Wellness ROI Featured

7:00pm EDT November 25, 2009

Nearly all companies want to know what their return on investment (ROI) is on their different business investments. Since their inception, worksite wellness programs have always been under a watchful eye for their true level of ROI.

However, at some level, we all know that worksite wellness programs can improve employee health and productivity, reduce absenteeism and, most notably, lower employees’ use of health care benefits. Often this is done through health awareness education, behavior and lifestyle change, and peer support programs. As more companies realize the benefits of preventive health, more are investing in wellness.

“Employers must keep in mind, however, that wellness programs are not a quick fix for poor health,” says Patty Starr, the senior director of health insurance and benefits for the Council of Smaller Enterprises (COSE). “It could take months, if not years, before one notices change.”

Smart Business spoke with Starr about wellness programs and how to get the most bang for your buck.

Why is a wellness program worthwhile?

Every business is different, and therefore, employers must examine their own circumstances, specifically their average health care cost for each employee, usually at least a couple thousand dollars per year. Investing a few hundred dollars per employee can produce an ROI of several hundred percent. In turn, this can generate a major offset to health care costs. It has been studied; no other business investment can afford that type of return. With health care premiums continuing to increase, businesses that fail to invest in employee wellness are likely to see negative results on their bottom lines.

How can you ensure that a worksite wellness program will provide maximum ROI?

In order for a worksite wellness program to reach maximum ROI, the most significant aspects should include effective programming and frequent evaluation of the program’s competence. Employees must realize that the wellness program is designed to provide important benefits for their personal health, at the same time understanding their own accountability for improving or maintaining their health status. An educational component should be included to build employees’ motivation and commitment to change to healthier behaviors. A needs assessment survey and health risk assessments should help determine specific company wellness goals and health improvement areas. Incentives to reinforce and establish positive health habits also drive maximum ROI.

What strategies improve the ROI of a worksite wellness program?

The Wellness Council of America (WELCOA) suggests the following five strategies:

  • Learn how your insurance company may be willing to pay for wellness. Many insurance companies provide preventive health benefits for their enrollees. These benefits pay for age and gender appropriate disease and cancer screenings. Also often included are annual physical examinations and routine immunizations. These benefits are a part of the health plan, so there is no or very little cost associated for you and your employees.
  • Provide a benefit plan design so wellness can be cost neutral. When determining an employee’s contribution to his or her health plan, a wellness program component should be included when calculating the total costs. The extra dollars per employee should become your wellness budget for the year. Also, communicate your wellness program incentives, including reimbursement of a certain amount or percentage to participating employees at the end of the year. This incentive can come in the form of cash, premium reductions or rewards.
  • Put into practice wellness policies that support healthy living. Change policies and worksite environments that discourage healthy behaviors and habits. Be sure that employees sign off on these policy changes.
  • Create a wellness message that increases employee participation, morale and engagement. The way in which a wellness program is communicated to employees will greatly determine its level of success. Wellness programs have two primary goals: to positively change lives by improving health and to positively impact a business’s bottom line. Because of this dual outcome, employers need to be cautious of how they communicate. Employers should think like employees, by not telling them how much the company will save but rather what’s in it for them.
  • Take advantage of your free community resources. There are many great community resources that you can use to complement your wellness program, such as WELCOA, the American Cancer Society and the CDC.

After a wellness program is put in place, when will health improvements be seen?

Of course, each company is different, but employers with effective worksite wellness programs can expect the following. When it comes to measurable results, often first on the list, which is rather immediate, is a decrease in employee absenteeism. Companies that are able to measure productivity will begin to notice improvement in six to 12 months. On the flip side, reductions in health plan premium increases may not take place until two or three years after the program begins. This is a direct result of a decline in health care claims. Obtaining these results requires that the programming be upheld and regularly examined for effectiveness. If the program is not maintained or there is lack of employee participation, negative and potentially harmful wellness behaviors may ensue.

Patty Starr is the senior director of health insurance and benefits for the Council of Smaller Enterprises (COSE), one of Ohio’s largest small business support organizations. Reach her at pstarr@cose.org or (216) 592-2269. Composed of more than 17,000 members, COSE strives to help small businesses grow and maintain their independence. COSE has a long history of fighting for the rights of all small business owners, whether it’s through group purchasing programs for health care powered by Medical Mutual of Ohio, workers’ compensation or energy, advocating for specific changes in legislation or regulation, or providing a forum and resource for small businesses to connect with and learn from one another.