By Rebecca Shafer, Michael Stack, Robin Kobayashi,
Of the many workers’ compensation cost reduction initiatives available to employers today, wellness programs are by far the one of greatest interest. Employers seek statistics on ROI (return on investment), as well as costs of implementation of such programs, they hunt for information on how to implement such programs and which vendors provide them. How much can we save? What is the ROI? How quickly will I see the savings? Those are the primary concerns of employers today. Of all the articles I have written in the last 25 years, those on wellness programs have by far been most widely read and most requested for reprints.
Employers know intuitively they will reduce their workers’ compensation costs and medical insurance costs if their employees are healthier, but senior management always prefers to make decisions with concrete numbers. Using intuition or general projections can often lead to unmet expectations. They will find the numbers, as well as a case for action in the recent article in Journal of Occupational and Environmental Medicine, “Medical Care Savings From Workplace Wellness Programs: What is a Realistic Savings Potential?”
The study focused on seven risk factors, i.e., smoking, high blood pressure, high cholesterol, overweight/obesity, physical inactivity, alcohol abuse, and low fruit and vegetable intake, noting that the three most costly medical conditions for working-age adults were cardiovascular disease, cancers, and diabetes.
According to this study:
- An effective workplace wellness program could reduce average annual costs per working-age adult by $649.09 or 18.4%
- For older working adults (60-64 years old), the possible savings could be substantially higher at $1,947.10 or 27.9%
- The maximum savings would not be achieved immediately; rather, medical care savings will increase with time if:
- “More eligible wellness program members participate.” Presently, not all eligible employees choose to participate in workplace wellness programs.
- “Effective control of heightened risk factors improves.” Some people who participate have not been successful in lowering their risk factors.
- “Greater risk reversal can be achieved.” Some people who participate have difficulty maintaining their lowered risk factors over time.
Employee turnover could present challenges for employers seeking to realize cost savings with workplace wellness programs because:
- Some people will leave an employer before savings are realized
- Some new employees might enter the work population with heightened risk factors
When designing an effective workplace wellness program, employers should note that age is an important variable:
- Chronic diseases of aging first appear in middle age (45-59 years), becoming more prevalent in time and peaking during retirement (65+ years)
- With respect to young working adults, the greatest potential savings could be achieved by controlling risk factors related to alcohol-related conditions, cardiovascular disease, and diabetes
- With respect to older working adults, the greatest potential savings could be achieved by controlling risk factors related to cardiovascular disease and cancers.
- The potential annual savings is 9 times greater for older working adults than for young adults; thus, an effective workplace wellness program should expend greater resources on older working adults