What is the ROI of Workplace Wellness?

In recent years corporate wellness programs have become increasingly more common. The percentage of corporations with wellness programs is rapidly growing, and, in several organizations, these programs have lowered overall healthcare costs, as they’ve improved health outcomes.

There are many benefits incorporating wellness programs into the workplace, but there are costs associated with these programs. A study conducted by Fidelity Investments revealed that, on average, wellness program costs per employee have been:

  • $693 per employee in 2015
  • $594 per employee in 2014
  • $430 per employee five years ago

Wellness program and ROI expert, University of Michigan Professor Dee Edington, PhD concurs with these numbers. He described at a Corporate Health Management Conference that companies should spend “about $300-$400 per employee if you expect good savings and a positive ROI.”

With a hefty price tag, many companies are slow to incorporate wellness programs. Many companies are begrudgingly incorporating wellness programs to stay competitive, while other companies are not incorporating wellness programs at all.

On the other hand, the companies that are embracing this wellness movement, and putting these initiatives in place, understand that an investment in wellness is an investment in a long-term, overall employee health, and that when they invest wellness programs they save at least 3 times their investment in health-related costs.

How do these wellness leaders do it despite the high costs? Companies that are making this investment in health are also embracing new technological advances to understand the specific ROI of these programs.

The Evolution of Workplace Wellness Initiatives

After World War II, business executives built gymnasium facilities to stay healthy. In the 1880s, these initiatives were embraced in other ways by other companies. National Cash Register instituted twice-daily exercise breaks. Texas Instruments, Rockwell and Xerox followed suit, and built in health and wellness programs and instituted employee fitness programs.

These measures have grown from the establishment of gyms to the establishment of holistic wellness programs that include education, health screening, and fitness challenges. Today, companies build into their wellness programs one-on-one meetings with health coaches, Biometric screening services, stress and weight management programs, and many other services.

With many options of initiatives the question becomes which one fits your company, your employees, and most importantly your budget.

Justifying Your Budget, Proving the ROI of Your Program

Today, companies are are operating in a market with double-digit growth in health care costs. Many companies are sitting idly by. There are, however, many other companies that are not so passive. These companies understand that by investing in wellness initiatives, their healthcare costs will not follow the bleak trend of the nation’s healthcare market.

  • In a survey, more than 60 percent of employers said workplace wellness programs reduced their organizations’ healthcare costs.
  • A study revealed that Johnson & Johnson’s wellness programs produced a ROI of $3.92 for every dollar spent on their wellness budget
  • A study revealed that Pepsi had an average reduction of $30 in health care costs per member per month  (PMPM) for members engaged in either the lifestyle or disease management program.
  • In a study the Rand Company found that Employees that participated in a disease management program resulted in savings of $136 PMPM. These savings were largely in part by the 30% reduction in inpatient visits.

“Employees that participated in a disease management program resulted in savings of $136 PMPM.”

Here’s the bottom line: if you invest in employee wellness you’re defying the market trends, and setting your company up for long-term success within your healthcare budget.

Additional Return on Wellness: Efficiency and Productivity

Companies care about every number on their financial spreadsheets, but what about the factors that influence those numbers overall? An investment in wellness initiatives is an investment in the employee, which  affects every aspect of a successful organization.

  • A study revealed that Employees who scored low on “life satisfaction” stayed home from work 1.25 more days per month than those with higher scores, adding up to about 15 additional days off per year.
  • A meta-analysis conducted by The American Journal of Health Promotion found that having a lifestyle management program in place resulted in a 25% reduction in absenteeism and sick leave.

Having a lifestyle management program in place resulted in a 25% reduction in absenteeism and sick leave.

Here’s the Bottom line: if you invest in employee wellness you’re not just saving money on hospital bills, but also your improving your company’s overall bottom line, and investing in your company’s greatest asset: the employee.

How To Measure ROI on Workplace Wellness

Companies have the opportunity to set themselves up for financial success and invest in everyone of their employees, but the question now becomes how do you measure the specific ROI on these programs?

Listed below are metrics that any company can track to measure the ROI on their Wellness Programs:

  • Healthcare cost trend of participant vs. nonparticipant
  • Number of participants to trend of spend on Healthcare
  • ROI of one specific wellness program compared to ROI of another specific wellness program

These measures are a great start, but for Employers we work with, these blanket numbers are not enough. Employers that we work with are looking to fully understand the specific ROI of each of their initiatives, and to do this we have created a tool that is able to provide data in real time and has the ability to slice and dice the data.

Nothing beats having every tool available to show the specific ROI on a wellness program, if you want to see this powerful tool in action request a demo, or read more about the ROI of workplace wellness here.