Wellness Plans : Health Promotion Program Return on Investment.

A lot of companys, as part of their efforts to contain rising healthcare costs, are beginning wellness programs variously described as wellness, lifestyle programs, health and productivity management, population health management and, simply, wellness programs.

The purpose of this article is to consider whether such health promotion programs improve health. If so, do they in turn reduce utilization of health care services and reduce health care expenditures?

The well-liked media have done much to promote the theory of employee wellness. Last year, In Business –  Madison1 magazine printed a story accompanied by a table reporting an impressive range of ROI –

Return on Investment (Per dollar Return On Investment for lifestyle programs)

• Coors $6.15

• Kennecott $5.78

• Equitable Life $5.52

• Citibank $4.56

• General Mills $3.90

• Travelers $3.40

• Motorola $3.15

• PepsiCo $3.00

• Unum Life $1.81

Source –  2004 T.E. Brennan Company, as reported

Would these ROIs stand up to rigorous empirical analysis of the data? What factors produce such disparate returns among these wellness programs? and does the published literature, subject to colleague review of scientific methods, support the ROIs stated here?

Health and Productivity Management

Illness and injury associated with an unhealthy lifestyle or modifiable risk factors is announced to account for at least 25 percent of staff member healthcare expenditures.

The most significant of these risk factors are stress, tobacco use, overweight or obesity, lack of exercise, excessive alcohol use, and poor nutritional habits.

Over the past two decades, a selection of groups at the local, state, and national levels have promoted the theory that health risk reduction and care management programs can improve employee health, and that workplace health education, health risk management, and benefit counseling should complement standard health insurance benefits.

The intensity of wellness programs range from bulletin board, flyer or newsletter information to onsite fitness facilities, health risk reduction classes, and personal lifestyle change coaching.

Health promotion programs today often include a health risk assessment  to evaluate each staff member’s modifiable risk factors of disease. Program coordinators then target interventions to those that are at increased risk through personal communications and individual follow-up.

Extensive health promotion programs might include classes on health risk reduction and job safety, fitness and exercise activities, health and fitness center memberships, and reductions in co-payments or premiums for workforce who adhere to recommended biometric screening guidelines.

Along with this, some employers are restructuring health benefits and encouraging employees’ cost-sensitivity when accessing health care.5 These changes are intended to reduce employees’ need for and utilization of health care, yielding decreased group medical care costs.

Demonstrated reductions in health care expenditures should then provide corporations with a powerful bargaining chip in negotiating lower medical insurance premiums during future terms.

Evidence basis –  A range of ROI estimates

The empirical research has produced results as varied as the popular media on Return On Investment. However, evidence continues to grow that well-designed and well-resourced wellness and illness avoidance programs provide multi-faceted payback on investment.

Colleague-reviewed investigations and meta analyses show that ROI is achieved through improved employee health, reduced benefit expense, and enhanced productivity.

• Goetzel and peers, in their meta-analysis of two dozen articles summarizing economic investigations of health and productivity management programs, found an typical return of $3.14 per $1 invested in traditional wellness programs.  The Return On Investment estimates for the individual wellness programs ranged from $1.49 to $13.7,

• Aldana reviewed 72 articles and concluded that wellness programs achieve an average Return On Investment (ROI) of $3.48 when considering health care costs alone, $5.82 per $1 when examining absenteeism, and $4.30 when both outcomes are considered.

• Ozminkowski and collagues conducted a 38 month case study of 23,000 participants in Citibank, N.A.’s health promotion program and reported that within a 2 year period, Citibank realized a ROI between $4.56 and $4.73.10  

Follow-up studies found improvements in the risk profiles of participants, with the high-risk group improving more than the “usual care” group1 thus of more intensive wellness programming.

• Chapman’s 2004 meta-evaluation of 42 studies, ranking overall validity of the studies, reports cost-benefit ratios from $2.05-$4.64.

In addition to immediately quantifiable cost reductions, scientists have announced a variety of spin-off benefits –  greater productivity, intellectual capacity, and reductions in disability12 and absenteeism.9,13,14,15

Such wellness programs may also have positive effects on worker perceptions of the business and worker morale, even among nonparticipants.  These outcomes go beyond savings in direct healthcare costs to provide non-health related Return On Investment.

Tailoring health promotion program to maximize Return On Investment Health promotion programs aim to reduce the health risks of staff members at high risk while maintaining the health status of those at low risk.

A variety of disease management interventions are available to fit the specific risk profiles of various worksites. Insurers and businesses now seek to calibrate their interventions for achieve optimal risk reduction and costeffectiveness.

In 2001, University of Michigan researchers announced on stable trends in health care costs for over 2 million current and former staff in an 18 year data set.

The mean cost increase per risk factor gained ($350) was found to be more than double the mean cost decrease per eliminated risk factor ($150).

