A Prescription for Savings: Developing Wellness Programs
It is widely accepted that workplace health and wellness programs can have a range of benefits. Studies have calculated savings, slower growth of health care costs, reduced absences, increased productivity and so on, but a healthy workforce does more than just engender good feelings—it is also a competitive advantage.
experts contend that they can also provide a competitive advantage for organizations that implement them. To prove this point, the research team of Dr. Raymond Fabius, a workplace health specialist and vice chairman of HealthNEXT, examined the ties between employee health and corporate earnings. “Superior stock market performance could elevate a discussion about potential advantages of successful employee health programs, from the human resources area to the C-suite,” he said. “That might solve a number of U.S. health problems.”
Published in the October 2013 Journal of Occupational and Environmental Medicine, the study examined a group of large, publicly-traded businesses that have received the Corporate Health Achievement Award (CHAA) from the American College of Occupational and Environmental Medicine. The researchers used four model scenarios, combining simulations and past market performance for comparison. Each tracked a theoretical $10,000 investment portfolio of nearly 20 employers from 1997 to 2012. For each scenario, CHAA recipients saw higher annualized returns than the S&P 500. In the highest-performing case, CHAA companies’ annualized return was 5.23%, compared to -0.06% for the S&P. Even in the lowest-performing example, CHAA companies’ annualized return was 6.03%, versus 2.92% for the S&P.
Of course, market performance is determined by many factors other than investment in health programs. But, Fabius said, “our results consistently and significantly suggest that companies focusing on the health and safety of their workforce are yielding greater value for their shareholders.”
What Makes a Successful Health Program?
While increased earnings may please stockholders, these financial rewards only accrue when an employer truly invests in health programs. CHAA recipients are evaluated along 17 criteria, including management commitment to specific health goals, improved safety standards, and company-wide efforts to assess health and safety risks. Reviewers’ checklists include emergency preparedness plans, hazardous waste disposal and coordination with local police and firefighters.
Major efforts often originate with more deep-pocketed businesses, but any employer can initiate changes to impact employees’ health, and they are worth considering. At Johnson & Johnson (a CHAA award winner), annual growth in total medical spending in 2009 was 3.7% lower than other large employers’ rates. Annual savings per employee averaged $565. “Our ROI was between $1.88 and $3.92 per dollar spent,” said Fik Isaac, the company’s vice president for global health services. For every dollar corporations spent on wellness programs, a 2009 Harvard study found medical costs fall about $3.27 and absentee day costs by about $2.73.
The health benefits of a strong program will likely include plans to reduce smoking and obesity, the leading causes of preventable deaths in the United States. Employers can also realize lower replacement costs for absent workers, and gain an advantage in attracting highly-qualified new employees. Further, research suggests that healthier people miss fewer days of work. Doris Konicki, a Chicago-based health and productivity consultant to ACOEM, stresses the value of integrating health promotion and protection activities, because “employers are seeing evidence of significant productivity-cost impacts related to poor health.”
Successful investment in employee health and wellness starts at the top, so senior management commitment is essential. “Just offering a health program doesn’t work,” Isaac said. “Whether at a small, mid-size or large company, management must see the link between health, productivity and the bottom line and lead by example. For instance, [management] could let employees use a fitness center or take a walk during the business day. When the leader does that too, employees sense that their organization cares, and values health.”
Convincing Corporate Leaders
Isaac believes that the only proven solution to the crisis in health care costs is to create a culture of health and safety. Many health care executives agree that it is doable, at least on some scale.
Smaller companies can learn from larger employers with robust health programs. It may even be easier for a small company to implement change. “The more concentrated your workforce, the more involved your CEO, the easier to emphasize the importance of wellness,” Fabius said. “Sending a message to 2,500 workers that their responsibilities now include taking care of themselves can generate a culture of health pretty quickly. For large, multi-site employers, the challenge may be greater. Risk managers should emphasize that becoming great takes a workforce with skill and will. Health is as important as any other performance measure,” he said.
Wayne Burton, M.D., chief medical officer at CHAA winner American Express, recommended presenting convincing data to senior management. “Show the health cost trends in your company,” he suggested. “Talk about the possibility of mitigating them. Explain how weight management impacts safety issues, too. Healthier weight or improved fitness lowers the likelihood of serious accidents.”
