I’ve written previously about wellness and health management, but since it’s a topic that comes up in virtually every client planning meeting I have these days, it seems worth revisiting.

The biggest challenge facing HR professionals looking to devote resources to wellness initiatives in their organizations is responding to the question, “What’s the ROI?” It seems intuitive that if you create a healthier workforce, your cost for health insurance should go down. But intuition only goes so far these days when it comes to expending corporate resources, and quantifying ROI continues to be a somewhat elusive target.

Sure, there is lots of evidence to support the notion that health management programs do pay off. Mercer's National Survey of Employer-Sponsored Health Plans has found that employers that demonstrated a greater commitment to wellness and health management experienced annual cost increases that were two percentage points lower, on average, than those of other employers. But, as compelling as that data is, it still doesn’t constitute scientific proof.

A recent study published in the American Journal of Health Promotion did provide some hard data on the ROI of a “comprehensive” health and productivity management program. Start-up costs led to negative ROI for the first year, but strong ROI in years two and three produced a combined 2.45:1 ROI for all three program years of the study.

The study represented the results of over 20,000 program participants each year and identified the following components for what researchers considered a “comprehensive” program: comprehensive program design, management support, integrated incentives, comprehensive communications, dedicated onsite staff, multiple program modalities, health awareness programs, biometric health screenings and vendor integration.

Whew!

Clearly, the study benefitted from the law of large numbers. When you have 20,000 participants, virtually any health management program you install is going to benefit somebody. But not every company has that luxury. Also, not every company will have the resources to incorporate every single aspect of a comprehensive program as outlined above.

Does that mean you shouldn’t even start down that road? No, absolutely not. Wellness and health management programs can be scaled to fit the needs of companies of almost any size, as long as you have the data to help identify what the needs are. But even without a lot of data or a lot of money to spend, a walking program, a healthy eating campaign or a “know your numbers” program will not only heighten awareness of health issues, it will send employees a message that their employer’s concern for them extends beyond what’s included in their job description. A healthier, more engaged workforce should be a more productive workforce, and everyone benefits from that.

Many clients may think that all this wellness stuff is a bunch of “hooey”; but with health costs continuing to escalate faster than wages, and employees’ increasing difficulty to afford cost shifts, savvy advisers will be prepared to discuss the many advantages of a well-designed health management program.

Lane is principal at Mercer in Washington, DC. He can be reached at george.lane@mercer.com or 202-331-5222.

 

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