Is Your Wellness Program Worth Its Weight In Dollars?

(Published August 4, 2008)

You cleared the first hurdle — executives agreed to implement a wellness program. Now they are asking for hard evidence that the company's financial investment in the program is paying off. Such a request trips up many HR professionals because there is no single way to measure a wellness program's return on investment (ROI). Not only that, but changing participation rates, health plan design shifts, and employee turnover can skew the validity of ROI measures.

If measuring your program's ROI seems akin to scaling Mount Everest, take comfort in the fact that more and more employers are successfully making the climb. According to a survey of 225 employers by Health2 Resources, more than one-quarter of those employers offering a wellness program have successfully measured their ROI, up from 14% in 2007. Of those that calculate ROI, 83% said they more than broke even, compared to 66% in 2007.

Ron Z. Goetzel, Ph.D., research professor and director of the Institute for Health Productivity Studies at the Rollins School of Public Health at Emory University, estimates that for every dollar invested in a wellness program, employers can expect to save between $1.50 and $3.

To determine how much money your organization is saving, first determine the questions you (or, more accurately, top executives) want answered. Next, identify the data necessary to answer these questions. Then, develop a data collection process that will allow you to gather necessary information. Finally, determine how to analyze the data.

When it comes to collecting and assessing data, the National Wellness Institute identified three areas of economic returns to consider.

1. Medical claims. Compare program participants' pre- and post-program costs against non-participants' pre- and post-program costs.
   
   That's what Highmark, Inc., did. Over a four-year period, the company compared the medical claims of employees who participated in its wellness program against the claims of employees with similar health risks who did not participate. "Participants and non-participants in the program were carefully matched to one another to minimize the effect of selection bias, a common threat to the validity of worksite health promotion studies involving workers in real-world settings," noted Goetzel. The comparison revealed a total savings during those four years of $1.3 million.
   
   
2. Cost of sick leave. Take the amount of time in sick leave used during pre- and post-program participation and multiply the difference by the cost of the average wage scale for that time period.
   
   
3. Cost of Workers' Compensation. Looking at total claims cost and dividing it by the number of full-time employees that are covered by WC will give you the per capita or per employee WC cost. See whether it changed after the program's institution.

Learn how to keep the dollars you are saving from being spent defending your company's wellness program in court by attending AHI's Reducing Health Care Costs Without Crossing The Legal Line: Wellness Programs & Other Cost Cutting Strategies webinar on August 13, which will explore, among many others things, how to establish programs that are legally compliant.

Related Topic(s): Safety & Health, Benefits