How do you get started with an investment worthy workplace wellness program [PART ONE]?
The first thing we have to look at is the definition of what components constitute a workplace wellness program. Not all workplace programs are created equal. For instance, some people might consider having a newsletter, or administering a walking program, and that really is not enough for those looking at attempting to have a return on investment. Wellness programs have become a standard part of a corporation’s benefit offering. If you believe the numbers reported about workplace wellness, up to ninety percent of employers indicate that they have a wellness program.
However, what that program might be is the question, and companies should make sure that these programs being put into place are powerful enough to make an effective change. Companies need to make sure they have a way of measuring that change. Just because wellness programs are ubiquitous does not mean that they are all effective. Some of the latest survey data on workplace wellness indicates the field is make some positive strides in the right direction, but it is also clear we have a long way to go.
When you look at the rates of smoking in particular there are fewer smokers today than in the past. However, we have only moved the needle from 23 percent to just under 20 percent. It is a move in the right direction, but given all of the things that are in place in terms of cigarette regulation, premium differentials, and other things employers are doing with regard to smoking cessation… and the fact that public opinion has seemed to turn on smokers, then one might interpret the fact that we have only gotten to just under 20 percent as not that impressive. Especially when you consider that typically the excess medical costs for a smoker is about $1600.00 more per year than a non-smoker, and that smokers are admitted to the hospital twice as often as nonsmokers. These types of statistics are not surprising but important things to keep in mind none-the-less. And it’s not just medical costs that are a concern, it is absenteeism as well. On average smokers are absent typically about 50 percent more often than nonsmokers.
Smoking is Not an Employer’s Only Problem
Obesity is also a leading cause of health costs. About 65 percent of Americans are either overweight or obese. An organization might ask, how are we going to make a change regarding obesity? How can we possibly get our employee population healthy when more than half of the people in the United States are overweight? Well, studies suggest that if your employees lose just five percent of their weight (even if they would still be considered overweight) it can have a positive impact on their health in terms of better health outcomes, especially if they have a chronic condition like diabetes or cardiovascular disease. Reducing weight also generally reduces the likelihood that your employees will develop these conditions.
None of these issues are something that we should ignore and we should absolutely celebrate that workplace wellness is movement in the right direction. We have to focus on modifiable health risks. Those things we can change. We can change whether we smoke. We can change whether we eat too much, and of course we can change how we exercise.
Establish a Good Baseline
One thing to keep in mind when you are measuring wellness programs is to make sure you have a good baseline: your company’s medical claims costs, your company’s disability claims, your company’s pharmacy costs, other related costs, etc. Baselines are going to help you have more accurate measurements of the impact of your wellness program. Also, one of the challenges of measuring return on investment is whether you want to look at the specific group it is effecting, or look at your entire employee base. You need to engage your employees to change them, but some programs are good at making an existing group better, some are good at engaging new participants, and some are good at both. However, if you do not set up your measures knowing exactly what question(s) you are trying to answer, the positive relationship between the wellness program component that you’re putting in place and the changes in the baseline measures you are looking could be improperly skewed and muddy the narrative.
Return on Investment vs. Value of Investment (ROI vs. VOI)
Some argue this is just an acronym change, or smoke-and-mirrors from the wellness industry. When examined in the context of workplace wellness programs traditionally ROI focused mostly on medical claim cost savings. In recent years analysts have been expanding the definition to now look at things like participation, engagement, absenteeism, and productivity. Since corporate wellness tends to be more focused on savings than a “return,” other areas positively impacted by corporate wellness programs are now being measured and that’s why we have seen the evolution of the value of investment.
So What Are You Really Getting Out of Your Wellness Program?
How is corporate wellness positively impacting your bottom line? That is really what this concept of ROI is meant to measure. However, you really should look at both of these terms – ROI and VOI – if what you are looking to measure is impact. You are spending money. You expending effort on wellness programs. What are you getting out of it as an organization? For instance, for some companies retention is an incredibly important factor, particularly for industries in the very competitive markets. Also, workplace wellness programs are now generally seen as kind of a standard part of any organization’s benefit package. There is something to be said about making sure you have a workplace wellness program in place so that you can be an employer of choice with a rich and robust benefits offering.
There are bottom line costs that organizations must incur when they have employees who are not optimally healthy. As companies, we care about the people who work for us, and as employees ourselves we are all on a journey to obtain more optimal health and reduce the risk factors that we all carry around. Some of these risk factors are things that we can change, and that’s why we call them modifiable risk factors. It is the benefit of interventions that effect these risk factors where an organization can look at traditional ROI measurements to see if the intervention resulted in lower benefits costs.
[credit: content inspired by fellow Alliant alum Dr. Michele Dodds.]