Konicki added, “The Affordable Care Act covers preventive services, keeping the focus on what can be done to keep employees healthy and prevent future problems, rather than just treat illness.”
If management is receptive, the next step is to introduce appropriate programs and get employee support. “You’ll have to deliver on your promise,” Burton said.
Instead of launching an ambitious, company-wide program, begin with small steps. “Start with one condition, one program,” Konicki advised. “Develop it and keep refining and revising—success evolves. Once a program is succeeding and becoming integrated into company culture, add another.”
Look for low-hanging fruit to show some initial success, Burton said. For example, checking employees’ blood pressure is low-cost and, if you screen 100 employees and 10 or 15 have high blood pressure, helping to control it will save on health care costs.
Another simple start is changing workplace snacks. “Instead of doughnuts, bring seasonal fruits for the break room or to meetings,” Konicki said. “Make arrangements in food service contracts to receive healthy choices for vending machines or cafeterias,” Isaac added. In Goodyear’s vending machines, healthy options are actually less expensive. “Make the cafeteria an educational experience for employees, with each selection having nutritional information,” Fabius said.
Programs to encourage walking are also low-cost. “Think about what you’ll provide your employees,” Konicki said. “Pedometers are inexpensive to distribute, and it’s easy to set up friendly competitions between departments.”
These projects should not be one-time events, Isaac stressed. Plan an agenda of events for the whole year, perhaps tying some into national outreach efforts like Prostate Cancer Awareness Month in November.
Programs should also track participants’ data and progress. “Measuring your population’s health risks over time can show each program’s effectiveness, as well as its business value,” Isaac said.
Health program costs vary across the range of activities. Basic programs like risk assessments and screenings are inexpensive but can realize an average return of $2 to $4 per dollar invested.
Large businesses can often afford to appoint a full-time health coordinator, but in smaller companies, a human resources staff member or another employee usually has to volunteer to add health program activities to their regular responsibilities. Another possibility is to look for a “health champion”—someone who is passionate about health and willing to offer extra time and energy to support healthy activities.
Regardless of company size, it is important to establish a committee or team. “It could include management, a workers compensation or benefits person, a health and safety coordinator—any staff member interested in health,” Burton said. “No particular experience is needed, just motivation.”
But according to Konicki, there is no need to reinvent the wheel. Health insurance providers like Blue Cross can send weekly health or exercise tips to your employees, for example. Community health events may also offer valuable resources and preventative health care at no direct cost to the company. Excellent free material is available online, such as tools from the Centers for Disease Control’s Healthier Worksite Initiative that can help identify health concerns.
Ultimately, employee involvement determines a program’s success. The desired level depends on the particular program. Burton looks for about 50% participation in health risk assessment activities, but 25% is acceptable for some programs. He recommends a “carrot” approach, for example, using friendly competition between locations to help both participation and engagement. Small prizes for activities like a pedometer challenge also motivate more to join in.
“You want to engage a large employee population, not just the healthy ones.” Isaacs said. “Participation of 60% to 80% is where you get the most impact. The more you get people engaged, the better your outcomes and ability to show more results.”
Isaac said it takes two to three years to see an impact, which grows if the program is sustained. “Policies and short-term and long-term strategy all have to be consistent with good health.” Johnson & Johnson’s cancer prevention effort, for example, banned tobacco products of any kind at every location.
To spur participation, American Express encourages health team members to show program value to employees and their families. “When we roll out a program worldwide, we might have external champions, like athletes, who talk about how health is important to them. Sharing positive stories is tremendous for showing value and getting employee buy-in,” Burton said. “In smaller companies, there’s even more reason for senior leadership to be in favor—not just in spirit, but through presentations, awards and competitions.”
With vigorous employee health and safety efforts, American Express’ workers compensation costs are also continually declining. “The increases are below peer benchmarks,” Burton said.
In the end, health and wellness programs just make financial sense. “Our results suggest that a real path to savings is not dropping employee health benefits, but rather improving them,” Fabius said. “Our study adds new evidence-based data to a growing body of literature indicating that healthy workforces provide a competitive financial advantage in the marketplace. A corporate focus on health and safety is good business.”