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March 21, 2019 | ROI, Corporate Wellness & Benefits

Do Wellness Programs Save Companies Money?

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As business owners, HR experts, managers, and employees, we can all openly agree that healthcare costs are significant. They’re simultaneously vital to employee life and a major threat to an organization’s profits.

Oh, but you know all too well that the necessitates and threats don’t stop there. A workforce is essential, but a lack in productivity is detrimental; A culture is crucial, but a disengaged population that radiates low morale is a ticking time bomb.

Employee Wellness Programs: Just a Trend or an Invaluable Resource?

With healthcare costs remaining relentless as they steadily continue to rise annually, and with workplace culture now a tip-top priority for most companies – big and small – employee wellness programs have quickly shuffled center stage and sing promising tunes of saving organization’s money when it comes to employee medical care costs, absenteeism, turn over, and other business imperatives.

As a leader who is considering a wellness program for their organization or looking for alternatives to the program that’s currently implemented, it’s incredibly valid to wonder if wellness programs are just a trend or if they provide actual value for employee health and engagement.  

Depending on where you turn for insight, there’s bound to be skeptics and believers on each side of the conversation.

The main points to behold are that:

  • The more employees adopt healthier behaviors, the less likely they are to develop health risks.
  • A reduction in health risks across the population likely means a reduction in filed insurance claims for preventable conditions.
  • The less claims that are filed, the lower the expected future claims costs will be, and the lower the benefit renewal costs for employers and in turn, employees.

Furthermore,

  • The stronger the culture, the higher the employee engagement.
  • The higher the employee engagement, the more connected employees are to the company’s vision and values, the higher the presenteeism and productivity, the lower the turnover, etc.

By implementing the right employee wellness program for your company, all of these scenarios will unfold.

So, a trend? All signs point to absolutely not. An invaluable resource? One hundred percent.

Here’s the hard truth about the ROI for employee wellness programs:

ROI for Employee Wellness Programs

As more companies inquire about or invest in employee wellness programs, the debate about their return on investment grows.

The safest answer to, “What is the ROI for workplace wellness programs?” is: It depends.

But with extensive, published research – such as The RAND Report1 – stating that the ROI on wellness programs is almost always positive, we’re here to assert that certain wellness programs can absolutely have a substantial impact on lowering healthcare claims and costs, increasing productivity, improving hiring and retention and, therefore, helping your bottom line.

Employee Wellness Programs and Health Care Costs

By the numbers:

  • In a study done on the ROI of employee wellness programs, Harvard researchers conclude that, on average, for every dollar spent on employee wellness, medical costs fall $3.27 and absenteeism drops $2.73. This is a 6-to-1 return on investment.2
  • A report by the International Foundation of Employee Benefit Plans determined that most North American employers saved $1 to $3 in their overall health care costs for every dollar spent on an employee wellness program. These savings come from direct costs, like workers’ compensation claims, and indirect costs, like improved retention and increased productivity.3
  • According to the Rand Wellness Programs Study, the disease management component to the studied wellness program was responsible for 86 percent of the hard health care cost savings, generating $136 in savings per member, per month, and a 30 percent reduction in hospital admissions.4
  • A Harvard Business Review article confirmed how ROI can be attained through employee wellness programs, specifically looking at high health risk employees. Of those classified as high risk (with body fat, blood pressure, anxiety level and other measures) when the study started:
  • 57 percent were converted to low-risk status by the end of the six-month program
  • Medical claim costs declined by $1,421 per participant, compared to the previous year
  • Every dollar invested in the employee wellness program yielded $6 in health care savings.5

But to see a more comprehensive picture of the ROI for employee wellness programs, we must look at its impact on culture, engagement and productivity.

Employee Wellness Programs and Productivity

The benefits of employee engagement cannot be overstated. While the hard savings from decreases in health care costs and employee sick leave is an important method for calculating ROI, the additional benefits achieved by improving employees’ health, lifestyle and well-being must be accounted for.

These factors are largely thought to be indirect ROI components (and often harder to calculate/crunch numbers for), but, at the end of the day, a wellness program would not be complete without diet, exercise, and improved behavioral initiatives and would fail to deliver an employee with all the tools needed to significantly improve the overall health and mental outlook of their life.

The long-term ROI on investing in an employee wellness program is tenfold.

It’s vital to remember that success will not happen overnight, but if you invest in a configurable, results-driven employee wellness program that is right for your company’s workforce, goals and needs, and devote time to communicating clearly and regularly about the program, in the long-term you should see:

A reduction in:

  • Costs related to health and presenteeism
  • Number of employee absences
  • Length of time employees are away from work
  • The cost of sick pay

An increase in:

  • Workforce engagement
  • Workforce productivity
  • Workforce retention, as they know you care about their overall wellbeing
  • Workforce motivation
  • Workforce and customer relations

Are You Protecting Your Biggest Asset by Building a Healthier Workforce?

With so many factors at play, it’s admittedly difficult to precisely quantify the financial impact of a wellness program until a program is implemented and running – making the ROI debate ongoing.

But we do know that engaged employees generally generate better organizational outcomes, and healthier employees generally require less healthcare.

At Bravo, we believe that to effectively evaluate any program, an organization needs a clearly defined strategy and regular reporting.

Our mission is to help companies of all sizes achieve a culture of health and personal betterment, as this is the most important component to employee wellness and sustainable employee benefits.

We are a leader in configurable and results-driven employee wellness programs with best-in-class reporting and measurable ROI, and we evolve with you to help you meet your population’s needs over time.

Learn more about who we are and how our plans target and reduce health risks and healthcare costs and enhance employee engagement and culture.


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Learn how to control rising healthcare costs with a sustainable wellness program. Download our 8 Steps to ROI in Wellness Guide to find out how your organization can control rising healthcare costs, inspire personal improvement to drive down health risks, and attract and retain top talent.

 

Resources:

1 RAND Corporation. Workplace Wellness Programs Study. Accessed February 8, 2019.
https://www.rand.org/pubs/research_reports/RR254.html.

2 Baicker, Katherine, David Cutler, Zirui Song. Health Affairs. Workplace Wellness Programs Can Generate Savings. Accessed February 8, 2019.
https://www.healthaffairs.org/doi/10.1377/hlthaff.2009.0626.    

3 International Foundation of Employee Benefit Plans. Employers Save Up to Three Dollars for Every Dollar Spent. Accessed February 8, 2019.
https://www.ifebp.org/aboutus/pressroom/releases/Pages/wellnessprogramsbenefitthebottomline.aspx.

4 RAND Corporation. Do Workplace Wellness Programs Save Employers Money? Accessed February 8, 2019.
https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Documents/RAND_RB9744.pdf.

5 Harvard Business Review. What’s the Hard Return on Employee Wellness Programs? Accessed February 8, 2019.
https://hbr.org/2010/12/whats-the-hard-return-on-employee-wellness-programs.

Topics: ROI, Corporate Wellness & Benefits

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