Know the score

The numbers supporting a causal relationship between employee health,
improved productivity and a robust bottom line are persuasive. The 2007/2008
Staying at Work report, conducted jointly
by the National Business Group on Health
(NBGH) and Watson Wyatt Worldwide,
found that companies with the most effective health and productivity programs
experienced 20 percent higher revenue per
employee, 16 percent higher market value
and 57 percent higher shareholder returns.

But getting to those results is a journey,
and many employers struggle to document
progress toward the returns promised by
employee wellness plan vendors.

“Many employers have viewed wellness
savings as a leap of faith, because they’ve
struggled to demonstrate proof of impact
in hard dollar terms,” says Jason Mahler,
FSA, MAAA, consultant for Group and
Health Care at Watson Wyatt Worldwide.
“It’s not possible to document concrete
ROI until you are at least a couple of years
into your program and may not be fully
realized until around year five, so employers should begin measuring intermediate
outcomes from the very beginning.”

Smart Business spoke with Mahler
about why employers should use scorecards and interim measures to track wellness program ROI.

Why is documenting wellness program ROI

It can take four to five years for a full
claims history to develop, and programs
like weight or smoking cessation and
chronic disease management don’t produce immediate returns. Also, first year
costs may actually rise due to program
implementation fees and employees taking
proactive health management steps, like
seeing doctors for chronic diseases.
Essentially, there’s a chain of events that
must occur to reach the desired financial
returns. First, employers must encourage
employee behavior changes, employees
must make the changes and sustain them,
then their health improves and, ultimately,
that reduces claims, costs and lost work

What are the first steps?

Employers should not wait to begin
measuring their program, but should measure intermediate outcomes from the very
beginning. First, establish your company’s
goals and get stakeholder buy-in. Next, set
intermediate metrics that demonstrate the
plausible linkage between program interventions and targeted outcomes, which is
called the value chain. The measures
should be customized based upon the
employee population and the company’s
claims and expense history; however,
reviewing industry norms might also be
helpful in establishing initial goals.

What should the scorecard include?

Include metrics all along the program
value chain and provide an executive summary of all program results. Besides tracking outcomes, the scorecard facilitates discussions around continuous improvement
and helps benefit managers customize and
improve the program to achieve the greatest value for their specific population.

Don’t just compare your results against the
goal and be satisfied; as you go along raise
the bar because that will drive the company’s eventual ROI.

What value chain links should employers

It’s important to track detailed data from
the wellness vendor in order to achieve
the promised ROI. Here are the value
chain links that should be measured:


  • Employee participation. It’s not
    enough to know how many employees
    sign up to participate; you need to know
    how many follow through and their
    engagement levels. Are they reading information, participating in conference calls
    or attending meetings? Are they opting out
    of the program and, if so, why?



  • Clinical and lifestyle compliance.
    Employees must practice improved health
    behaviors, so employers should track
    macro-level behavior trends, such as
    whether diabetic employees are having
    annual physician reviews of their blood
    sugar levels or whether employees with
    chronic conditions like asthma are being
    treated. Eventually, those employees will
    need fewer visits to emergency rooms and
    miss less work.



  • Clinical control. Track whether the
    clinical outcomes are actually improving.
    For example, are blood sugar levels
    among diabetic employees stable and have
    some been able to eliminate insulin?



  • Utilization and financial metrics.
    Finally, measure the ROI. Did your
    employees take fewer trips to the emergency room resulting in lower costs? Are
    the numbers of claims and the average
    costs decreasing? Are employee sick days


Setting interim goals and tracking results
will ensure that employers achieve the
promised ROI from employee wellness

JASON MAHLER, FSA, MAAA, is a consultant for Group and Health Care at Watson Wyatt Worldwide. Reach him at (713) 507-1796
or [email protected].

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