The article below was originally produced by CEO-level QEI Patron Willis Towers Watson and is republished below with permission.
In 2019, the Centers for Disease Control and Prevention (CDC) announced the results of a 2017 study reporting that almost one-half of all U.S. worksites offered some type of health promotion or wellness program. The study, conducted by the CDC and the University of North Carolina at Chapel Hill’s Gillings School of Global Public Health, was the first government survey of workplace wellness programs in 13 years. The study surveyed almost 3000 diverse workplaces, including for profit, non-profit and government employers in all industry sectors and sizes. Because small employers (fewer than 100 employees) represent over 90% of all employers in the U.S., 77.1% of the study’s survey respondents were employed in small businesses.
The CDC study reported that almost 30% of the employers surveyed offered some type of program to address physical activity, fitness or sedentary behavior. Nineteen percent of the employer programs included tobacco cessation. Approximately 17% of employers had programs to address obesity or weight management. Despite this information, the CDC study concluded that, though the prevalence of wellness programs has increased, they remain low across most health programs, and few worksites have comprehensive programs.
Employee wellness programs are broadly defined and run the gamut in terms of offerings. Generally, however, the most popular and frequently offered options include:
- Weight loss programs
- Discounted gym memberships or onsite fitness centers
- Online tools to manage and maintain health
- Exercise programs, such as walking or yoga
- Health screenings
- Smoking cessation programs
- Health, fitness and nutrition education presentations
Experts advise that, for an employer considering implementation of a wellness program for its employees, it is critically important to define the program’s goals up front. Most programs seek healthier employees in hopes that healthier employees will be happier employees, thus reducing turnover. Most employers believe wellness programs that work will help increase employee productivity as they will decrease absenteeism and sickness. Finally, employers hope to decrease the cost of employee health insurance by demonstrating to health insurers that the programs will produce healthier employees with fewer claims.
The problem with these laudable goals is that studies of wellness programs have reported varying results as to whether the programs accomplish the employer’s goals. In 2010, an analysis by a Harvard economist, medical student and health economics professor of 36 peer-reviewed studies conducted about wellness programs and their effects on health care costs and employee absenteeism reported that the programs were successful in meeting their goals. According to the Harvard analysis, wellness programs returned $3 in health care savings and $3 in reduced absenteeism costs for every dollar invested.
A 2016 Journal of Occupational and Environmental Medicine (JOEM) study found that wellness programs yield positive financial rewards for employers. JOEM studied the link between workplace health promotional best practices and an organization’s financial performance by tracking the market performance of companies implementing evidence-based workplace wellness programs. JOEM reported that companies with high health and wellness records appreciated by 235% compared with the S&P 500 index appreciation of 159% over a six-year simulation period, leading to the conclusion that robust investment in wellness programs is one of several practices pursued by high performing, well managed companies.
However, two more recent studies came to different conclusions about the effectiveness of these programs. The RAND Wellness Programs Study, released in 2014, concluded that these programs have little if any immediate effect on employer spending on employee health care. This study included almost 600,000 employees at seven employers and involved two common components of wellness programs: lifestyle management (focusing on employees with health risks such as smoking and obesity and offering support for reduction of both to prevent chronic disease) and disease management (focusing on employees with existing chronic diseases and helping them take better care of themselves by reminding them to take prescribed medicines and communicating about subjects such as missed lab tests, etc.). According to RAND, overall these two components of wellness programs reduced employer’s health care costs by approximately $30 per employee per month, with the disease management component of the programs comprising 87% of that savings. According to RAND, only 13% of the employees participated in the disease management component of these programs compared with an 87% participation rate in the lifestyle management component. Therefore, the much higher participation in the lifestyle management component of the program constituted only slightly to overall savings.
The RAND study also performed a return on investment (ROI) calculation as part of its analysis. The result was that considering the ratio of reduction in health care costs to program costs, including fees of program vendors and the cost of employee screenings, the overall ROI was only $1.50. So, for every dollar spent on the wellness programs, employers saw only a $1.50 return. Though the lifestyle management component had a lower ROI than the disease management component ($.50 versus $3.80), RAND concluded that lifestyle management did significantly reduce absenteeism by more than one hour per employee-year. This benefit was not enough, however, to make the wellness programs pay off financially.
As a result of its study’s findings, RAND recommends that employers be clear up front about the goals of their wellness programs. Because of the findings, RAND concluded that if an employer’s goal is to improve employee health and productivity, then an evidence-based lifestyle management program can help it reach that goal. However, employers seeking a healthy ROI should focus wellness programs on those employees with chronic diseases. Finally, given the lack of an ROI with the lifestyle management component of wellness programs, employers should pay close attention to that component program’s costs. Health screenings and employee health counseling are expensive while focusing on promoting healthy eating and exercise through educational presentations are not.
Finally, the Illinois Workplace Wellness Study published in 2018 questioned the effectiveness of the programs to achieve dual goals of improved employee health and lower employer health care costs. That study invited 3,300 benefit-eligible employees of the University of Illinois at Urbana-Champaign to participate in the study, with 4,834 of the employees assigned to the treatment group allowed to take paid leave time off to participate in a common employer wellness program. Successful completion was rewarded with payment of randomly assigned amounts ranging from $50 to $350. The remaining employees (1,534) were assigned to a control group that was not allowed to participate in the wellness program. Over 56% of the eligible employees invited chose to participate in the program. According to the study, in the year prior to its beginning, those employees ultimately choosing to participate in the wellness program already had lower medical expenditures and healthier behaviors than those who did not elect to participate, leading to the conclusion that availability of wellness programs does not change employees’ behavior to any great degree. Because this study was a randomized control trial, it was able to measure whether medical spending disparities pre-existed the program and concluded that it did.
The University of Illinois study also concluded that monetary payments were not much of an incentive to participation. When no monetary incentive was offered to participants, slightly less than 50% completed the assessment and screening components of the program. A $100 reward for completion only increased the rate to 59%. Doubling the reward only raised the rate of completion to a mere 63%. Finally, researchers surveyed participants and found that the existence of the wellness program did not impact their sense of job satisfaction or productivity.
Increased health care spending has prompted policymakers and others to look for ways to reduce these expenditures, and many have settled on wellness programs as an important component of the solution. According to an analysis of the wellness industry by IBIS World published in May 2019, the total revenue spent on these programs increased from $1 billion in 2011 to almost $7 billion five years later.
Given the enormous investment in these programs by so many businesses, it is imperative that studies continue to examine program results and that long-term monitoring of program outcomes continue. It is equally important that employers offering these expensive programs to employees are clear about their goals and that they design programs that best meet them consistent with results of studies that have been completed and with studies that are continuing to be reported over time.