In other words, increases in costs when groups of staff members moved from low risk to high risk were much greater than the lowers in costs when groups moved from high risk to low risk. Their conclusion –  Programs designed to keep healthy people healthy will likely provide the greatest return on investment.

On the other hand, Pelletier’s meta-analysis and other health promotion program examinations18 suggest that individualized risks reduction for high-risk employees within the context of comprehensive health promotion programming is the vital element in achieving positive clinical and cost outcomes in worksite interventions.

Dose-Response?

A few factors may affect the impact of various health promotion programs and the ultimate Return On Investment (ROI), including cultural and environmental factors, workforce demographics, level of participation and longevity of the health promotion program.

Most cost-benefit studies have been conducted in large companies with more than fifty workforce. But researchers have shown that similar results can be obtained by small companies with as few as five workforce actively involved in a well-managed health promotion program.

Various studies also suggest that even relatively modest levels of participation can achieve substantial wellness program impact. Contrary to reports by the popular media that such wellness programs require more than 70% participation, published reports of at least one case showed positive Return On Investment (ROI) with 51% participation.

Length of intervention appears to be a more salient variable –  an impact on medical costs typically requires three-to five years of health promotion programming.

Future developments

Despite the abundance of positive wellness program evaluations, a few caveats remain. Negative results are less likely to be reported or published, therefore biasing the Return On Investment upward.

Uncertainty persists regarding the specific impact of the various wellness program components. But as these wellness programs take hold, further research and investigation will enable fine-tuning of wellness program investments.

Meanwhile, the preponderance of data and the strength of the published research stand in favor of a positive Return On Investment (ROI) for wellness programs.

Truly, the organization case for such health promotion programs is now well enough defined that some insurance brokers offer discounted rates to businesses that institute or subscribe to health promotion programs.

Future questions will focus on how to best to combine robust and focused interventions, the intensity of elements, and how to calibrate the dose-response model to achieve a target Return On Investment (ROI).

Here, employers, workforce, and researchers will need to collaborate to define mutual objectives respecting both clinical and cost outcomes.

Sources –

1. In Business –  Madison. Madison, WI –  September 2004. p. 39.

2. Anderson DR, Whitmer RW, Goetzel RZ, Ozminkowski RJ, Wasserman J, Serxner S. Health Enhancement Research Organization Committee. American Journal of Health Promotion 2000; 15(1) –  45-52.

3. Manning J. Wellness movement gains ground among corporations, health insurers. Milwaukee Journal Sentinel. August 19, 2004.

4. Chapman LS. Expert opinions on “best practices” in employee health promotion (WHP).  The Art of Wellness Newsletter, July/August 2004 – 1-6.

5. Fronstin, P, and Werntz, R. EBRI Issue Brief No. 267, March 2004. Washington, DC – Worker Benefits Research Institute (EBRI).

6. Powell C. Professionals urge corporations to promote employee health promotion strategies. Akron Beacon Journal. October 25, 2004.

7. Goetzel RZ, Juday TR, Ozminkowski RJ. AWHP’s Workplace Health, Summer, 1999.

8. Goetzel, RZ. Absolute Advantage. Washington DC – Health Promotion Councils of America. Vol 1(8); 2002.

9. Aldana SG. American Journal of Wellness 2001; 15(5) –  296-320.

10. Ozminkowski RJ, Dunn RL, Goetzel RZ, Cantor RI, Murnane J, Harrison M. American Journal of Wellness 1999; 14(1) –  31-43.

11. Ozminkowski RJ, Goetzel RZ, Smith MW, Cantor RI, Shaughnessy A, Harrison M.  The impact of the Citibank, N.A. J Occup Environ Med. 2000; 42(5) –  502-511.

12. Serxner S, Gold D, Anderson D, Williams D. J Occup Environ Med. 2001; 43(1) –  25-29.

13. Riedel JE, Lynch W, Baase C, Hymel P, Peterson KW. American Journal of Wellness 2001; 15(3) –  167-191.

14. Edington MD, Karjalainen T, Hirschland D, Edington DW. AAOHN J. 2002 Jan; 50(1) –  26-31.

15. Aldana SG, Pronk NP. J Occup Environ Med. 2001 Jan; 43(1) –  36-46.

16. Pelletier KR. American Journal of Wellness. 2001; 16(2) –  107-16.

17. Edington DW. American Journal of Health Promotion 2001; 15(5) –  341-349.

18. Leatherman S, Berwick D, Iles D, Lewin LS, Davidoff F, Nolan T, Bisognano M. Health Affairs 2003; 22(2) –  17-30.

19. Erfurt JC, Holtyn K. J Occup Med 1991; 33(1) –  66-73.

20. Serxner S, Anderson DR, Gold D. American Journal of Wellness. 18(4) –  1-6, iii, 2004 Mar-Apr.

21. Serxner SA, Gold DB, Grossmeier JJ, Anderson DR.