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August 01, 2011 | Leave a Comment
Wellness programs are getting a lot of attention these days and with good reason! The cost of healthcare has been on the rise for quite some time now and is a major challenge for many businesses today. Thanks to America’s addiction to fast food, smoking and television most businesses are taking a battering to their bottom line and corporate wellness is taking on a greater role.
With only 3% of American’s leading healthy lifestyles it’s apparent why health problems are costing the U.S. economy billions in lost workdays and rising medical costs.
Bottom line, unhealthy employees just cost more:
- Approximately 70% of all diseases are preventable as they are associated with modifiable behaviors
- The CDC reports medical expenses for those who are obese are 29-117% higher than those at a healthy weight.
- The total excess cost to a company per smoker per year is $5,606, including $1,882 attributable to smoke breaks, $1,623 for excess medical expenditures, and $341 for missed work days due to sickness
- The cost of cardiovascular diseases in the United States, including health care expenditures and lost productivity from deaths and disability, is estimated to be more than $503 billion in 2010.
This leaves employers with one question: What is the real return on investment – ROI on corporate wellness programs? Since their inception, corporate wellness programs have always been under the ROI microscope. I think this is because employers still don’t believe wellness programs are effective and worth the cost.
It is commonly reported in the marketplace that for each $1 invested by an employer in corporate wellness, a $3-$6 return (in the form of cost savings) is realized 2-3 years after implementation. ROI for corporate wellness is difficult to quantify exactly because the results of a wellness program offered by mega corporation is going to have very different results compared to the wellness program offered by a small local manufacturing company. Everything varies from number of employees, to employee demographics to availability of resources. There are also several different ways that employees cost money: direct health care costs, absenteeism, presenteeism, worker’s compensation, disability, employee turnover/recruitment. Every worksite is different, think about your employee population and healthcare costs. Ask yourself based on the above, where is your money going?
Need help forecasting the ROI for your organization? There are some forecasting tools on the market that allow employers to determine whether the investment in wellness makes sense for your company. To learn more go to wellsteps.com and click on the tools link at the bottom of the page. There you’ll find an ROI calculator.
As healthcare continues to rise, it’s time for employers to be proactive. It’s time for companies to play offense instead of defense. While exact ROI is not always verifiable, what is our alternative?
Aldana, S.G. “Financial Impact of Health Promotion Programs: A comprehensive Review of the Literature.” American Journal of Health Promotion, 2001: 15(5): 296-230
Blackburn, George. The ROI on Weight Loss at Work. Harvard Business Review. 2009 December.
Champan L. Meta-evaluation of worksite health promotion economic return studies. Art of Health Promotion Newsletter. 2003 Jan/Feb; 6(6): 1-10
Heart Disease and Stroke Prevention: Addressing the Nations Leading Killer. Center’s for Disease Control and Prevention. http://www.cdc.gov/dhdsp
Musich, S. Napier, D. Edington, D.W. “The association of Health Risks with Workers’ Compensation Costs.” Journal of Occupational and Environmental Medicine. 43(6): 534-541, June 2001
Shepherd, L.C. “States, businesses snuff out smoking.” Employee Benefit News. 2006, August: 20(10)
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