Wellness Program Incentives

Many employers, as part of their efforts to contain rising medical care expenditures, are launching worksite programs variously described as Workplace Health Promotion Programs, lifestyle programs, health and productivity management, population health management and, simply, wellness programs.

The purpose of this article is to consider whether such programs better health. If so, do they in turn lower utilization of medical care services and lower medical care expenditures?

The popular media have done much to promote the concept of organization wellness. Last year, In Business: Madison magazine printed a story accompanied by a table reporting an impressive range of returns on investment (ROI):

Return on Investment (Per dollar ROI for lifestyle programs)
• Coors $6.15
• Kennecott $5.78
• Equitable Life $5.52
• Citibank $4.56
• General Mills $3.90
• Travelers $3.40
• Motorola $3.15
• PepsiCo $3.00
• Unum Life $1.81
Source: 2004 T.E. Brennan Business, as announced

Would these ROIs stand up to rigorous empirical analysis of the data? What factors produce such disparate returns among these programs? And does the published literature, subject to peer review of scientific methods, support the ROIs published here?

Health and Productivity Leadership

Illness and injury associated with an unhealthy lifestyle or modifiable risk factors is published to account for at least 25% of employee health care expenditures. The most significant of these risk factors are stress, tobacco use, overweight or obesity, physical inactivity, excessive alcohol use, and poor nutritional habits. Over the past two decades, a variety of groups at the local, state, and national echelons have promoted the concept that health risk reduction and care management programs can better employee health, and that worksite health education, health risk management, and benefit counseling should complement standard healthcare insurance benefits.

The intensity of Corporate Health Promotion Programs range from bulletin board, pamphlet or newsletter information to worksite fitness facilities, health risk reduction classes, and personal lifestyle change coaching.3 Corporate Health Promotion Programs today frequently include a health risk assessment (HRA) to evaluate each employee’s potentially-modifiable risk factors of disease. Program coordinators then target interventions to those that are at increased risk through personal communications and individual follow-up.

All-Inclusive Company Health Promotion Programs may include classes on health risk reduction and job safety, fitness and exercise activities, health club memberships, and reductions in co-payments or premiums for workers who adhere to recommended health care screening standard procedures.

Along with this, some employers are restructuring health benefits and encouraging employees’ cost-sensitivity when accessing health care.5 These changes are intended to cut employees’ need for and utilization of health care, yielding reduced group health care expenditures. Demonstrated reductions in health care expenditures should then support employers with a powerful bargaining chip in negotiating lower healthcare insurance premiums during future terms.

Evidence basis: A range of return on investment estimates

The empirical research has produced results as varied as the popular media on return on investment. Nonetheless, evidence continues to grow that well-designed and well-resourced Workplace Health Promotion Program and disease prevention programs provide multi-faceted payback on investment. Peer-reviewed evaluations and meta analyses show that return on investment is achieved through improved worker health, reduced benefit expense, and enhanced productiveness.

• Goetzel and colleagues, in their meta-analysis of two dozen articles summarizing economic evaluations of health and work rate management programs, observed an average return of $3.14 per $1 invested in traditional Workplace Health Promotion Programs. The ROI estimates for the individual programs ranged from $1.49 to $13.7,8
• Aldana reviewed 72 articles and concluded that Workplace Wellness Programs achieve an average ROI of $3.48 when thinking of medical expenditures alone, $5.82 per $1 when examining absenteeism, and $4.30 when both outcomes are considered.
• Ozminkowski and collagues conducted a 38 month case study of 23,000 participants in Citibank, N.A.’s health management program and published that within a 2 year period, Citibank realized a ROI between $4.56 and $4.73.10  Follow-up studies reported improvements in the risk profiles of participants, with the high-risk group improving more than the “usual care” group11 as a result of more intensive programming.
• Chapman’s 2004 meta-assessment of 42 studies, ranking overall validity of the studies, reports cost-benefit ratios from $2.05-$4.64.

In addition to immediately quantifiable expenditure reductions, researchers have stated a variety of spin-off benefits: greater productivity, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15 Such programs may also have beneficial effects on employee perceptions of the company14 and worker morale, even among nonparticipants. 13 These outcomes go beyond savings in direct medical care costs to provide non-health related ROI.

Tailoring program to maximize return on investment Employee Wellness Programs aim to decrease the health risks of employees at high risk while maintaining the health status of those at low risk. A variety of disease management interventions are available to fit the specific risk profiles of various worksites. Insurers and businesses now seek to calibrate their interventions in order to achieve good risk reduction and costeffectiveness.

In 2001, University of Michigan researchers published on stable trends in medical costs for over 2 million current and former employees in an 18 year data set. The mean cost increase per risk factor gained ($350) was found to be more than double the mean cost decrease per eliminated risk factor ($150). In other words, increases in costs when groups of employees moved from low risk to high risk were much greater than the decreases in costs when groups moved from high risk to low risk. Their conclusion: Programs designed to keep healthy people healthy will likely provide the greatest return on investment.

On the other hand, Pelletier’s meta-analysis16 and other program evaluations18 suggest that individualized risks reduction for high-risk staff members within the context of comprehensive programming is the vital element in achieving positive clinical and expenditure outcomes in worksite interventions.

Dose-Response?

Several factors might affect the impact of various programs and the ultimate return on investment, including cultural and environmental factors, workforce demographics, level of participation and longevity of the program.

Most cost-benefit research studies have been conducted in big companies with more than fifty staff members. But researchers have determined that similar results can be obtained by small companies with as few as five staff members actively involved in a well-managed program.

Various research studies also suggest that even relatively modest levels of participation can achieve substantial program impact. Contrary to reports by the popular media that such programs require more than 70 percent participation, published reports of at least one case showed beneficial return on investment with 51 percent participation.

Length of intervention appears to be a more salient variable: an influence on healthcare costs generally requires three-to five years of programming.

Future developments

Despite the abundance of positive program evaluations, several caveats remain. Negative results are less likely to be reported or published, thus biasing the return on investment upward.

Uncertainty persists regarding the specific impact of the various program components. But as these programs take hold, further research and evaluation will enable fine-tuning of program investments.

Meanwhile, the preponderance of data and the strength of the published research stand in favor of a beneficial ROI for Corporate Wellness Programs. Indeed, the corporation case for such programs is now well enough defined that some insurance brokers offer discounted rates to organizations that institute or subscribe to wellness programs.

Future questions will focus on how best to combine comprehensive and focused interventions, the intensity of components, and how to calibrate the dose-response model to achieve a target return on investment. Here, employers, staff members, and researchers will need to collaborate to define mutual goals/objectives in terms of both clinical and expense outcomes.