The Case for Wellness Programs

February 11, 2008

Wellness programs, also referred to as health promotion programs, are an investment in human capital. Healthy people – those in the best physical and psychological shape - make better employees. These employees are more likely to be on the job and more productive, as well as be attracted to, and remain with, a company that actively promotes their well-being.

Impact of Preventable Diseases
More than half of Americans have one or more chronic diseases. According to the Centers for Disease Control (CDC), the profile of diseases contributing most heavily to death, illness and disability among Americans has changed dramatically during the last century. Today, chronic diseases, such as cardiovascular disease (primarily heart disease and stroke), cancer, and diabetes are among the most prevalent, costly and preventable of all health problems. The prolonged course of illness and disability from such chronic diseases results in decreased quality of life for millions of Americans – and a significant financial impact on the companies that employ them. Studies estimate that as much as 50 to 70 percent of health claims costs are preventable since they are due to behavioral and lifestyle choices.

The most common chronic diseases are costing the economy more than $1 trillion annually, according to the Milken Institute 2007 Report “An Unhealthy America: The Economic Burden of Chronic Disease”. When individuals suffer from chronic diseases, the result is not only medical costs and absenteeism rates, but reduced productivity as well. An ill employee may show up for work to avoid taking sick days but doesn’t perform as well – a circumstance know as "presenteeism."

Active Health Management
Health and productivity management is based on the concept that an "at risk" workforce is a business liability with direct and hidden costs to productivity. A key component of productivity management is actively managing employee health. Wellness programs provide the engagement that employers need.

• Impact on Health Risks. Well-designed wellness programs have demonstrated a reduction in employee health risks.
• Health Risks and Claims Costs. People with more health risk factors produce higher claims costs. University of Michigan studies show that people with five or more risk factors can double or quadruple the relative risk of claims costs. Reducing risk factors in an employee population will affect a decline in associated health care costs.
• Focus on Health Risk Status. Some programs focus solely on high-risk individuals already in a disease state. The most effective programs identify not only the high-risk employees, but also those employees in a lower risk status to prevent them from moving into higher risk categories by raising awareness, and providing education, motivation and accountability.
• Absenteeism. Health risks have the same relationship to days absent as they do to health care costs: the greater the number of health risks, the higher the absenteeism rates. Conversely, health promotion programs have been shown to significantly reduce absenteeism.
• Productivity. Negative impacts on productivity are a major, costly product of poor health. Some researchers believe that the financial impact of productivity losses exceeds actual health care costs by as much as four times.

Implementing Wellness Programs
Experts agree that effective worksite health promotion programs contain certain common components. The most effective programs begin with benchmarking and incorporate an evaluation system that measures process and outcome variables. Key program elements include:

• Health assessments in the form of health risk assessments (self-reported information) and health screenings (biometric data) provide baseline measurements and yearly trend indicators of employee health risk factors.
• Health education that focuses on skill development and understanding the short- and long-term ramifications of lifestyle behaviors and habits tailored to the specific health indicator issues uncovered in the assessment phases.
• Supportive environments created to engage employees in a variety of ways and build organizational values, policies and initiatives that reinforce and support a healthy work environment and promote positive cultural change.
• Integration that embeds health promotion effectively within the organizational structure through visible executive support, wellness committees and task forces as well as into overall company strategic and tactical goals.
• Linkage to benefits plans to optimize reach and effectiveness for the higher-risk populations that need them most.
• Incentives that reward participation and keep health results top-of-mind.
• Coaching which provides human interface with health professionals to support individuals as they progress through the stages of change toward personalized goals.

Return on Investment
Health promotion programs are a proven method for employers to help their employees become active managers of their own health and welfare. Multiple studies have shown that businesses can realize $3 - $8 for every dollar spent on health management and wellness programs. These savings are direct (reduced medical claims) and indirect (reduced absenteeism, disability and increased productivity).

Reviews show that some positive health behavior change can happen within six to 12 months. However, companies that make a serious investment in their human capital from a health and productivity standpoint invest in a long-term, multi-year approach to health promotion.

Investments in wellness programs can vary from low-end "quality of life," typically measured as under $50 per employee, per year, to fully-integrated "health and productivity management" programs for over $400 per employee annually. While initially this may appear unwarranted, it is a fraction of the cost an average employer spends to ensure health benefits which are currently estimated at $5,000-$7,000 per capita with recent annual increases of 8-10 percent. The level of investment in prevention is more than justified when factoring in health care savings, as well as productivity improvements, which some experts estimate at $10,000 or more per employee, per year.

Summary
Well-designed wellness programs have demonstrated a proactive approach to containing and/or reducing claims costs as well as to improving employee productivity, morale and well-being. For U.S. businesses to remain competitive globally, well designed and carefully implemented wellness programs are a viable, proven, cost-effective tool for health care cost management.

Let Infinisource help your clients develop a wellness program that best fits their financial and cultural needs. For more information go to www.infinisource.net.