Employer Data Quantifies the Value of Wellness Programs

By Joanne Wojcik

Apr. 1, 2008

Perhaps the most significant difference between yesterday’s and today’s wellness movement is the science behind it.

Employers who are just now embarking on the wellness path are doing so methodically, collecting data from all relevant sources to better gauge the impact their programs are having, not only on health but also on productivity.

For the past six years or so, we’ve been looking at the Journal of Occupational and Environmental Medicine link to  to see what other employers have been getting in terms of return on investment,” says Patti Clavier, who works in group health and well-being strategy and operations for Santa Clara, California-based Intel Corp.

Dr. Joyce Young, well-being director for IBM Corp., has had several studies on the impact of wellness programs published in that journal, including one on an Internet-based work-site smoking cessation intervention and another on an incentive-based online physical activity intervention on employee health status.

“There is also some good data showing how much more smokers’ health care costs are,” Young says. “We also found that people who were physically active more than twice a week had costs $500 to $600 less than those who were not physically active. You have to do sophisticated analysis to understand all the reasons for that. But the patterns are there.”

A review of 56 published studies of work-site health promotion programs by the Washington-based Partnership for Prevention found they produced an average savings-to-cost ratio of $5.81 to $1. The programs also reduced annual health costs by an average of 26 percent, reduced absenteeism by 27 percent, and reduced workers compensation and disability claim costs by 32 percent.

“What you find is a very comprehensive holistic approach to health and productivity management will usually be cost neutral in year one,” says Shelly Wolff, national leader for health and productivity at Watson Wyatt Worldwide in Stamford, Connecticut. “Year two is when you start seeing return on investment, and by the time you get to three years, things really start kicking in and you really do see ROI,” she says, adding that longer-term studies have found the gains continue for at least seven years.

Many employers also are starting to measure the impact of wellness programs on productivity in addition to health care costs by combining claims data with data on absenteeism, occupational injuries and disability claims, Wolff says.

Pitney Bowes Corp., for example, won the C. Everett Koop National Health Award twice, in 1995 and in 1997, for its work measuring wellness-program ROI, which produced “good hard metrics showing that by investing in health improvement programs you actually saw reductions in absenteeism costs,” says Dr. Jack Mahoney, director of health strategies at the office equipment manufacturer, which is based in Stamford, Connecticut.

The collective impact of ill health on the workplace is what is called the “burden of illness,” says Andrew Webber, president and CEO of the National Business Coalition on Health in Washington. “You put the whole picture together in terms of what the illness burden is costing you,” he says.

“It’s not just health care costs; it’s the time away from work. That’s a big part of where the return comes from,” Wolff says. “If a company is only looking at health care cost trend as their marker of success, they’re missing the other real, important costs that are impacting the health and effectiveness of your employees and the organization.

“We do know that people with health risks, people who are overweight, people who smoke are off work more. That means someone else is doing their job, so you’ve got higher replacement costs, you’ve got overtime, and that has a cascading effect on stress, which is another part of what we saw in our research,” she says. “You kind of get this domino effect.”

Joanne Wojcik writes for Business Insurance, a sister publication of Workforce Management.

Schedule, engage, and pay your staff in one system with