Many companies have begun offering their employees at-work wellness programs to improve workers’ health while controlling health care costs. Many chronic diseases, such as diabetes, heart disease and arthritis, are tied to lifestyle practices. And employees who have, or are at a high risk for, such diseases invariably incur higher insurance costs and productivity losses.1
Companies that invest in health promotion programs see results in lower insurance costs, reduced absenteeism and increased employee job satisfaction.2 A 2002 Hewitt Associates survey reported that 81 percent of U.S. companies had adopted wellness programs to improve employee health, and 76 percent had disease management programs3 (Exhibit 22).
Health promotion programs, including education and wellness programs, encourage employees to improve their lifestyles. They educate employees on healthy habits and help to create healthy workplace environments. Such programs include nutrition and weight management classes, health risk appraisals and counseling with health coaches. A health risk appraisal (HRA) identifies high health risk employees by checking risk factors such as blood pressure, weight and blood cholesterol. With this information, the company can provide health education programs tailored to individual employees.4
Disease management is a process that reduces health care costs and improves the quality of life enjoyed by individuals with chronic disease conditions, by treating or minimizing the effects of the disease. Such programs help employees who are being treated for a chronic disease manage their conditions.
Most disease management programs involve patients with a nursing professional who educates them on how to manage their conditions. These programs encourage patients to follow their doctors’ orders and keep to their plan of care. Disease management programs help prevent complications and keep the patient healthier, longer.
Health Promotion Programs in Texas
San Antonio-based financial services company; 22,000 U.S. employees, 9,500 Texas employees
In 2006, USAA won the C. Everett Koop National Health Award, which recognizes excellence in health risk reduction and cost reduction programs.5 USAA’s “Take Care of Your Health” program addresses a variety of health issues through more than 20 different workplace initiatives. These include:
- On-site health clinics, fitness centers and personal trainers
- Smoking cessation and weight management programs
- Healthy food choices available in the cafeterias and vending machines
In 2005, 68.5 percent of the company’s employees participated in at least one of these wellness programs. USAA relies on a coordinated internal communications effort to spread anecdotes about successful employees to encourage participation.
To measure the savings produced by these programs, USAA aggressively tracks employee population level health data. Dr. Peter Wald, Vice President and Enterprise Medical Director at USAA, stresses that a company should see its wellness programs as a worthwhile but long-term investment and should not expect a return on the investment for three to five years. While USAA has not determined savings for all of its programs, they have reduced workplace absences and produced an estimated three-year savings of more than $105 million.6
World’s largest vehicle manufacturer; 192,000 U.S. employees, 3,000 Texas employees
General Motors’ LifeSteps health promotion program began 12 years ago and today covers 1 million current and retired employees and their dependents.
The program uses health educators and online and mailed HRAs to help employees make better lifestyle choices.7 HRA results are mailed back to participants with customized information and advice.
LifeSteps has produced annual insurance savings of $42 per participant and an estimated $2 to $3 return per dollar on the company’s investment in the form of increased productivity and reduced absenteeism.8 Interestingly, a 2004 University of Michigan study sampled 23,490 GM employees grouped into normal weight, overweight and obese categories. The study demonstrated the importance of physical activity in a wellness program, as moderately active (exercising one to two times/week) and very active (exercising three or more times/week) employees paid $250 less in annual health care costs than sedentary employees (those who do not exercise) across all weight categories. For the obese subpopulation, the difference was $450.9
Largest independent grocery store in Texas; 65,000 Texas employees
The “Healthy at H-E-B” wellness initiative targets unhealthy lifestyle behaviors of employees. Each voluntary participant receives a financial incentive for completing an HRA. H-E-B’s programs are focused on disease prevention rather than treatment, although it also includes a disease management service. Forty-four percent of the grocer’s employees participated in the first year; by the fourth year, 79 percent were on board.
Healthy at H-E-B costs were absorbed by the company’s existing benefit plan budget.
H-E-B’s health care costs were rising by 25 percent annually before the program began, but increased by just 2.9 percent in 2006, and actually fell by 3.7 percent in 2005.10
Computer systems company; 18,000 Texas employees
Dell has a comprehensive health and wellness program, “Well at Dell.” Employees choose and build their own health plans; participate in on-site wellness programs such as healthy pregnancy and lifestyle coaching; and have access to disease management programs. Dell also has a 24-hour health hotline that is answered by a registered nurse.
Since Well at Dell began in 2004, program participants have experienced reduced cost increases, primarily due to reduced inpatient admissions.11
Savings and Returns on Investment
When planning a health promotion program, companies may calculate the return on investment (ROI) for the programs before deciding if it is a good investment. Evidence suggests that comprehensive and adequately funded health promotion and disease prevention programs provide a payback on investment. These studies show that ROI is achieved through healthier workers, reduced insurance costs and less absenteeism.12
A 2001 article in the American Journal of Health Promotion which reviewed 72 previous studies on this topic, concluded that each dollar spent on health promotion programs generated an average savings of $3.48 on health care and reduced absenteeism costs by $5.82. In all, the programs produced an average ROI of $4.30 per dollar spent.13
A 1999 case study of Citibank’s wellness and disease management program found that the company realized a ROI within two years of between $4.56 and $4.73 per dollar spent on the program.14
Still another 1999 analysis of health promotion programs found ROI estimates ranged from $1.40 to $13.00 in savings per dollars spent.15
Wellness programs typically do not experience savings for three to five years after implementation. An investment for wellness, then, is in some sense a leap of faith. But an increasing body of evidence suggests that the investment is well worth making.
