for three or more years, including basic Web-based wellness education programs. 

Wellness program participants had a greater tendency to pursue preventive services such as preventive physicals, mammograms and cancer screenings, than their comparison group counterparts, possibly as a result of self-care knowledge obtained from their worksite wellness programs, the study said. Preventive care measures often cost employers more in the short term, but they can help to save longer-term health care costs.

"This study is significant because it shows that implementing a worksite wellness program at a company can help control overall health care costs," said Dr. Donald R. Fischer, Highmark Chief Medical Officer. "Having hard data from this study proves what we've been telling our group customers all along—keeping employees healthy is not just good for the business, it's also good for the bottom line.

"The cost of health care is arguably the most talked about subject in America right now. While the recent health care reform legislation took a step to create access for Americans, it does not address cost," said Fischer. "It's incumbent on everyone in the health care system—the insurers, employers and members—to address costs."

Research from the Wellness Council of America (Welcoa) in Omaha, Nebraska, agrees that return on investment is measurable if wellness programs are promoted effectively. The organization cites the experience of David Chenoweth, president of Chenoweth & Associates in Loveland, Colorado. Chenoweth is a 30-year veteran of health data analysis and evaluation. He was interviewed for a Welcoa special report released in mid-March 2011.

He said that his firm's history of individual ROI studies indicate that well-positioned and comprehensive wellness plans have been successful at containing employer health care cost increases to less than 10% annually, compared to double digit increases for employers that are not committed to wellness.

Why don't more employers recognize this value? Chenoweth noted that return on investment analysis and evaluation is more difficult than many employers imagine.

"Data acquisition can be a real challenge," he said. Employers need three to four years worth of pre-wellness intervention data and an additional year or more of health claims data for cost analysis.

He also advises that employers define tangible cost items that can be measured and compared over time and not attempt to make sweeping comparisons with diffuse patterns of costs.

The results of these targeted studies should more than prove the point that wellness programs are having positive impact on costs over time, he noted. n

The author

Len Strazewski has been covering employee benefits issues for more than 30 years. He has an M.S. in Industrial Relations from Loyola University in Chicago.