Employee Wellness Plans : Company Health Promotion Programs: Economic Considerations

Initially introduced by Halbert Dunn in the 1950’s, wellness became a popular buzzword during the late 1970’s and received considerable academic attention in the 1980’s.  Workplace Wellness Programs for workers became more widespread during the following decade, and credible evidence for their economic viability began to be published.  There have now been over 100 published research studies on this topic and a number of systematic reviews.

Health risks inflate expenditures.  Medical Insurance expenditures escalate with both age and number of risks present.8,10   The number of risks is also strongly related to sick time absenteeism, Worker’s Compensation expenditures, short-term disability, and reduced productivity (”presenteeism”).

Early Worksite Wellness Programs were relatively basic and typically produced a return on investment of less than one dollar for every dollar spent operating the program (ROI = <1:1).8 Such programs might be characterized as "fun-oriented".  Participation is entirely voluntary, and there is no particular focus on the reduction of specifically identified elevated risks.  Interventions and activities are not personalized, and there is no emphasis on the management of health costs.  These programs are typically site-based only, lack options to address all of the major behaviorally-related health risks, and lack multimodal presentation.  Minimal or no incentives and rewards are provided to workers for participation, and services to spouses and family members are not available.  Most such programs lack meaningful evaluation.  

More conventional programs are "activity-oriented" and have shown an return on investment of between 1:2.5 and 1:3.5.8 These programs may have a greater emphasis on health and risk reduction, although the efforts are relatively broad and not customized.  They may have some generalized emphasis on health cost management, although not necessarily aimed at specific elevated risks.  Most are site-based and voluntary, with spouses included only rarely.  Modest rewards and incentives may be utilized to bolster participation.  Formal evaluation may be weak.

The newest and most economically viable programs are "results-oriented" and exemplify the health and productivity management model.  These programs consistently produce return rates of 1:4 or greater within a 12-24 month period.8   Such programs are strongly focused on the reduction of specifically identified elevated risks and the management of health expenditures.  They are generally voluntary, but use strong financial and other incentives/rewards to promote participation.  They are multi-component in nature (address all major risks), and have both worksite and virtual modalities of operation.  The interventions are highly targeted and individualized, and available to spouses as well as workers.

For companies, the cost of offering medical insurance for their staff members is of great significance.  Those expenditures have been growing at annual rates between 6 percent and 14%. Chapman's 2007 systematic review reported an average decrease in healthcare expenditures of 26.5 percent as a result of Company Health Promotion Programs.  His review covered 60 of the most scientifically valid research studies, with an average of 3.77 years of study.

Rates of Absenteeism due to illness is another cost driver.  Chapman's review reports an average decrease in sick leave of 25.3%.   Cost for Worker's Compensation was reduced by 40.7%, and disability costs by 24.2%. There is also an emerging literature on the costs of presenteeism (reduced productivity).11,13  In one study, every risk reduced through a wellness program yielded a 9% decrease in presenteeism (and a 2% decrease in absenteeism).

Some businesses have achieved a zero percent increase in healthcare expenditures across at least brief periods of time.10  Doing so requires 90-95 percent participation of the employee population in focused wellness drives, with 75%-85 percent of the employees falling into the low risk category.10  Although robust efforts to cut the risk status of those in moderate or elevated risk categories must be made, the needs of currently healthy employees must be addressed as well to avoid increases in risk-status.

Given the size of the federal workforce, important cost savings in the government's contribution to healthcare insurance premiums for employees could be achieved if a majority of that population were participating in active wellness programs.  Similarly, improvements in absenteeism, worker's compensation, disability, presenteeism, and turnover as a result of robust Worksite Wellness Programs would provide substantial fiscal benefits for the government.

References

1.   Aldana, Steven G.  (2001)   Financial Impact of Company Health Promotion Programs:  A Comprehensive Review of the Literature.   Am J Health Promotion 15(5):296-320.
2.   Chapman, Larry.  (1998)   The Role of Incentives in Health Promotion.  The Art of Health Promotion  2(3):1-8.
3.   Chapman, Larry.   (2003)   Biometric Screening in Health Promotion:  Is it Really As Important as We Think?  The Art of Health Promotion  7(2):1-12.
4.   Chapman, Larry.  (2005)   Meta-Assessment of Company Health Promotion Programs Economic Return Studies: 2005 Update.  The Art of Health Promotion, July/August, 1-15.
5.   Chapman, Larry.   (2006)   Employee Participation in Corporate Wellness Programs and Corporate Wellness Programs:  How Important are Incentives, and Which Ones work Best?   North Carolina Medical Journal   67(6):  431-432.
6.   Chapman, Larry, Lesch, Nancy, and Passas Baun, Mary Beth.   (2007)   The Role of Health and Wellness Coaching in Corporate Wellness Programs.   The Art of Health Promotion, July/August, 1-12.
7.   Chapman, Larry.  (2007)   Proof Positive:  An Analysis of the cost-Effectiveness of Worksite Wellness.  Northwest Health Management Publishing, Seattle, WA.
8.   Chapman, Larry.  (2007)   An In-Depth Look at the Economic Evidence for Rewarding Health Behavior Change.   Workshop presentation at the World Research Group “Rewarding Healthy Behaviors for Health Plans and Employers” Conference, Orlando, FL, January 23-24.
9.   Edington, Dee.   (2001)   Emerging Research:  A View from One Research Center.  American Journal of Health Promotion 15(5): 341-349.
10.   Edington, Dee W.  (2007)   Health Management as a Serious Business Strategy.  Presentation at the World Research Group “Rewarding Healthy Behaviors for Health Plans and Employers” Conference, Orlando, FL, January 23-24.
11.   Pelletier, Barbara, Boles, Myde, and Lunch, Wendy.  (2004)  Changes in Health Risks and Work Productivity.   Journal of Occupational and Environmental Medicine, 46(7): 746-754.
12.   Pelletier, Kenneth R.  (2005)   A Review and Analysis of the Clinical and Cost-Effectiveness Studies of comprehensive Health and Disease Management Programs at the Worksite: Update VI 2000-2004.  JOEM 47(10)1051-1058.
13.   DeVol, Ross, Bedroussian, Armen, et. al.  (2007)  An Unhealthy America:  The Economic Burden of Chronic Disease.  Report released by the Milken Institute.   www.milkeninstitute.org.
14.   Partnership for Prevention.  (2008) Investing in Health:  Proven Health Promotion Practices for Workplaces.   http://www.prevent.org/images/stories/2008/investinginhealth_finalfinal.pdf.