How much, by when? That's the driving question surrounding employee health management programs. And as a benefit consultant, it's your job to help clients understand how a workplace wellness program can influence their corporate health care trend and when they can begin to realize the financial benefits of this investment in employee health.
A recently published study from StayWell Health Management and Towers Watson can help you address these essential questions. The study, "Association Between Changes in Health Risk Status and Changes in Future Health Care Costs: A Multi-employer Study," was published in the November 2012 issue of the Journal of Occupational and Environmental Medicine. The findings demonstrate that when risks change, costs follow. But over time, focusing workplace health improvement initiatives on population-wide prevention will deliver greater financial results than focusing on helping a specific segment of your population reverse or reduce existing health risks. In addition, the study showed that the initial financial payoff begins to accrue after just one year.
As one of the first multi-employer studies to investigate the link between changes in health risks and future health care costs, this study delivers several key findings that can help you in your daily dialogue with employers. Specifically:
* If you reduce health risks, lower costs begin accruing very quickly. In fact, health care costs declined in the same year risks decreased. Employers can break even on their wellness investment in year two and achieve up to a 3:1 ROI in year three.
* The financial implications for prevention may be even greater than for risk reduction. For every health risk added, costs in the next year increased by 38% above the cost savings that resulted from eliminating a risk.
* A long-term solution is better than a quick fix. In this study, a greater immediate savings was realized from reducing health risks for people with chronic conditions than for the average employee. After controlling for differences in age, gender and company, those with chronic conditions who reduced health risks had a five-times lower cost burden compared to those without a chronic condition. In addition, those with chronic conditions who added health risks doubled the cost burden compared to those without chronic conditions.
Why it matters
To make the most of leading-edge research, you need to understand how you can use this information when counseling clients:
* The findings support a comprehensive approach to population health management, including the importance of reducing health risks and preventing the accumulation of risks over time. These findings reinforce the prior knowledge that keeping people healthy is equally important to reducing specific risk factors.
* Understanding these findings can help your team better support the short-term and long-term business case for a population health management approach. In the short term, employers can expect savings to be driven by health risk reduction among individuals with chronic conditions. But long-term savings requires a population health management approach.
* The findings help employers justify their corporate commitment to improving employee health and productivity and provide all-important data that can be essential when gaining C-suite approval for corporate spending on wellness programs.
* The study validates the use of health risk change (as reported on a health assessment and through biometric screening data) as a leading indicator of future financial impact.
Put your calculators away
While it's tempting to use these research findings to predict future savings, we strongly caution against this approach. We know from previous study findings that wellness programs can produce immediate savings in productivity related costs, including reduced absenteeism, disability and workers' compensation costs, as well as enhanced work performance. However, this study does not capture these additional benefits, which are part of the larger value of investing in employee health management programs.
In addition, this study indicates that financial impact may grow over time, but the current study only followed individuals for the first year after risk change. When coupled with our recent findings that employers can realize specific, short-term savings when employees reduce health risks, we believe the total value of behavior change programs is not fully captured in these study findings.
Grossmeier, Ph.D., is vice president of research at StayWell Health Management. Nyce, Ph.D., is director of Towers Watson's Corporate Research and Innovation group.
