Health Information
 

Some employers look to cost sharing, cost shifting, managed care plans, risk rating, and/or cash-based rebates or incentives. But these methods merely shift costs. Only worksite health promotion programs such as Health Fairs, health education and wellness programs stand out as the long-term answer for keeping employees well in the first place. 

Facts about corporate wellness programs.  Details

Good Health Makes Economic Sense

Escalating healthcare costs in the U.S. pose major concerns for many companies. It is reported that the average employer spends more than $8,000 per year for each employee’s health benefits, including insurance, disability and workers’ compensation (Occupational Health Management). The cost of U.S. healthcare benefits increased 15 percent in 2002 and another 10 percent in 2003. Mercer Consulting’s 2003 survey of costs of employer-sponsored healthcare plans found that the average total cost of health benefits for active employees (which includes all medical and dental plans offered) rose from $5,646 per employee in 2002 to $6,215 in 2003. These costs are expected to rise annually at the rate of 13% to 15% over the next five years; for small businesses, the cost will climb much higher. Drug prescription costs are increasing at a rate of 17% to 20% annually, according to benefit consulting firm William M. Mercer, Inc. (2002). Continued increases in healthcare costs are prompting companies to seek innovative ways to promote employee health while at the same time containing costs.

Health and wellness programs can produce a range of business benefits to companies, including the following:

• Reduced medical costs and disability costs: Many companies have found they can significantly reduce the cost of employee healthcare benefits by proactively promoting health, safety, and wellness. According to a 3-year study conducted by Motorola comparing costs for employees that participated in its Wellness Initiatives compared to those that did not, for every $1 the company invested in Wellness benefits, it saved $3.93. The company estimated that in 2000, its Wellness Initiatives saved the company $6.5 million in avoided healthcare costs and $10.5 million in avoided disability payments.
• Reduced Absenteeism: Numerous studies have found that employee wellness programs can significantly reduce employee absenteeism. For instance, Control Data Corporation estimates it has reduced costs of absenteeism by $1.8 million annually through implementation of its StayWell Program.
• Enhanced Productivity: Many studies have linked health risks with reduced employee productivity and to no surprise found that healthier workers are more productive. As an example, a study conducted by First Card Chicago NBD Corp. of 1,000 of its customer service representatives, found that those workers with fewer health risk factors such as smoking and obesity were more productive.
• Enhanced Recruitment and Retention: A 2003 survey commissioned by the American Association of Occupational Health Nurses Inc. found that 60% of employees consider wellness programs an incentive that greatly added to their decision to remain with their current employer. Other studies have also linked employee health and wellness programs with improved workplace morale and enhanced retention rates.

Active employers report that worksite health and wellness programs save money.  Studies show that participating companies in these programs have up to 50% lower medical costs, 46% less absenteeism, and 20% declines in disability costs (see reports below).   

What’s more, as listed by Business Week, many major insurers, such as Metropolitan Life, Prudential, John Hancock, Travelers and Aetna , offer reduced insurance premiums to companies with wellness programs. A representative of Sun Life of Canada, which offers a 5% discount, said, “We want to recognize and do business with employers who value healthy workers.” 

Business Case Studies Show the Dollar Value of Wellness

 Steelcase:  In the longest-running evaluation of a wellness program, Steelcase observed 4,000 employees from 1984 through 1995.  The company found among employees who dropped from high-risk to low-risk through the wellness program, average annual health claim costs dropped 53%.  “It’s evidence for the decision-makers within the company to say, ‘Yes, this is a cost-saving measure’,” says Jonathan Showstack, UC San Francisco.  (Associated Press)

Johnson & Johnson:  An independent evaluation of Johnson & Johnson’s wellness program discovered mean annual inpatient cost increases for non-participants were nearly twice those for participants in the wellness program.  The study also found lower cost increases in hospital days and admissions among the program participants.  (JAMA)

Pitney Bowes: A study revealed 9% savings in medical costs.

