The next level of wellness programs Featured

8:00pm EDT October 26, 2007

The financial evidence supporting the return on investment for wellness programs is growing. Recent studies show that the medical care costs for people with chronic diseases account for more than 75 percent of the nation’s total medical care costs. In addition to incurring the direct costs of higher premiums, employers lose more than 39 million employee workdays each year just due to obesity-related illnesses. For example, according to the Centers for Disease Control and Prevention, people with diabetes lose 8.3 days per year from work, accounting for 14 million disability days compared to 1.7 days for people without diabetes.

Perhaps the most impressive statistic of all is the ROI achieved by employers who invest in employee wellness programs. According to Michael Pondrom, employee benefits specialist with Westland Insurance Brokers, on average, employers are saving between $1.50 to almost $5 in premiums for every dollar they invest in these programs. The key to actually realizing the savings is getting employees to act.

“True employee engagement results from increased focus on communication and, perhaps more importantly, incentives,” Pondrom says. “Since half of Fortune 500 companies offer wellness programs, it’s perceived to be a luxury that only large employers can afford, but fortunately, it’s possible for mid-sized employers to also offer this benefit without significant expense by outsourcing the design and administration of the program to an insurance broker.”

Smart Business spoke with Pondrom about how CEOs can achieve a next-level employee wellness program without the associated costs.

What evidence exists that CEOs will achieve ROI by investing in employee wellness programs?

For starters, more than 80 percent of chronic disease is preventable. So if employers can help to prevent the disease, they prevent most of the related direct, or hard, and indirect, or soft, costs. As an example, all of the research I’ve read indicates that an employee who controls his or her diabetes costs an employer only $24 in monthly health care premiums versus $115 in premiums for diabetic employees who don’t control the disease.

What constitutes a next-level employee wellness program?

Taking your wellness program to the next level of engagement is really a three-step process that can be facilitated by your insurance broker: Identify the risks, educate your employees and, most importantly, offer incentives.

The first step is to review the potential risks posed by the specific demographics of your employees. The most efficient and accurate way to accomplish this would be to first review your company’s claims data for clues. As an example, in reviewing the claims data for one of our clients, it became evident that they had an above-average incidence rate for cardiovascular-related claims among employees. As a result of the findings, we scheduled an on-site health fair for the employees, offering free screenings for early signs of cardiovascular disease through a specialized cardio-assessment firm. Many employees were unaware that they were at risk for cardio disease, and the screenings provided them with both the information and the incentive to take action and to make lifestyle changes.

Broker-coordinated health fairs are also an excellent avenue to reach out to those employees already diagnosed with a disease who just need information on how to enroll in a program.

How does employee education play a role in achieving engagement?

Education is an ongoing and critical element in any successful wellness program. There are numerous sources of free information that help employers achieve awareness among employees. The goal is not only to educate your employees on what programs are available, but also on how to use them and the advantages of using them. Your insurance carrier and broker can provide brochures, posters, online information sources, payroll stuffers, newsletters and nurse hot lines. Most of the materials are free; all you have to do is request them from your broker.

How do incentives drive employee engagement?

It’s vital that employers offer no-cost or low-cost incentives to incite employee lifestyle changes. Some employers are providing subsidized on-site healthy lunch programs or discounted gym memberships. I’ve seen very effective programs that pay employees as little as $1 for each pound of weight they lose. Like any incentive program, the plan must be well communicated and reinforced in order for it to work.

Which employee wellness program elements can be outsourced and what does outsourcing cost?

Your broker can implement and administer an employee wellness program that will not only provide all of the necessary employee education and on-site health fairs, but brokers can design, implement and coordinate low-cost or no-cost employee recognition and incentive plans free of charge. An employee walking club is an example of a zero-cost program that your broker can organize for you; low-cost programs that engender employee engagement include bonuses for weight loss and personalized coaching programs that average $4 per month per employee. All employers can impact their bottom line by driving employee engagement toward wellness, and it doesn’t require any additional internal staff time when they outsource.

MICHAEL PONDROM is an employee benefits specialist at Westland Insurance Brokers. Reach him at (619) 641-3241 or