Wellness Program Return on Investment.

Many corporations, as part of their efforts to contain rising health care costs, are beginning worksite programs variously described as wellness, lifestyle programs, health and productivity management, population health management and, simply, wellness programs.

The purpose of this article is to consider whether such programs improve health. When so, do they in turn reduce utilization of healthcare services and reduce healthcare expenditures?

The well-liked media have done much to promote the theory of corporate wellness. Last year, In Business –  Madison1 magazine printed a story accompanied by a table reporting an impressive range of returns on investment (ROI) –

Return on Investment (Per dollar ROI for lifestyle programs)

• Coors $6.15

• Kennecott $5.78

• Equitable Life $5.52

• Citibank $4.56

• General Mills $3.90

• Travelers $3.40

• Motorola $3.15

• PepsiCo $3.00

• Unum Life $1.81

Source –  2004 T.E. Brennan Corporation, as reported

Would these ROIs stand up to rigorous empirical analysis of the data? What factors produce such disparate returns among these programs? and does the published literature, subject to peer review of scientific methods, support the ROIs stated here?

Health and Productivity Management

Illness and injury associated with an unhealthy lifestyle or modifiable risk factors is stated to account for at least 25 percent of worker healthcare expenditures.

The most meaningful of these risk factors are stress, tobacco use, overweight or obesity, physical inactivity, excessive alcohol use, and poor nutritional habits.

Over the past two decades, a variety of groups at the local, state, and national levels have promoted the theory that health risk reduction and care management programs can improve employee health, and that worksite health education, health risk management, and benefit counseling should complement standard health insurance benefits.

The intensity of wellness programs range from bulletin board,  brochure or newsletter information to on-site fitness facilities, health risk reduction classes, and personal lifestyle change coaching.

Wellness programs today often include a health risk (assessment|appraisal}  to evaluate each employee’s modifiable risk factors of illness. Program coordinators then target interventions to those that are at increased risk through personal communications and individual follow-up.

Comprehensive wellness programs may include courses on health risk reduction and job safety, fitness and exercise activities, health club memberships, and reductions in co-payments or premiums for staff members who adhere to recommended medical screening guidelines.

Along with this, some companys are restructuring health benefits and encouraging employees’ cost-sensitivity when accessing healthcare.5 These changes are intended to reduce employees’ need for and utilization of healthcare, yielding reduced group medical care costs.

Demonstrated reductions in health care expenditures should then provide businesss with a powerful bargaining chip in negotiating lower health insurance premiums during future terms.

Evidence basis –  A range of ROI estimates

The empirical research has produced results as varied as the popular media on ROI. However, evidence continues to grow that well-designed and well-resourced wellness and disease prevention programs provide multi-faceted payback on investment.

Colleague-reviewed examinations and meta analyses show that ROI is achieved through improved worker health, reduced benefit expense, and enhanced productivity.

• Goetzel and peers, in their meta-analysis of two dozen articles summarizing economic examinations of health and productivity management programs, found an typical return of $3.14 per $1 invested in traditional wellness programs. the ROI estimates for the individual programs ranged from $1.49 to $13.7,

• Aldana reviewed 72 articles and concluded that wellness programs achieve an typical ROI of $3.48 when considering health care costs alone, $5.82 per $1 when examining absenteeism, and $4.30 when both outcomes are considered.

• Ozminkowski and collagues conducted a 38 month case study of 23,000 participants in Citibank, N.A.’s health management program and reported that within a 2 year period, Citibank realized a ROI between $4.56 and $4.73.10  

Follow-up studies found improvements in the risk profiles of participants, with the high-risk group improving more than the “usual care” group1 then of more intensive programming.

• Chapman’s 2004 meta-evaluation of 42 studies, ranking overall validity of the studies, reports cost-benefit ratios from $2.05-$4.64.

In addition to immediately quantifiable cost reductions, scientists have announced a selection of spin-off benefits –  greater productivity, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15

Such programs may also have positive effects on worker perceptions of the company and worker morale, even among nonparticipants.  These outcomes go beyond savings in direct health care costs to provide non-health related ROI.

Tailoring program to maximize ROI Wellness programs aim to reduce the health risks of employees at high risk while maintaining the health status of those at low risk.

A variety of disease management interventions are available to fit the specific risk profiles of various worksites. Insurers and businesses now seek to calibrate their interventions in order to achieve optimal risk reduction and costeffectiveness.

In 2001, Univ. of Michigan scientists announced on stable trends in healthcare costs for over 2 million current and former staff members in an 18 year data set.

The mean cost increase per risk factor gained ($350) was found to be more than double the mean cost decrease per eliminated risk factor ($150).

