Employee Health Promotion

Employee Health Promotion Programs first became popular during the economic boom of the late 1980s and early 90s. Programs featured on-Site fitness centers and massages, and were used as recruitment tools for young employees searching for nontraditional work environments. However, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and organizations 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 Employee Health Promotion Programs as a cost-saving strategy. Organizations 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). Employee Health Promotion Programs can help reduce the costs associated with: Healthcare premiums – The expense a business pays for medical insurance: According to a 2005 study by Hewitt, the Healthcare expense per employee in the U.S. in 2006 will average $8,046, with organizations absorbing nearly two-thirds of that expense. Pharmaceutical costs – The price of a drug plan: According to a 2005 study by Mercer, the average annual drug costs for sizable organizations grew 11.5%, 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 employees: According to a 2004 study by insurance provider Cigna, the average short-term disability claim results in $13,094 in direct disability payments and healthcare costs. The report also found that 26% of claims related to healthcare events were a result of chronic conditions that could likely be mediated through Employee Health Promotion Programs, and that these cases amount for 56% of the STD-related healthcare costs. Absenteeism — The cost of missed work: Absenteeism cost organizations $660 per employee in 2004, with nearly one-third of organizations characterizing the trend as a genuine issue. Presenteeism — The cost associated with employees who work at decreased productivity levels: Sixty% of the total cost of employee diseases 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 Employee Health Promotion Programs can reduce both direct and indirect Healthcare costs. A 2004 review of Employee Health Promotion Programs revealed that, in total, an investment of $1 by a business in Wellness Programming returned a median cost savings of $2.05 to $4.64.