23 Jun 2016

The Real Cost Benefits of Wellness Programs

The Real Cost Benefits of Wellness Programs

By John H. Capobianco, President and CMO of HCIactive

It’s no secret that wellness programs have gone mainstream. Eighty-one percent of large companies and 49 percent of small companies now offer some form of health benefit enhancement program, according to the Kaiser Family Foundation.  Many signed on with the wellness movement based on the promise that these programs would save them money on health expenses, yet not everyone is seeing the savings they expected. There are a number of reasons why. The health costs incurred in some companies may be simply rising too fast, dwarfing the benefits from the wellness initiatives. Other organizations may expect ROI too soon, and become disillusioned when there is little or no change in the first year.

Together, these issues have cast doubt over the effectiveness of wellness programs, causing business leaders to view them as just another expense. They needn’t be. Understanding the real benefits that wellness programs provide, beyond health-related cost-savings, can offer a shift in perspective.

employees

There are four real benefits to wellness programs that will impact your company’s bottom line.

1: IMPROVED RECRUITMENT RESULTS

C-suite leaders consistently say they are challenged to find enough talent to pursue new growth, and the competition is fierce. In past eras, companies offered higher wages to lure talent from competitors, but in a slow-growth economy, few can afford to engage in wage competition. Wise firms are turning to benefits for leverage.

Health benefits top the list of human resource benefits companies use to entice prospective employees, according to the Society for Human Resource Management (SHRM). Their reasoning is sound: HR benefits are among the top factors that prospective employees look for when determining whether to work for a company. Millennial talent in particular places health benefits among their top five evaluation criteria, according to the 2015 Millennial Impact Report, published by the Case Foundation.

The talent is savvy—that is why you want them to work for you in the first place! They know the difference between health benefits that allow an employer to check a box, and benefits designed with the employees in mind. Well-designed wellness plans provide an edge. They supplement generic health insurance coverage with easy and transparent online access to benefits information and medical records. They also take into account growing healthcare trends such as integration with popular fitness devices like Fitbit and apps like MyFitnessPal, as well as offer programs and incentives to encourage positive health behaviors. These features communicate to prospects that your company cares about them.

2: INCREASED RETENTION

Losing a productive employee is expensive. Replacing junior and mid-level employees costs around 20% of that person’s annual salary, while replacing a senior executive can cost twice that person’s annual take-home pay, according to The Center for American Progress. That’s reason enough to hold on to the talent you have.

A number of factors contribute to an employee’s feeling of connection and commitment to their employers. Competitive pay sits at the top of the list of reasons why people stay in their jobs, but employees in all age groups say they are willing to accept a lower salary if they are compensated in other ways, such as through flexible working hours, by working for a company whose mission is meaningful to them, or by having a role that provides opportunities to use talents, or contribute in new ways.


“27% of employees today say that their company’s wellness program contributes to their sense of satisfaction with their job.”


Benefits offer an important contribution to an employee’s sense of commitment. Since 2002, SHRM data show benefits among the top five contributor’s to job satisfaction for employees in all demographics. Employees name health insurance as the benefit that most contributes to their satisfaction, and 27% of employees today say that their company’s wellness program contributes to their sense of satisfaction with their job.

The social and community aspects of wellness programs also contribute to retention. Wellness fairs, in-office services like mindfulness training or yoga classes, and corporate support for run/walk events all provide opportunities for employees to engage in wellness activities together. Social engagement makes people more personally connected to their colleagues—another factor which compels employees to stay where they are.

3: INCREASED PRODUCTIVITY

It is difficult to feel present and productive at work when you don’t feel well, and people with chronic illnesses often don’t feel well. Even those in general good health find that regular exercise, healthy eating habits, and sufficient sleep make them feel more awake, energized, and in a better mood—all critical to creating a productive and positive environment.

Well-designed workplace wellness programs encourage and incentivize these positive behaviors. Moreover, they are effective. A study conducted by RAND shows that people who participate in wellness programs see positive results in the form of weight loss, increased exercise, and more fruits and vegetables in their diets. Study participants report that they feel better, too.

In-house evaluations of wellness programs have likewise highlighted productivity gains. The DuPont Corporation, for example, decreased the number of absent employee days by more than 11,000 after it instituted a wellness program; Pacific Bell Telephone Company likewise decreased absenteeism by .8 days per employee per year, resulting in savings of more than $2 million.

4: DECREASED HEALTH CARE COSTS

I opened this piece acknowledging that many companies see their overall health spending increase faster than the savings they incur. Nonetheless, there is early evidence that well-designed wellness programs decrease medical costs long term.

Companies see the biggest return on investment in programs designed to help employees manage chronic conditions, such as asthma and diabetes. Employees who suffer from mental health conditions such as depression or anxiety likewise benefit personally from better management of their condition, and require less crisis management, which decreases costs.

The numbers can be compelling. In a recent cohort case study conducted here at HCIactive, we found that members who fully participated in wellness programs had a 40 percent reduction in average medical costs compared to members that did not participate. Those numbers were based on analysis of more than two years of data from more than 1700 members. The savings from the participants alone resulted in a $1.7 million annual reduction in healthcare costs. These participants also saw a 6 percent reduction in certain abnormal lab results such as blood pressure and total cholesterol.

CONCLUSION

The bottom line is that wellness programs do work—but not only, and not primarily, as a tool for reducing health-related expenses. Recruitment, retention, and productivity should be part of how businesses evaluate the effectiveness of their benefits offerings. In the area of cost savings, better disease management and positive behaviors will help your employees achieve improved health, resulting in those lower costs over time.

For information about HCIactive’s wellness plans, click here.

About the Author

As President and Chief Marketing Officer, John Capobianco oversees all operations of HCIactive. With over thirty years of experience in the healthcare and IT industries, Capobianco is a proven business executive and technologist with a gift for articulating a compelling vision and inspiring an organization to successfully execute that vision. Before HCIactive, Capobianco grew the business and brands of large companies such as Hewlett-Packard, SAP and CA. He also led high growth companies through successful IPOs and exits at Bluestone Software and MEDecision.