Do Wellness Programs Make Cents?

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

Of the 40% of companies that do track ROI across all programs, about half say they see a two-to-one return on their investment. About one-quarter see greater returns, while the other quarter says they are just breaking even or even losing money.

In fact, some programs can raise costs in the short term. Snyder’s of Hanover, for example, managed to keep health costs per employee month flat for five years between 2003 and 2008, in part due to sophisticated data analyses and efforts to steer employees toward annual physicals and top experts in any given field. Last year, however, several health-screening fairs at the Pennsylvania-based pretzel-maker’s various manufacturing facilities turned up employees with serious illnesses, saving at least one employee’s life, according to Penny Opalka, manager of benefits and compensation. Those discoveries, in combination with the acquisition of a company that did not take such proactive steps, drove up 2009 health-care costs by 15% — “but once they have those illnesses under control, those levels will start to come down,” predicts Opalka.

Despite the complexities of measuring progress, few companies plan to back away from such programs. At this point, at least, health-care reform doesn’t seem to be an inhibiting factor, either. Ninety-one percent of survey respondents say it would have no impact on their interest in the programs. “Even if tomorrow the financing part of coverage were done by someone else, employers would still have to be concerned about the health and productivity of their employees,” says Darling.

What CFOs can do, short of obtaining precise dollar-denominated ROIs, is take an inventory of all the programs they currently have, and consider the current cost and benefits they carry. “The most useful thing would be to make sure the company fully understands what [it is] paying for, what difference it is making, and what the results are,” years beyond the initial intervention, Darling advises.

Not to mention it doesn’t hurt for a CFO to join a fitness challenge or submit to a cholesterol test at a health fair. Executives like the CFO “are both role models and champions. They can drive a lot in the company if they choose to, and there are very real benefits to that,” says Darling, often including a decreased need to provide monetary incentives to employees to participate in the programs.

 

 

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