One large Texas retailer interviewed for this report estimated its costs for health care over the next five years. The company found that annual increases in health care premiums, if they continued at their current rate for five more years, would wipe out the company’s entire profit. They then analyzed the most expensive diseases in their employee population and found that nearly all of them were caused by unhealthy lifestyle choices, such as eating habits, smoking and a lack of physical exercise.
This company has invested in wellness programs targeted at all lifestyle choices that affect health care costs, and reduced its annual increase in health care premiums to below the national average.
A successful program can be beneficial even if only a small number of employees participate. An analysis showed that a health promotion program could break even if participation succeeded in shifting just 1 percent of employees from “high-risk” to “low-risk” status.16
The Citibank study cited above reported that 51 percent of eligible employees completed an HRA and only 5 percent completed a follow-up intervention, but the program still yielded an ROI of $4.56 per dollar invested.17 ROI can increase dramatically as more people participate.18
Small investments in healthier lifestyles can make a tremendous difference. A study by Dee Edington, director of the Health Management Research Center of the University of Michigan, showed the relationship between HRA scores and prospective medical claims costs over a two-year period. For each one-point improvement in an employee’s HRA, Edington predicts individual claims costs will fall by $56.19
Edington’s research also showed the importance of promoting wellness among the healthy population, not just the current high-cost employees. Companies don’t save as much money by lowering risks as they do by preventing them in the first place.
Edington found that costs for an employee who moves into a high-risk category for disease increase by $350 per year; costs for an employee who moves into a low-risk category fall by less than $150 per year. In other words, the increase in costs that occurs when employees move from low-risk to high-risk are much greater than the decreases in costs produced when they move from high-risk to low-risk. 20
- Eric A. Finkelstein, Ian C. Fiebelkorn and Guijing Wang, “The Costs of Obesity Among Full-time Employees,” American Journal of Health Promotion (September/October 2005), p. 50; and Judith Ricci and Elsbeth Chee, “Lost Productive Time Associated with Excess Weight in the U.S. Workforce,” Journal of Occupational and Environmental Medicine (December 2005), p. 1,227.
- Rebecca Anderson and Beth Kaczmarek, “The Importance of Promoting Health in the Workplace,” The Internet Journal of Academic Physician Assistants (2004), p. 3, http://www.ispub.com/ostia/index.php?xmlFilePath=journals/ijapa/vol4n1/workplace.xml (Last visited February 28, 2007.)
- “Health and Productivity Programs Continue to Grow in Popularity as Health Care Costs Rise,” Columbus Wired (July 2002), http://www.columbuswired.net/Health/HealthAndProductivityPrograms_080102.htm (Last visited March 6, 2007.)
- Aon Consulting, Inc., Health Promotion and Disease Prevention as a Corporate Economic Strategy, by Karen Roberts (Austin, Texas, August 2005), p. 5.
- 2006 C. Everett Koop National Health Awards, “The USAA Take Care of Your Health Program,” http://healthproject.stanford.edu/koop/2006winnerindex.htm (Last visited February 28, 2007.)
- 2006 Koop Health Award, “The USAA Take Care of Your Health Program.”
- 2004 C. Everett Koop National Health Awards, “The UAW-GM LifeSteps Health Promotion Program,” http://healthproject.stanford.edu/koop/2004winnerindex.htm (Last visited March 6, 2007.)
- National Business Group on Health, Center for Prevention and Health Services, Health Improvement: A Comprehensive Guide to Designing, Implementing and Evaluating Worksite Programs, by Courtney Rees and Ronald Finch (Washington, D.C., November 2004), p. 5.
- F. Wang, T. McDonald, L. J. Champagne, and D. W. Edington, “Relationship of Body Mass Index and Physical Activity to Health Care Costs Among Employees,” Journal of Occupational and Environmental Medicine (May 2004), p. 428.
- Interview with Kathy Durbin, director of benefits, H-E-B, Austin, Texas, February 14, 2007.
- Interview with Tre’ McCalister, Dell, Austin, Texas, February 22, 2007.
- Daniel Zank and Donna Friedsam, “Employee Health Promotion Programs: What is the Return on Investment?” Wisconsin Public Health & Health Policy Institute Issue Brief (September 2005.)
- Steven Aldana, “Financial Impact of Health Promotion Programs: A Comprehensive Review of the Literature,” American Journal of Health Promotion (May/June 2001), p. 308.
- R. J. Ozminkowski, R. L. Dunn, R. Z. Goetzel, et al. “A Return on Investment Evaluation of the Citibank, N.A., Health Management Program,” American Journal of Health Promotion (1999), p. 38.
- R. Z. Goetzel, T. R. Juday, R. J. Ozminkowski, “What’s the ROI? A Systematic Review of Return-on-Investment Studies of Corporate Health and Productivity Management Initiatives,” AWHP’s Worksite Health (Summer 1999), p. 15.
- National Business Group on Health, Health Improvement: A Comprehensive Guide to Designing, Implementing and Evaluating Worksite Programs, p. 4.
- R. J. Ozminkowski, “A Return on Investment Evaluation of the Citibank,” pp. 31–39.
- William Whitmer, Kenneth Pelletier, et al., “Editorial: A Wake-up Call for Corporate America,” Journal of Occupational and Environmental Medicine (September 2003), p. 923.
- Louis Yen, Timothy McDonald, David Hirschland, Dee Edington, “Association Between Wellness Score from a Health Risk Appraisal and Prospective Medical Claims Costs,” Journal of Occupational and Environmental Medicine (October 2003), p. 1053.
- Dee Edington, “Emerging Research: A View From One Research Center,” American Journal of Health Promotion, (May/June 2001), p. 346.