Company Health and Wellness : The Case for Corporate Wellness Programs

Employee Wellness Programs first became popular during the economic boom of the late 1980s and early 90s. Programs featured on-Site fitness centers and massages, and were used as recruitment tools for young staff members searching for nontraditional work environments. Nonetheless, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and organizations returned to a more old-school benefit structure focused on managed healthcare.

In recent years, as Medical Care costs have spiraled out of control, corporations have explored the potential of Corporate Health Promotion Programs as a cost-saving strategy. Organizations such as Johnson and Johnson, General Motors, Motorola and Union Pacifi c Railroad have all seen a signifi cant return on investments in employee health (See Case Studies, p.20). Corporate Health Promotion Programs can help lower the costs associated with:

Healthcare premiums – The cost a corporation pays for medical insurance: According to a 2005 study by Hewitt, the Healthcare cost per employee in the United States in 2006 will average $8,046, with corporations absorbing nearly two-thirds of that cost.

Pharmaceutical costs – The price of a prescription plan: According to a 2005 study by Mercer, the average annual prescription costs for sizable organizations grew 11.5 percent, making it nearly a decade straight of double-digit increases in cost.

Short-term disability (STD) – The price of offering STD insurance to employees: According to a 2004 study by insurance provider Cigna, the average STD claim results in $13,094 in direct disability payments and healthcare costs. The report also found that 26 percent of claims related to health care events were a result of chronic conditions that could likely be mediated through Company Health Promotion Programs, and that these cases amount for 56 percent of the STD-related healthcare costs.

Rates of Absenteeism – The cost of missed work: Rates of Absenteeism cost companies $660 per employee in 2004, with nearly one-third of companies characterizing the trend as a genuine issue.

Presenteeism – The price associated with staff members who work at decreased productiveness levels: Sixty% of the total cost of employee diseases come from presenteeism, according to a 2004 study by the Institute for Health and Productivity Studies at Cornell University.

The evidence is clear that strategically designed Workplace Health Promotion Programs can decrease both direct and indirect Health Care costs. A 2004 review of Workplace Health Promotion Programs revealed that, in total, an investment of $1 by a corporation in Wellness Programming returned a median cost savings of $2.05 to $4.64.