The Value of Employee Wellness Programs
Health in the Workplace
There is little doubt that employee health is important. Employees who are sick and stressed contribute little to the workplace and the overall success of a company.
The article below is condensed from an article by Kenneth Thorpe and Mary Grealy, and may be found in its entirety here. It covers some of the pros and cons of employee wellness programs.
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Are employee wellness programs good investments for employers?
The intuitive answer to that program would be a strong yes. Logic would say that keeping workforces healthy accomplishes two significant goals — strengthening productivity by reducing absenteeism and containing the rise in health care costs borne by employers.
Questions are being raised, though. A post in Washington Post‘s Wonkblog earlier this month was headlined “Corporate Wellness Programs: Not Quite the Cost Savers,” and quoted a University of Arizona economics professor alleging that employer wellness programs are changing the nature of health spending, but not necessarily reducing it. What’s happening, he said, is that money that might have been spent on hospitalizations is not being spent on pharmaceuticals and outpatient doctor’s visits, but spent nonetheless.
We’re writing this blog post because we have considerable experience, in our respective roles, working with employers who have put in place innovative wellness programs and are using metrics and their understanding of the unique nature of their respective workforces to continue fine-tuning these initiatives to strengthen their effectiveness. We believe it would be unfortunate if the idea that employee wellness programs bring no return on investment took hold and became conventional wisdom. These initiatives are critical weapons in the ongoing war against chronic disease.
As we examine the investment value of wellness programs, three important points need to be made.
First, contrary to the example cited in the Wonkblog post, there are companies throughout the country that are showing genuine health care cost savings as a result of their wellness efforts. At Johnson & Johnson, for example, employees are given financial incentives to complete a health profile that enables them to better understand how lifestyle factors affect their current health status, and to take part in weight loss and maintenance programs including Weight Watchers memberships. The company has seen real savings of nearly $600 per employee (in 2009 dollars) and disability rates 20 percent below industry average.
Second, it may well be that employee wellness programs lead to greater use of outpatient services and prescription drugs instead of hospitalizations, but this is an exchange that can lead to overall savings. In 2002, the St. John Providence Health System in Detroit, part of the Ascension Health system, instituted a number of changes to encourage employees to take a more active role in their health management and put several wellness and disease prevention programs in place. Over a five-year period, employee medical and prescription drug costs increased by about 26 percent, but significant reductions in inpatient hospital stays and emergency room visits generated over $15 million annually in health cost savings.
And, finally, we must keep in mind that these programs are relatively new compared to other employee benefits and are still evolving. The study cited in the Wonkblog makes the point that some wellness programs, like smoking cessation initiatives, are put in place but not monitored to ensure compliance. Some high-profile employers, like the Cleveland Clinic, have made substantial progress tying financial incentives to verifiable progress in controlling measurable indicators like weight, blood sugar and blood pressure.
The bottom line is that these employee wellness programs need to be encouraged. They make sense at a societal level, understanding that better health in the workplace is critical if we’re to make progress in the fight against chronic diseases that eat up more than 80 cents of every health care dollar we spend in this country. But also at the individual company level, where employers both large and small are achieving return-on-investment success stories, maintaining a healthy workforce is both the right and smart thing to do.
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