A lot of employers, as part of their efforts to contain rising health care costs, are beginning wellness programs variously described as wellness, lifestyle programs, health and productivity management, population health management and, simply, wellness programs.
The purpose of this article is to consider whether such wellness programs improve health. If so, do they in turn reduce utilization of healthcare services and reduce healthcare expenditures?
The well-liked media have done much to promote the concept of employee wellness. Last year, In Business – Madison1 magazine printed a story accompanied by a table reporting an impressive range of Return On Investment -
Return on Investment (Per dollar Return On Investment (ROI) for lifestyle programs)
o Coors $6.15
o Kennecott $5.78
o Equitable Life $5.52
o Citibank $4.56
o General Mills $3.90
o Travelers $3.40
o Motorola $3.15
o PepsiCo $3.00
o Unum Life $1.81
Source – 2004 T.E. Brennan Company, as reported
Would these Return On Investment (ROI)s stand up to rigorous empirical analysis of the data? What factors produce such disparate returns among these wellness programs? and does the published literature, subject to peer review of scientific methods, support the Return On Investment (ROI)s announced here?
Health and Productivity Management
Disease and injury associated with an unhealthy lifestyle or modifiable risk factors is announced to account for at least 25% of employee health care expenditures.
The most meaningful of these risk factors are stress, tobacco use, overweight or obesity, lack of exercise, 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 theory that health risk reduction and care management programs can improve worker health, and that workplace health education, health risk management, and benefit counseling should complement standard health insurance benefits.
The intensity of wellness programs range from bulletin board, brochure or newsletter information to on-site fitness facilities, health risk reduction classes, and personal lifestyle change coaching.
Wellness programs today often include a health risk assessment to evaluate each staff member’s modifiable risk factors of illness. Program coordinators then target interventions to those that are at increased risk through personal communications and individual follow-up.
Extensive wellness programs might include classes on health risk reduction and job safety, fitness and exercise activities, fitness club memberships, and reductions in co-payments or premiums for workforce who adhere to advised health screening guidelines.
Along with this, some companys 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, yielding decreased group medical care costs.
Demonstrated reductions in healthcare expenditures should then provide companys with a powerful bargaining chip in negotiating lower medical 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 Return On Investment. Notwithstanding, evidence continues to grow that well-designed and well-resourced wellness and illness avoidance programs provide multi-faceted payback on investment.
Colleague-reviewed examinations and meta analyses show that Return On Investment is achieved through improved staff member health, decreased benefit expense, and enhanced productivity.
o Goetzel and peers, 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 health promotion programs. The Return On Investment (ROI) estimates for the individual health promotion programs ranged from $1.49 to $13.7,
o Aldana reviewed 72 articles and concluded that health promotion programs achieve an average Return On Investment (ROI) of $3.48 when considering health care costs alone, $5.82 per $1 when examining absenteeism, and $4.30 when both outcomes are considered.
o Ozminkowski and collagues conducted a 38 month case study of 23,000 participants in Citibank, N.A.’s wellness program and reported that within a 2 year period, Citibank realized a Return On Investment between $4.56 and $4.73.10
Follow-up studies found improvements in the risk profiles of participants, with the high-risk group bettering more than the “usual care” group1 so of more intensive wellness programming.
o Chapman’s 2004 meta-evaluation of 42 studies, ranking overall validity of the studies, reports cost-benefit ratios from $2.05-$4.64.
In addition to immediately quantifiable cost reductions, researchers have announced a variety of spin-off benefits – greater productivity, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15
Such wellness programs may also have positive effects on staff member perceptions of the company and staff member morale, even among nonparticipants. These outcomes go beyond savings in direct healthcare costs to provide non-health related ROI.
Tailoring health promotion program to maximize Return On Investment Wellness programs aim to reduce the health risks of personnel at high risk while maintaining the health status of those at low risk.
A variety of disease management (DM) interventions are available to fit the specific risk profiles of various worksites. Insurers and businesses now seek to calibrate their interventions in order to achieve optimal risk reduction and costeffectiveness.
In 2001, University of Michigan researchers stated on stable trends in healthcare costs for over 2 million current and former workforce 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 lowers in costs when groups moved from high risk to low risk. Their conclusion – Programs designed to keep healthful people healthful will likely provide the greatest return on investment.
On the contrary, Pelletier’s meta-analysis and other wellness program examinations18 suggest that individualized risks reduction for high-risk workers within the context of comprehensive wellness programming is the critical element in achieving positive clinical and cost outcomes in workplace interventions.
Dose-Response?
Several factors might affect the impact of various health promotion programs and the ultimate ROI, including cultural and environmental factors, workforce demographics, level of participation and longevity of the health promotion program.
Most cost-benefit studies have been conducted in large businesses with more than fifty personnel. But scientists have shown that similar results could be obtained by small businesses with as few as five personnel actively involved in a well-managed wellness program.
Various studies also suggest that even relatively modest levels of participation can achieve substantial wellness program impact. Contrary to reports by the popular media that such wellness programs require more than 70 percent participation, published reports of at least one case showed positive ROI with 51 percent participation.
Length of intervention appears to be a more salient variable – an impact on medical costs ordinarily requires three-to five years of wellness programming.
Future developments
Despite the abundance of positive wellness program examinations, a few caveats remain. Negative results are less likely to be stated or published, thus biasing the Return On Investment upward.
Uncertainty persists regarding the specific impact of the various health promotion program components. But as these health promotion programs take hold, further research and evaluation will enable fine-tuning of health promotion program investments.
Meanwhile, the preponderance of data and the strength of the published research stand for a positive Return On Investment (ROI) for health promotion programs.
In truth, the business case for such health promotion programs is now well enough defined that some insurance agents offer discounted rates to businesses that institute or subscribe to health promotion programs.
Future questions will focus on how to best to combine comprehensive and focused interventions, the intensity of elements, and how to calibrate the dose-response model to achieve a target Return On Investment (ROI).
Here, employers, workers, and scientists will need to collaborate to define mutual goals for both clinical and cost outcomes.
Sources -
1. In Business – Madison. Madison, WI – September 2004. p. 39.
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