Studies Prove Health Promotion Pay-Back

Study                                                               Result                                                            

Prudential (Bowne, 1984)                                Medical costs reduced by 50%; disability cut                                                                         by 20% among participants 

Control Data (Jose, 1987)                                $1.8 million savings due to lower                                                                         medical costs and lower absenteeism 

Travelers Insurance                                         Over 15 years, program cost $57million and saved $146 million 

Bank of America (Fries, 1993)                          Health risk scores improved by 12%;                                                                         health claims reduced by 48%

City of Birmingham (Harvey, 1993)                   Participant hospital days dropped 71%;                                                                         Hospital admissions dropped 62%

Tenneco (Baun, 1986)                                     Male and female exercisers had 20%                                                                         and 46.8% lower rates of absenteeism 

Dallas School District (Blair, 1986)                   Participants had 20% lower absenteeism, or 1.25                                                                         fewer days per person

General Mills (Wood, 1989)                             36.3% lower absenteeism and 36% lower sick leave                                                                         costs for participants

 Dupont (Bertera, 1990)                                  Participants had 14% decline in disability days

 Blue Cross Plans (Conrad, 1990)                     33.6% lower costs associated with absenteeism                                                                          among participants

 Utility Company (Shi, 1993)                             32% lower medical costs among employees

 First Chicago NBD Corp. (1991-1994)            Workdays lost for participants were 33.9 vs. 74.5                                                                        for non-participants

 Coors (1985-1993)                                         Net cost savings of $2.4 million over 8 years.

 Citibank (1994-1997)                                      ROI of up to 8.81 for every dollar invested

 Procter & Gamble (1992)                                 Participants had 29% to 36% lower medical costs

 Sources: The Art of Health Promotion, March/April 1998. American Journal of Health Promotion, July/August 1999.

Wellness Programs Lower Health Risk

 •     Depression: Depressions costs U.S. employers over $44 billion per year, mostly in absenteeism and lost productivity (“Morning Edition,” National Public Radio, October 7, 1999). 

      Two-thirds of patients with undiagnosed depression visit a primary care physician more than six times a year with physical complaints (Healthcare Demand and Disease Management, September 1997).

      People experiencing a major depressive disorder are 27 times more likely than others to have a work disability. Yet a National Mental Health Association survey showed only half of women and less than half of men consider depression a health problem. Wellness programs help employees confront and manage mental disorders. 

•     Stress: A 1997 study found uncontrolled stress was responsible for 12% of all unscheduled absences that year, double the rate of 1995.  What’s more, stress caused nearly half the workers to respond unethically or illegally.  Reported reactions to stress included:     cutting corners on quality control, falsifying accident reports, abusing sick day policy, and deceiving customers and superiors on serious matters (Business & Health, November 1997). 

      Between 50% and 80% of all reported diseases are stress-related in origin, and nearly half of all successful executives seriously consider career changes while in their 40’s because of  stress.  However, a comprehensive study by the American Journal of Health Promotion documented that worksite stress management programs decrease blood pressure and anxiety and increase job satisfaction. 

•     Weight Control: Obese employees are more than twice as likely to experience high-level    absenteeism – 14 or more absences due to illness per year (American Journal of Health Promotion, December, 1998). 

      The one-third of Americans who are overweight have double the normal risk for coronary artery disease, but weight loss can bring that risk back in line. Structured weight control programs give people the support to make lifestyle changes.

 •     Nutrition:  Employees with total cholesterol over 200 have 16% more hospital days and     24% more claims in excess of $5,000.  Changes in diet can reduce cholesterol, and for every 1% reduction in blood cholesterol, The Wellness Letter reported a 2-3% reduction in heart attack risk.  Nutrition education helps people choose healthier eating.

 •     Exercise: Fitness center participants stay in hospitals an average 2.1 days less than non-participants (American Journal of Health Promotion, July/August 1993).

       A regular program of low to moderate exercise reduces heart attack risk by 35-55%, reported  The Wellness Letter.  And Harvard Medical School noted that doing aerobic exercise five times a week decreases the risk of Type II diabetes by 42%.  Fitness programs and incentives raise employee activity levels.

 •     Regular Exams: Working Woman observed that every three minutes, a woman in the U.S. learns she has breast cancer. Yet in a poll of 2,500 women, age 18 and older, a full third  admitted they hadn’t had a clinical breast exam in the past year.  Finding cancer early vastly increases the chances of recovery, and health education communicates the importance of   regular exams.

 •     Smoking Cessation: The Wellness Letter (UC Berkeley) reported that smoking doubles a person’s chances of having a heart attack. Yet within five to 10 years of quitting, the former smoker’s risk is no different from that of a lifetime nonsmoker. Targeted smoking cessation programs help people quit.

 •     Safe Habits:  Employees who fail to use seat belts have 54% more hospital days and 36% more claims in excess of $5,000 than those who do.  One serious car crash can cost an employer $100,000.  Wellness programs make the case for safety.