In other words, increases in costs when groups of workers moved from low risk to high risk were much greater than the reduces in costs when groups moved from high risk to low risk. Their conclusion –  Programs designed to keep healthy individuals  healthy will likely provide the greatest return on investment.

On the other hand, Pelletier’s meta-analysis and other program evaluations18 suggest that individualized risks reduction for high-risk workers within the context of extensive programming is the critical element in achieving positive clinical and cost outcomes in worksite interventions.

Dose-Response?

A few factors may affect the impact of various programs and the ultimate ROI, including cultural and environmental factors, workforce demographics, level of participation and longevity of the program.

Most cost-benefit studies have been conducted in big corporations with more than fifty employees. But researchers have shown that similar results can be obtained by small corporations with as few as five employees actively involved in a well-managed program.

Various studies also suggest that even relatively modest levels of participation can achieve substantial program impact. Contrary to reports by the popular media that such programs require more than 70 percent participation, published reports of at least one case showed positive ROI with 51 percent participation.

Length of intervention appears to be a more salient variable –  an impact on medical costs ordinarily requires three-to five years of programming.

Future developments

Despite the abundance of positive program analysiss, a few caveats remain. Negative results are less likely to be announced or published, as a result biasing the ROI upward.

Uncertainty persists regarding the specific impact of the various program components. But as these programs take hold, further research and investigation will enable fine-tuning of program investments.

Meanwhile, the preponderance of data and the strength of the published research stand in favor of a positive ROI for wellness programs.

Truly, the corporation case for such programs is now well enough defined that some insurance brokers offer discounted rates to corporations that institute or subscribe to wellness programs.

Future questions will focus on how to best to combine extensive and focused interventions, the intensity of elements, and how to calibrate the dose-response model to achieve a target ROI.

Here, employers, staff members, and scientists will need to collaborate to define mutual goals in terms of both clinical and cost outcomes.

Sources –

1. In Business –  Madison. Madison, WI –  September 2004. p. 39.

2. Anderson DR, Whitmer RW, Goetzel RZ, Ozminkowski RJ, Wasserman J, Serxner S. Health Enhancement Research Organization Committee. American Journal of Wellness 2000; 15(1) –  45-52.

3. Manning J. Wellness movement gains ground among companies, health insurers. Milwaukee Journal Sentinel. August 19, 2004.

4. Chapman LS. Specialist opinions on “best practices” in corporate wellness (WHP). the Art of Wellness Newsletter, July/August 2004 – 1-6.

5. Fronstin, P, and Werntz, R. EBRI Issue Brief No. 267, March 2004. Washington, DC –  Worker Benefits Research Institute (EBRI).

6. Powell C. Experts urge companies to promote worker wellness strategies. Akron Beacon Journal. October 25, 2004.

7. Goetzel RZ, Juday TR, Ozminkowski RJ. AWHP’s Worksite Health, Summer, 1999.

8. Goetzel, RZ. Absolute Advantage. Washington DC –  Wellness Councils of America. Vol 1(8); 2002.

9. Aldana SG. American Journal of Wellness 2001; 15(5) –  296-320.

10. Ozminkowski RJ, Dunn RL, Goetzel RZ, Cantor RI, Murnane J, Harrison M. American Journal of Wellness 1999; 14(1) –  31-43.

11. Ozminkowski RJ, Goetzel RZ, Smith MW, Cantor RI, Shaughnessy A, Harrison M. the impact of the Citibank, N.A. J Occup Environ Med. 2000; 42(5) –  502-511.

12. Serxner S, Gold D, Anderson D, Williams D. J Occup Environ Med. 2001; 43(1) –  25-29.

13. Riedel JE, Lynch W, Baase C, Hymel P, Peterson KW. American Journal of Wellness 2001; 15(3) –  167-191.

14. Edington MD, Karjalainen T, Hirschland D, Edington DW. AAOHN J. 2002 Jan; 50(1) –  26-31.

15. Aldana SG, Pronk NP. J Occup Environ Med. 2001 Jan; 43(1) –  36-46.

16. Pelletier KR. American Journal of Wellness. 2001; 16(2) –  107-16.

17. Edington DW. American Journal of Wellness 2001; 15(5) –  341-349.

18. Leatherman S, Berwick D, Iles D, Lewin LS, Davidoff F, Nolan T, Bisognano M. Health Affairs 2003; 22(2) –  17-30.

19. Erfurt JC, Holtyn K. J Occup Med 1991; 33(1) –  66-73.

20. Serxner S, Anderson DR, Gold D. American Journal of Wellness. 18(4) –  1-6, iii, 2004 Mar-Apr.

21. Serxner SA, Gold DB, Grossmeier JJ, Anderson DR.