Do Wellness Programs Make Cents?

Employers are investing in ways to contain health-care costs, but few know what they're getting back.

While employee health-improvement programs have become more and more popular as a way to contain firms’ health-care costs in recent years, very few companies actually know how much their investments in such programs as on-site flu shots and free annual checkups are yielding, according to a recent survey of large employers by Fidelity Investments and the National Business Group on Health.

Virtually all companies now offer some element of health-improvement programs, with such items as employee-assistance programs and on-site flu shots nearly standard. Other popular programs include nurse hotlines, fitness and nutrition counseling, disease-management programs, and health fairs or other on-site education. Even the least-popular program included in the survey, on-site health clinics, is being used by a sizable number of firms — 32% — and several experts believe the number will grow soon.

However, less than half — around 40% — aggregate return on investment across all programs. Furthermore, only 19% of companies are accurately capturing the costs of such programs, while 62% are underestimating the amount they spend, according to independent estimates calculated by Fidelity.

Rather than a stunning lack of discipline, the results indicate the inherent difficulty of trying to measure health-care outcomes, says Helen Darling, president of NBGH, an advocacy group for large employers. “It’s really hard to quantify the success of these programs in a rigorous way,” she says.

A big complicating factor is that most companies have multiple programs with multiple vendors, and not all vendors are likely to translate outcomes into the common denominator of dollars. According to the survey, 58% have two to five vendors for health-improvement programs, and 30% have six or more. On top of that, the best outcome in many cases is a cost avoidance, such as prescriptions not needed, which in itself can be hard to track and define.

Data-storage giant EMC, for example, has several key initiatives under way to improve employee health, including personal electronic health records, a dietary program to stop hypertension, and opportunities for people with chronic diseases to be monitored remotely. Each program is being developed with different partners, and not all can produce crisp data since much of the savings is in cost avoidance. “You might be able to choose a lower-cost drug or avoid a lab test with a new doctor by virtue of having your health record so easily accessible,” but employees wouldn’t necessarily report such savings in a systematic way, says Delia Vetter, EMC’s senior director of benefits and programs.

That’s not to say there’s no effort to measure savings. A pilot of the dietary program showed the company avoided nearly $1,000 in medical and drug costs per participant, and EMC is hoping to eventually get a measure of the productivity gains that go along with that. In general, though, “it’s just intuitive — if employees aren’t at the doctor’s office and they’re feeling good, they’re more productive,” says Vetter.

Even the numbers companies get from their vendors should produce some skepticism, Darling says, because much depends on timing. Many smokers, for example, attempt to quit many times before they give up for good, just as many people trying to lose weight often have trouble maintaining the loss. “Multiple quits and failures are very common, so whether a program is considered a success or a failure depends on how you do the cut and when you track the data,” she notes.

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