Are Wellness Programs Good Investments?
With more than 50 percent of healthcare dollars associated with lifestyle conditions, employer wellness programs aren’t just “feel-good” or marketing initiatives – they may be tied directly to a positive impact on a company’s bottom line. This makes them a “must-have,” according to Fierce Health Payer, which cites as an example Humana’s “HumanaVitality” wellness and rewards program. However, not everyone agrees. Some, like PepsiCo’s wellness program, actually fail the bottom line.
In a recent piece, Fierce Health Payer reports that “Humana cut unscheduled absences from work by 56 percent and monthly claims costs by an average of $53 for more than 13,000 participating employees.” Joe Woods, CEO of HumanaVitality, says the program works for Humana because the company has used it to “build a culture of wellness” and because the program’s goals, pace and success measures are personalized for each employee.
Wellness programs like Humana’s are encouraged under the Affordable Care Act (ACA). A fact sheet (“The Affordable Care Act and Wellness Programs”) from the U.S. Department of Labor (DOL) reads, “Implementing and expanding employer wellness programs may offer our nation the opportunity to not only improve the health of Americans, but also help control healthcare spending. The Affordable Care Act creates new incentives and builds on existing wellness program policies to promote employer wellness programs and encourage opportunities to support healthier workplaces.”
Last year, reporting on the ACA wellness program guidelines (“Employers: Get Fiscally Fit with Wellness Programs”), Forbes indicated that “there is growing evidence that wellness programs drive employer medical costs down and reduce employee absenteeism for illness. One study showed average employer medical costs falling $3.27 for each dollar spent on wellness and a $2.73 reduction in employer costs associated with absenteeism.” (Note: The ACA regulations took effect January 1 of this year, and DOL clarified the rules last fall.)
But Reuters has indicated that wellness programs may not reduce healthcare costs. In “PepsiCo’s workplace wellness program fails the bottom line,” Reuters reports on “the most comprehensive evaluation of [a wellness program] ever published.” It says that findings from a 7-year Health Affairs study of PepsiCo employees “cast doubt on the widely held belief that workplace wellness programs save employers significantly more than they cost.”
PepsiCo’s program, “Healthy Living,” has two components: “life management” (which most closely parallels typical wellness programs) and “disease management.” While its disease management program (help with chronic illnesses like diabetes and hypertension) “produced healthcare savings of $136 per member per month,” the life management component (better eating habits, more exercise, smoking cessation, etc.) did not have a significant effect on healthcare costs (source: Reuters).
According to the Reuter’s article, workplace wellness programs are a $6 billion-a-year industry and “a pillar of the Affordable Care Act.” However, the potential health benefits and the disputed impact on the bottom line do not take into account another variable: happy employees – something significant, but difficult to measure.
What’s it worth to a company to attract and retain a talented workforce? What’s the value of an investment in a culture that advances wellness? A study by the Sir Richard Branson’s Virgin Group found a “strong link between the wellness and vitality of an organization, and the wellness of employees. The result of which was increased job morale, satisfaction, commitment and performance.”
Where do you stand on workplace wellness programs? Are they good investments regardless of cost and/or savings? What’s the role of health plans who now work not only with employers but also individual consumers?
